Halfway through a 10-year plan to establish itself as a bioscience center, Arizona has experienced a slowdown in federally funded research grants.
But it continues to make gains in creating new biotech companies and jobs and is effective in attracting venture capital for those firms, according to an assessment by Battelle, a nonprofit research organization that wrote the original Bioscience Roadmap.
“The overall metrics are very positive,” said Walt Plosila, vice president of the Battelle Technology Partnership Practice. “We are building a critical mass of companies, and they are providing good, well-paying jobs.”
After adoption of the plan in December 2002, Battelle has prepared updated reports each year on the progress or lack of progress made by the state.
This year’s report is being presented this week at a series of meetings in Flagstaff, Tucson and Phoenix.
Plosila said the number of bioscience jobs increased 18.5 percent between 2002 and 2006, faster than the national average, to more than 80,000 total jobs. The number of firms has increased 16.7 percent during the same period. The average annual biotech wage is $48,700, about $9,000 more than the state’s overall private sector average, he said.
The vast majority of state bioscience jobs are still with hospitals — about 84 percent. The nonhospital sector, including pharmaceuticals, medical devices, labs and other categories, has about 20.6 percent of jobs but is growing more rapidly.
Plosila also is pleased with the ability of Arizona’s start-up bioscience firms to attract venture capital. He said Arizona bioscience firms are on track to receive $100 million in venture funding this year, the goal specified in the Bioscience Roadmap. And it’s coming at a time when venture funding nationwide has been slow, he said.
“We’re now getting more capital for companies that develop products,” he said. “Before it was going to services, which is at the lower end of biotech.”
Plosila’s major concern is in research, where he said the state has seen a drop in grant funding from the National Institutes of Health, the so-called “gold standard” for bioscience research funding.
“In previous years, there was fabulous growth in NIH funding, but it looks like over a long time period that will balance out,” he said. “For 2006 it didn’t keep up.”
He attributed the decline to constraints in the NIH budget and increased competition for available money. He said the situation may just be temporary because Arizona’s universities and institutions such as the Translational Genomics Research Institute have effectively cooperated on research projects.
“We know one of the criteria for NIH funding is collaboration, and Arizona is very good at that,” he said.
John Murphy, president of the Flinn Foundation, which sponsored the road map, said the research funding situation is causing anxiety in many states, including some that have built large facilities in anticipation of research projects that have not yet been funded. Such a situation hasn’t happened in Arizona yet, but he said a prolonged slowdown in research grants could stifle development of private-sector spinoff companies.
“You need to keep that furnace stoked,” he said.
The state is making progress or substantial progress on 16 of 19 actions originally recommended in the road map, Plosila said. The three that have seen no action to date are creation of a state bioseed fund that would invest in the earliest stages of start-up company development; providing a mechanism for Arizona universities to take equity positions in start-up companies, which also would help them become established; and establishment of technology zones around existing and proposed bioscience centers.
Plosila expects progress on the last proposal in the upcoming year. Phoenix is considering developing a downtown medical district, and other cities may do the same, he said.
But the other two proposals will be harder to implement because they require approval by the voters and legislators, he said.
Murphy believes the state has set the stage for a substantial bioscience industry with its research efforts. He cited developments in southern Arizona, a hub for companies spun off from research at the University of Arizona. One of those companies, Ventana Medical Systems, is in discussions for a takeover by medical giant Roche, and other companies also may bid, he said.
“This is a natural evolution as an industry starts to take root,” Murphy said.
• Phoenix-based Translational Genomics Research Institute and ASU Biodesign Institute in Tempe team with Nobel laureate Lee Hartwell of the Fred Hutchinson Cancer Research Center in Seattle in a $45 million project to advance personalized medicine.
• The University of Arizona College of Medicine-Phoenix, in partnership with ASU, welcomes the first class of 24 students after winning accreditation in record time.
• Science Foundation Arizona awards $23 million in grants in its first year for scientific and medical research programs. More than 60 percent of the funds involve bioscience-related projects.
• W.L. Gore & Associates, a Delaware-based medical-device manufacturer with a longtime Flagstaff presence, announces plans to build facilities in north Phoenix that could employ up to 800 people.
• Drug-development services firm Covance breaks ground on a 300,000-square-foot lab in Chandler after facing opposition from animal-rights protesters. Between 300 and 400 jobs are expected.
• Marketing officials introduce Arizona’s brand for bioscience development — Biozona — at a convention in Boston.
• A permanent facility for Phoenix Bioscience High School opens in central Phoenix.