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COMMENTARY
A Site Selection Web Exclusive, January 2012
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North Carolina’s Life
Science Success Story

Elusive Early-Stage Funding Among Challenges

COMMENTARY
by E. NORRIS TOLSON,
President and CEO,
North Carolina
Biotechnology Center
I

t's a new year of opportunity in the life sciences.

In North Carolina, we see that opportunity manifest in the bricks and mortar of corporate office buildings, in glass and steel of high-tech production facilities and in the faces of the workers at our more than 530 life-science companies. We've added to our R&D, biomanufacturing and contract research base over the past four years. It's a testament to the breadth of North Carolina's foundation, which was launched 28 years ago when our state leaders saw that our legacy industries alone — tobacco, furniture and textiles — would not carry our future.

Those leaders didn't plan for The Great Recession. However, this industry has given North Carolina hope, adding jobs despite a stagnant economy. For our future, it also holds the solutions to many of our most challenging problems — food, medicine and energy, as well as national defense.

North Carolina is ready, with scientific expertise and a company base as broad as biotechnology itself. Our small companies are researching new cures, inventing faster and more accurate diagnostic tests, engineering ways to deliver medicines more effectively. Our large companies are re-defining pandemic response — both Novartis' cell-culture flu vaccine facility and Medicago's tobacco-leaf production and extraction plant vastly reduce the amount of time needed to produce millions of vaccine doses for the American public.

Emerging sectors — from nanobiotechnology to advanced medical devices — are developing the products that will define the future. Those two topics, plus marine biotechnology and drug discovery, are the focus of our four Centers of Innovation, which link industry with academic researchers to help solve problems and commercialize products.

Finally, we are looking to our agricultural roots, where biotechnology applications enable plants to generate everything from medicine to fuel, in addition to the food on our tables. Four of the world's top-five ag biotech companies are researching those solutions right here in North Carolina, while our universities continue to spin out company after company that develops intriguing technology that works in the doctor's office as well as on the farm. This success has led to the creation of the $13.5-million, 50,000-sq.ft. (4,645-sq.-m.) Alexandria Real Estate ag biotech center, a unique high-tech business incubator/greenhouse complex being planned in Durham.

Even with so much activity, North Carolina is dealing with the same challenges as other biotech clusters in the U.S. and around the world:

Funding: Our startup companies, like those across the nation, report early-stage funding is the biggest barrier to developing their technologies. In North Carolina, universities may get initial grant money to spin out a company from the Biotechnology Center. The Center's low-interest loan programs provide funding for the research and growth phases of companies with few other funding options. Overall, though, all state bioscience organizations know that capital in the $5 million range is difficult to find. The North Carolina Treasurer set aside a small percentage of the state's pension funds to invest in venture capital funds that in turn invest in innovative life-science companies. This helps address part of the gap, but it is not nearly enough to fund all the good ideas out there.

Talent: Too often, life-science companies have to put new hires through extensive training to bring them up to speed on the company's specific technologies. Often, the classroom training of new hires doesn't represent the industry standard. North Carolina's educators and industry leaders got together to solve that problem, creating the NCBioImpact training consortium. This partnership delivers training from certificate through Ph.D. via three training partners. One site for training — the Golden LEAF Biomanufacturing Training and Education Center at North Carolina State University in Raleigh — provides a hands-on, pilot-scale environment for university, community-college and professional-development students to learn. This success in the biomanufacturing sector should be replicated in research and development, clinical research, and other areas that require field-specific training.

Changing environment: Mergers, acquisitions, and patent expirations are changing the way traditional pharmaceutical companies operate. Ongoing changes at the Food and Drug Administration continue to streamline its regulatory process. However, companies and investors continue to report this is a significant barrier. The only thing that is predictable in this environment is change. We have to be constantly on the lookout for new ideas, and we have to be even more creative in how we pool resources to implement those ideas.

Three decades ago, North Carolina started its biotechnology industry nearly from scratch. We've worked together over those years to build the right programs to fill the gaps that typically occur when research becomes business, and businesses hire workers.

This systematic and collaborative approach has created a thriving industry with 530 companies and 57,000-plus employees. We're the second fastest-growing of the top biotech clusters — 29.1 percent from 2001 to 2008. The collective impact of this growth and activity is $64.6 billion annually on the state's economy.

North Carolina, like many states, continues to invest in this emerging industry. For the last 12 to 15 years, the state has funneled on average at least $100 million per year to life-science research, education, infrastructure and job creation. Our costs of doing business still run well below those of other major life-science clusters. We're consistently ranked among the best business climates in the nation by Forbes, CNBC, Chief Executive and, yes, Site Selection.

It's that unique combination of critical mass and collaborative spirit that gives North Carolina the complete package for success in the life sciences. Our challenge is to keep one eye on the future while we take advantage of the opportunities that life science presents, this year and in the coming decades.


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