As these economic development deals grow in size--the combined state- county package for Scripps is worth more than half a billion dollars-- so too grows the risk that a deal will fall short of expectations. State and local governments see biotech as the Next Big Thing--a high- growth industry producing everything from better medicines to better crops. But it is also a notoriously hit-or-miss business. Companies may need a decade or more to turn a profit--if they ever do--but state or local governments think they have to buy in to the pre-performance hype.
In Florida, for instance, Palm Beach County is spending $200 million to purchase the land and build Scripps its research facility, while the state is paying $310 million for the institute's first seven years of operating costs at the site. In exchange, San Diego-based Scripps, famous for its research on cancer and other diseases, has promised to hire at least 545 professors, scientists and administrative workers. Governor Jeb Bush claims that start-up businesses spinning off from Scripps research, combined with pharmaceutical companies who will want to locate nearby, will add 50,000 jobs and $3.2 billion to Florida's economy in 15 years.
Other states also are making big biotech bets, with similarly rosy predictions of job growth. Arizona put $120 million of public and private funds into luring the International Genomics Consortium to Phoenix and is selling more than $400 million in bonds to fund research facilities at state universities. Pennsylvania and Michigan are investing large chunks of their shares of the tobacco settlement in biotech research, and New Jersey last year launched a $10 million venture capital fund for life science start-up companies.
The push will continue in legislatures this year. An advisory group to Washington Governor Gary Locke suggested in January that the state invest $250 million in biotech research. Minnesota Governor Tim Pawlenty wants to boost research funding at the University of Minnesota and the Mayo Clinic. And in Kansas, lawmakers are considering a request to put aside $500 million over 10 years to fund bioscience research at state universities and to set up a state authority charged with the responsibility of commercializing that research. "The 'rob thy neighbor' approach to economic development doesn't work," says Kansas state Representative Kenny Wilk, the bill's sponsor. "This is about growing our own entrepreneurs at home."
But emulating the successes of the three undisputed biotech capitals- -Boston, San Francisco and San Diego--may be elusive. "People think biotech is like Krispy Kreme doughnuts," says Joe Cortright, an economist who studied state biotech initiatives for the Brookings Institution. "They think it started in one part of the country but some day will be everywhere." Cortright suggests that the established biotech centers will only grow more concentrated, to the dismay of biotech wannabes. They have the hard-to-find ingredients, such as a base of entrepreneurial scientists and investors who understand the complexities of biotechnology. "The easy part is supporting research," he says. "The hard part is translating that research into companies."
