March 3, 2005
Can Seattle become a first-tier biotech hub?
By MICHAEL O'HARA
With hopes for bolstering and diversifying the local economy and the new jobs that go with it, a number of communities around the country are looking for ways to be viewed as a biotech cluster and then climb the rating ladder to become a top-ranked biotech center.
With state and federal backing, the Puget Sound region is well along this path. It is already one of the best areas in the country for pure research, thanks to the University of Washington, the Fred Hutchinson Cancer Research Center and other world-renowned research facilities. These institutes produce vast amounts of research, some of which has successfully migrated into new startup companies.
However, the region is still considered a second-tier biotech cluster, and is destined to remain so unless companies here can move to the critical next point getting to market with a viable drug. That's a struggle for most startups, but it's not until the region is in the business of producing drugs for market that the economic benefits of being a first-tier hub kick in.
It's a big step. Contrary to popular opinion, moving into manufacturing is not just about money, although money is a big factor. It also requires support from local government, the community and higher education. At the same time, biotech companies need to build trust that their research will not endanger the community or prospective patients, and that their products will benefit mankind.
Overcoming cash burdens
It can take many years for a startup to turn a good idea into a product that can be approved by the U.S. Food and Drug Administration for human consumption. The first few are spent refining basic research to the point where it makes sense to file a new drug application. Then companies move into process development, clinical trials and finally, drug or product manufacturing.
Because of the makeup of most biotech startups, these companies are good at research but not necessarily staffed for process development and beyond. At that point, the cash-burn rate for these companies increases significantly. The need to hire specialists in process development, construct facilities to scale up and produce clinical material and, finally, construct a facility to manufacture in quantities large enough to meet expected demand puts a tremendous financial burden on these companies.
One way to alleviate the burden is through what's called contract development and manufacturing, which provides for process development and the production of clinical material on a contract basis. By choosing a more affordable alternative to building their own facilities, more companies would be able to move a drug candidate forward, which in turn increases the chances of some companies becoming manufacturers, with all the economic benefits that would entail.
A contract facility provides the opportunity to advance product into manufacturing, on a company-by-company basis, at a fraction of the cost that each would spend to go it alone. While it still takes millions for each company to hire the expertise of a contract development and manufacturing facility, it costs far less than the traditional approach, and time-to-market is drastically reduced. This gives every company the ability to advance several drug candidates through the process instead of betting the farm on one. It also improves the odds that a promising drug will get a chance to improve or even save a life.
Gov. Christine Gregoire has proposed a $350 million Life Sciences Discovery Fund. While the fund is a welcome boost, discovery is not the only, or even the main hurdle for young biotech companies. We would like to suggest that some of these funds be used for constructing a contract development and manufacturing facility, either alone or in conjunction with private industry. A facility like this could be self-sufficient and continue to reinvest into the biotech community.
With or without the fund, the sector could use help from lawmakers at the state, city and county levels in providing a business environment that promotes the evolution from a research and development environment to the kind of manufacturing base that produces jobs and tax revenues. Tax breaks and/or incentives, zoning considerations, even partnership in contract manufacturing facilities are all ways that government helps bring about the transition.
Research institutes and biotech companies that work to the highest ethical standards, demonstrate practices that ensure the safety of the community and develop beneficial products will earn the support of the community.
In turn, a supportive community welcomes the research efforts of our universities and institutes and supports the efforts to turn this research into companies through financial, political and social avenues.
Local universities and community colleges need to provide the programs that graduate scientists, engineers, managers, technicians and other people who drive biotech companies.
In turn, the biotech companies must support the universities and community colleges in their efforts to turn out great candidates, working with these institutions to develop pertinent curriculum and strong internship programs. Companies that return resources, buildings and endowments upon their success foster ongoing cooperation and keep the cycle strong.
The Bay Area hitched its wagon to Genentech, the biotech star whose resources as the nation's first biotech company, and one of the largest, helped launch the sector's success and solidify that region's dominance.
With a coordinated effort that links government, community, higher-learning and private-sector entities, Washington can parallel the Genentech model without placing the burden of development on any single entity. While more complicated to orchestrate, this interconnected strategy would establish a reliable and sustainable path to helping more companies make the leap into biotech manufacturing.
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