Washington Editor

WASHINGTON - A government survey of firms working in the biotechnology industry revealed that the most common barriers to growth are the regulatory process, access to capital and intellectual property issues.

The U.S. Department of Commerce's technology office conducted a survey of 3,000 companies engaged in biotechnology-related activities for the purpose of increasing national policymakers' understanding of current development and use of biotechnology in the U.S. industries. Also, the survey was designed to help federal statistical agencies develop measurements of biotechnology-related economic activities.

In a press conference with congressional staff, government employees and reporters Thursday, Phillip Bond, the under secretary of commerce for technology, said the findings represent the first comprehensive report the government has commissioned on the industry.

Of the 3,000 respondents, government officials said 1,000 identified themselves as biotechnology companies, most of which employed fewer than 50 people. Specifically, 90 percent of the total reported fewer than 500 employees while one-quarter had 10 or fewer employees. About 59 percent had 50 or fewer employees.

Companies that did not describe themselves as biotechnology firms were those that create biotechnology products or research tools or use biotechnology processes in their manufacturing - either as one of several business lines or as their sole business.

Many respondents said growth in the industry is impeded by antiquated rules and regulations (identified by environmental firms) and public acceptance and ethical concerns (agricultural firms). More than one-third mentioned a lack of understanding or interest by policymakers and liability concerns.

Though the report helped the government identify some of the problems, Karen Laney-Cummings, acting director of the office of technology competitiveness, said the survey was not designed to reshape policy.

"For that, we would have to ask, What types of regulatory problems do you have?'" Laney-Cummings said.

Such specific questions likely would be the subject of future surveys.

Nevertheless, the study has provided some interesting information, she said. For example, patent issues - companies mentioned problems with patent fees and the complexity of laws associated with third-party intellectual property rights.

Also, according to the survey, there are more patents pending than issued. Firms reported more than 33,000 pending biotech-related patent applications, compared to 24,000 currently held.

The fastest-growing biotechnology-related technical occupation was research and development-focused computer specialists, a category that grew at an annual rate of 21.8 percent during 2000 to 2002. Firms said they hired those types of employees from abroad more often than any other category, but said foreign outsourcing of jobs is not common.

Smaller companies reported a pattern of research and development funding that more often included venture capital and angel investors. About 56 percent of respondents participated in some kind of government program and 34 percent participated in the Small Business Innovation Research program. About 10 percent of companies said they had a defense-related contract in the past five years.

Economically, the respondents' businesses were valued at at least $272.8 billion, or 2.7 percent of the gross domestic product in 2001.

In 2001, the respondents (in total) had more than 1.1 million employees, total annual net sales of about $567 billion, operating income of $100.5 billion, capital expenditures of $29.5 billion and R&D expenditures of $41.6 billion.

Companies also invested about twice as much in the biotechnology-related lines of business than in their business as a whole. For example, capital expenditures represented 12.4 percent of total net sales for the biotechnology lines, compared with 5.2 percent for all operations.

For a copy of the report, contact the U.S. Department of Commerce Technology Administration at (202) 482-3037, or visit the website at www.technology.gov.