WASHINGTON _ Although Wall Street bankers may be shuttingtheir doors in biotechnology executives' faces, state economicdevelopment agencies are bending over backwards to welcome them.And for companies grown accustomed to investors' cold shoulders, abear hug from a state governor can feel good.In the last six months, lawmakers in Washington, New Jersey andMaryland have passed bills friendly to biotechnology, offeringeverything from tax incentives to guaranteed loans. One recentlyratified Maryland law even exempts the energy used in biotechnologyclean rooms (a specialized manufacturing facility chamber) from thestate sales and use tax.The push is on among states to attract what many believe will be one ofthe key industries of the future.Carl Feldbaum, president of the Biotechnology Industry Organizationsaid that "economic enthusiasm" for biotechnology is rampant in states,regions and cities across the country. "The states are not fickle. They'renot looking toward next month, they're looking toward the next two orthree decades," he said.Maryland and North Carolina have been among the most aggressive incourting biotechnology companies. Maryland, which already has thefourth highest concentration of companies in the nation, boasts someformidable assets _ namely the FDA and National Institutes of Health(NIH).But the state has not rested on its natural resource laurels; it claims tobe the only state in the union with a "commercial biotechnologystrategy." One part of that strategy is the Enterprise Investment Fund,established by the state's General Assembly, to provide seed money tobiotechnology entrepreneurs. The state boasts no less than fiveincubators (university-affiliated business parks to nurture start-upcompanies).The Maryland Bioprocessing Center, a 58,000-square-footbiotechnology manufacturing scale-up facility, is being built in partwith a $16 million loan from the state. The center will be located on theBayview Research Campus of Johns Hopkins University on a five-acresite (worth $500,000) donated by the city of Baltimore.Designed to meet FDA current Good Manufacturing Practices,Maryland's bioprocessing center will contain four production units thatcan accommodate two clients a year. Each unit will have separate airhandling and quality assurance mechanisms. The idea is to providefledgling companies with a ready-made early-stage manufacturingfacility."We're not discouraged by Wall Street," Bill Badger, senior businessrepresentative in Maryland's Department of Economic andEmployment Development (DEED), told BioWorld. "The marketplacedecides who's up and who's down, but we're committed to being aplayer in this industry for the long haul."When the privately held, Cleveland firm Osiris Therapeutics Inc. wentscouting for a state to grow into, it chose Maryland. The company willrefurbish a facility in downtown Baltimore with the help of a $3million state bond for leasehold improvements. Although Osiris willstart with about 20 employees in Baltimore, the firm told TheBaltimore Sun it would grow to employ "several hundred within athree-year period" at the time the bond was announced. And jobgrowth like that warms the cockles of governors' hearts.Badger added that biotechnology companies have no trouble findingqualified employees in his state: the Washington-Baltimore-Annapoliscorridor has the highest concentration of scientists and engineers in thecountry.Feldbaum said that states are becoming ferociously competitive inattempting to attract companies at the critical stage when theytransition from a pure research and development operation to their firstmanufacturing facility."States are attempting to draw companies away from their birthplacesat that stage," Feldbaum said. "Companies are realizing they don't needthe manufacturing facility to be located across the street from theMassachusetts Institute of Technology or the University of Californiaat Berkeley. They realize they can build it in Raleigh-Durham, N.C.,instead."According to Steven Burke, vice president of external relations at theNorth Carolina Biotechnology Center, his state has adopted a uniquestrategy to appeal to biotechnology companies. The 14-year-oldprivate, non-profit center is funded by a "permanent line item" in thestate budget for the express purpose of promoting biotechnology. Itsaverage annual budget for the last ten years has been $8 million."North Carolina does not have a tradition of offering tangible financialincentives to companies, such as pre-paid buildings and taxabatements," Burke told BioWorld. "We work instead to create acomplete ambient environment that is supportive."Burke said a company that locates in North Carolina can expect thecenter to help arrange collaborations with universities, provide accessto the state's venture capitalists and government officials and trainingfor employees, and to ensure that regulations impacting the industry are"thoughtfully designed."Perhaps even more important, Burke said that his organization hasworked hard to educate and inform North Carolina residents aboutbiotechnology, minimizing the chance for unpredictable public moodswings that could obliterate projects like the field-testing of agenetically engineered plant.He also sees biotechnology as a potential replacement for industries,such as the tobacco, furniture and textile industries, that were oncemainstays of North Carolina's economy but are now in decline. Thetobacco industry, currently under assault in Congress for allegedlymanipulating the level of nicotine in cigarettes, could rise from theashes under one scenario offered by Burke."It's possible that biotechnology could be used to genetically engineertobacco plants to produce proteins that could be useful in makingpharmaceuticals," said Burke. In fact, one California company isalready testing that hypothesis in North Carolina's tobacco fields. Theyare able to do that, Burke is quick to point out, because NorthCarolina's 1990 Genetically Engineered Organisms Act is firmly inplace, creating that "ambient" regulatory atmosphere. n

-- Lisa Piercey Washington Editor

(c) 1997 American Health Consultants. All rights reserved.