Final Word: Is Building Biotech an Economic Magic Potion?

Virtually every corner of the United States (not to mention the rest of the world) seeks to build a powerful biotech presence (see www.bio.org/local/). Since the dawn of biotechnology in the mid 1970s, private venture capital, major corporations, and state and federal governments have poured hundreds of billions of dollars into the industry. Results have been mixed, in terms of benefits to local economies and products that reached the marketplace.

K. John Morrow, Jr.

When we look at the industry's growth, region by region, we can conclude that the biosciences are perhaps the most dynamic component of the US economy. In 2006, there were 1.2 million, employees, with average pay $26,000 higher than that of the overall average US salary. Real growth in pay, when corrected for inflation, has been substantially higher than that of the national average. With the multiplier effect, the total impact on the economy was 7.1 million jobs.

State initiatives to support biosciences vary greatly, but many are well-conceived, well-funded, and designed to play on regional strengths, such as marine biology in Maine, biofuel research in Iowa, and plant biotechnology in St. Louis. North Carolina's biomanufacturing training and education program is the largest and possibly the best coordinated in the nation.

Despite these impressive accomplishments, the growth of the bioscience job base in no way matches the loss of traditional manufacturing jobs. According to the Economic Policy Institute (EPI), some 3.1 million manufacturing jobs disappeared in the US between 2000 and 2006, almost double the total number of bioscience employees at the end of this period.

The impact of bioscience on the overall US labor force (145,000,000) is small. If biosciences represent only 1% of the total number of jobs, it can never make a substantial impact on the overall employment picture.

Another sobering point is that despite a commitment to high-tech economic development that stretches back to the 1950s, and a robust involvement in education since the early 1980s, North Carolina's per capita median income is still below the national average ($39,000 vs $44,000 in 2004). Because of the years required to assemble the bricks and mortar and the decades demanded for the implementation of educational programs, it will be years before even the best formulated high-tech initiative will begin to have an impact on a transitioning economy.

Yet there is really no other choice, as every year farming, commodity production, and traditional manufacturing are hammered again and again. Regardless of the consequences, governments are driven to push technology as the only escape from their economic impasse.

One might argue that even if bioscience is not the magic elixir we would hope it to be, in a broad sense, high-tech development contributes to overall quality of life through improving education and funding community resources. While such arguments may carry appeal when one is preaching to the choir, they don't carry much weight with the guys wearing the green eyeshades.

If we look at the broadest economic picture internationally, it is clear that the most successful national economies are those that pour their resources into R&D. Israel, Finland, and Sweden are the world's top three investors in R&D (at 7%, 4.27%, and 3.51% of GNP, respectively), and all three have booming economies. Investment in high tech in general and biotech in particular has to be viewed as long-term and part of an overall economic development plan.

So politicians and economic planners who commit to building a booming biosciences sector can rest secure in the knowledge that they are constructing a bright future for their children, or if not for them, certainly for their grandchildren.

K. John Morrow, Jr., is president of Newport Biotech, Newport, KY, 513.237.3303, KJohnMorrowJr@Insightbb.com He is also a member of BioPharm International's editorial advisory board.