March 6, 2006
The DNA of an industry | Maine has the building blocks of a biotech sector, but what would it take to make it a significant part of the economy?
By Jeffrey Bouley
When Idexx Laboratories first planted roots in Maine in 1984, it had a small waterfront location in Portland and fewer than a dozen staffers. Fast forward to 2006, and you'll see 1,200 employees at the company's Westbrook headquarters and nearby satellite office, along with another 2,800 employees spread out in 17 states and 13 countries. Last year, Idexx's annual revenues approached $640 million.
So when the company recently reached capacity in its Westbrook location and started weighing options for expansion, more than a few hearts started beating fast at the unwelcome prospect of the company pulling up stakes for another state. The thought crossed the minds of Idexx's leaders, too ˆ something they made no secret of ˆ and the future of one of Maine's biggest biotech successes was none too clear.
In mid-January, though, Idexx headed off metaphorical heart attacks with news that it was planning to invest more than $100 million in facilities and equipment in Westbrook over a 20-year period, and to add as many as 500 employees in Maine over the next five years. The expansion, company and state and local officials were eager to point out, represents a commitment to be part of the Maine's economic growth. "We have a fabulous portfolio of products in our pipeline, and we look forward to doing our part in advancing biotech in the state," says Laurel LaBauve, corporate vice president for worldwide operations at Idexx.
A developer and manufacturer of veterinary, food and water testing products, Idexx is a significant player in the biotech world. But just as being home to L.L. Bean doesn't make Maine a global power in the apparel and sporting goods industries, being part of Idexx's worldwide success doesn't make Maine a major player in the biotech industry.
For most people in the United States, biotechnology conjures places like Boston, San Francisco and San Diego. Of the nine metropolitan areas that are considered biotechnology centers, the closest to Maine aside from Boston are New York and Philadelphia. Bring up Maine in a business conversation, and people still are more likely to think lobsters, blueberries, potatoes and tourism.
But while it may not be a globally recognized biotech player, Maine does have a respectable showing for a small state, with about 80 biotech companies, including The Jackson Laboratory in Bar Harbor, a non-profit genetic research institution that employs 1,300 people, and Portland-based ImmuCell, which is the only other biotech company in the state that shares Idexx's distinction of being publicly traded.
No one is predicting Maine will edge out the major biotech centers anytime soon, but there is a growing sense that biotech should be an important part of Maine's economic future. And while some local observers see developments like the Idexx expansion as proof of the concept, Maine's biotech industry still has significant hurdles to overcome, from a lack of scientific degree programs to recruitment challenges. "I think the outlook for biotech in the state is quite positive," says Janet Yancey-Wrona, director of Maine's Office of Innovation.
"Although one of the many things we have to do is make stronger connections between industry and research. Where our companies are strong are areas that are not necessarily aligned with our research strengths, and we really want to open up communication between those two sectors." (See "Research driven," cover.)
Missing ingredients
So, what is holding Maine back from greater things in the biotech industry? As the report "Signs of Life: The Growth of Biotechnology Centers in the U.S." notes, the nine top biotech regions are leaders because they have two necessary elements for industry growth: strong research capacity and the ability to convert research into successful commercial activity.
But biotech research institutes are in short supply here, with the Gulf of Maine Research Institute, the Foundation for Blood Research, the Maine Medical Center Research Institute, Mount Desert Island Biological Laboratory and The Jackson Lab representing the most notable centers. With few major institutions, Maine cannot compete head-to-head with a much more research-laden state like Massachusetts, which has 10 research institutions that are among the the top 100 recipients of National Institutes of Health financing.
Another critical factor in the development of a major biotechnology industry is the availability of private-sector investment in product development, notes Joseph Cortright, an economist with Portland, Ore.-based consulting firm Impresa Inc. and co-author of the "Signs of Life" report, released by The Brookings Institution in 2002. As Cortright points out, most biotech firms operate at a loss, spending a great deal of money on research and development for several years in advance of meaningful revenues. Such companies depend heavily on venture capital investments, on sales of their company stock in public markets, on research contracts and on equity investments from large pharmaceutical companies ˆ usually granted in exchange for marketing rights.
Most companies in Maine, though, are small, private firms that don't have stock to trade. "When you look at this area, only two biotech companies are publicly traded," says Michael Brigham, president and CEO of Portland-based ImmuCell, which provides biotech products related to cattle. "It's a story of big versus small, with Idexx being the one massive company and then [Maine having] lots of smaller ones. We have $4 million in revenues and 28 employees compared to Idexx's 3,000 people."
As for venture capital, it does exist and has been helpful in giving biotech startups ˆ including Chemogen of South Portland in 2004 and Stillwater Scientific Instruments of Orono in 2005 ˆ a financial boost. But venture capital opportunities are limited in Maine. Government funding, particularly from the state, has helped make up some of the investment gap, Brigham says, but biotech firms in Maine may be relying too much on that kind of money. He says many of the smaller companies need to become more commercially oriented and move from research to marketing products and services that will add money to their coffers.
Despite the negatives, the biotech community here is more vibrant than one would expect for a state this size that has traditionally focused on lower-tech industries, says Charles Colgan, a public policy professor at the Muskie School of Public Service. While there is limited research showing how the state stacks up against larger biotech centers when you adjust for population and other factors, Colgan does believe Maine has a leg up in the biotech sector compared to many small states, thanks to a consistent presence of biotech companies going back a few decades. "As of five years ago when we last studied this, we found that virtually all of the biotechs in Portland, for example, were directly or indirectly descended from Ventrex Labs, which started in the '70s in Portland and then got bought up by a company in California," Colgan recalls.
All of Ventrex's operations were transferred to California in the early 1990s, but many of its people stayed in the Portland area to start their own companies, Colgan notes. Idexx and Scarborough-based Binax, for example, trace their origins to Ventrex, he says. "It's quite remarkable how that one company and its peculiar circumstances 30 years ago gave rise to a pretty successful and diverse sector," says Colgan.
Sweetening the pot
To overcome the state's disadvantages, some biotech backers in Maine are working to play up a few of Maine's advantages for startups or company relocations and expansions. Nelle Hanig, a business development representative with Portland's Economic Development Division who is studying ways to boost that city's biotech cluster, sees Portland with benefits over larger metropolitan areas because of lower costs for commercial space and housing, and less traffic and crime ˆ all within two hours of Boston.
"At this point, the cluster of biotech companies in greater Portland is small compared to what's in Boston, but the possibility of pulling talent from that area, partnering with Boston-based companies on projects and otherwise tapping the potential of such a nearby resource bodes well for growing the biotech industry in southern Maine, in greater Portland and potentially the whole state," says Hanig.
But quality of life issues aren't sufficient on their own to attract and grow the biotech industry. One of the keys to attracting more business is giving companies someplace to settle. Portland is developing a six-lot industrial park just off the Maine Turnpike focused on attracting biotech companies. Also, a business-industrial park on Riverside Street in Portland that is home to one biotech company, SolidPhase, and soon to be home to second, Bioprocessing Inc., could become another biotech cluster, say Hanig and Jack Lufkin, director of Portland's Economic Development Division. "It's part of creating a range of opportunities for biotech companies to come to Portland," Lufkin says.
Portland isn't the last word in potential Maine biotech clusters. The Teague Biotechnology Center of Maine in Fairfield, for example, is still in the fledgling stages of its mission to attract biotech companies to central Maine. It currently rents space to The Jackson Laboratory, as well as being home to a company called Pharmacom, which identifies molecular, subcellular and cellular targets for biotech purposes. The center also provides office space for biosciences company P2TECH, based in Portland, Ore., which provides technical, analytical and research services to biotech companies and medical research labs.
The goal of creating biotech clusters in Maine is to create the opportunity of collaboration between companies, industry experts say. But creating a cluster also helps companies with recruitment efforts. "A lot of times when we recruit someone in the sciences, they have a working spouse who is also in the sciences, and it's important that if they relocate to Maine that both partners have job opportunities," notes Dr. Tony DiMarco, a division vice president in research and development for Idexx.
Also, having opportunities for people to move to other companies as they advance through their careers is important, notes ImmuCell's Brigham. "People often like living here once you recruit them to Maine, but you have to get them here first," Brigham says. "And if a candidate doesn't see that they have six or seven or more good companies they can jump to if it doesn't work out at your company, they are less likely to want to come here to begin with."
The lack of a large, visible biotech cluster is something The Jackson Laboratory has struggled with. Chuck Hewett, Jackson Lab's chief operating officer, says Bar Harbor doesn't have many nearby biotech firms, but it does have its own sort of sciences cluster, consisting of Eastern Maine Medical Center, the University of Maine and Mount Desert Island Biological Laboratories. This group helps create research synergies, he says, but he still faces recruitment challenges. "It's tough when someone expresses excitement about moving here and then the spouse says, 'What am I going to do within 50 miles of Jackson Lab in terms of work?'"
Colgan adds that educational efforts have to go hand-in-hand with aggressive recruitment, so that there is a good base of local skilled workers. "In the long term, the secret for the industry's growth is going to be workforce, workforce, workforce," Colgan says. "Recruitment is part of that, but you also need to be able to draw people in locally."
Developing homegrown scientists has been a problem, notes Colgan. Currently only the University of Maine is a Ph.D.-granting institution, with the University of Southern Maine offering one master's program in biological sciences. Educational institutions are starting to address the situation, though. The University of New England is working to develop a pharmacy school, and the University of Maine recently announced its plan for a graduate school of biomedical sciences, offering a doctoral degree in biomedical sciences with concentrations in molecular and cellular biology, neuroscience, biomedical engineering, and functional genomics. But the school will likely only have 15 students in its first year, which begins this fall, and will probably need a few years to get to 60 students.
As in the education field, recognition of Maine's biotech potential ˆ and the challenges the sector faces ˆ extends through state government and the private sector. But even as those groups look for ways to enhance Maine's biotech industry, no one is predicting quick success or quick fixes to problems that hold the state back. "We have a long way to go in Maine to be more than just the sum of our parts," Hewett says.
So when the company recently reached capacity in its Westbrook location and started weighing options for expansion, more than a few hearts started beating fast at the unwelcome prospect of the company pulling up stakes for another state. The thought crossed the minds of Idexx's leaders, too ˆ something they made no secret of ˆ and the future of one of Maine's biggest biotech successes was none too clear.
In mid-January, though, Idexx headed off metaphorical heart attacks with news that it was planning to invest more than $100 million in facilities and equipment in Westbrook over a 20-year period, and to add as many as 500 employees in Maine over the next five years. The expansion, company and state and local officials were eager to point out, represents a commitment to be part of the Maine's economic growth. "We have a fabulous portfolio of products in our pipeline, and we look forward to doing our part in advancing biotech in the state," says Laurel LaBauve, corporate vice president for worldwide operations at Idexx.
A developer and manufacturer of veterinary, food and water testing products, Idexx is a significant player in the biotech world. But just as being home to L.L. Bean doesn't make Maine a global power in the apparel and sporting goods industries, being part of Idexx's worldwide success doesn't make Maine a major player in the biotech industry.
For most people in the United States, biotechnology conjures places like Boston, San Francisco and San Diego. Of the nine metropolitan areas that are considered biotechnology centers, the closest to Maine aside from Boston are New York and Philadelphia. Bring up Maine in a business conversation, and people still are more likely to think lobsters, blueberries, potatoes and tourism.
But while it may not be a globally recognized biotech player, Maine does have a respectable showing for a small state, with about 80 biotech companies, including The Jackson Laboratory in Bar Harbor, a non-profit genetic research institution that employs 1,300 people, and Portland-based ImmuCell, which is the only other biotech company in the state that shares Idexx's distinction of being publicly traded.
No one is predicting Maine will edge out the major biotech centers anytime soon, but there is a growing sense that biotech should be an important part of Maine's economic future. And while some local observers see developments like the Idexx expansion as proof of the concept, Maine's biotech industry still has significant hurdles to overcome, from a lack of scientific degree programs to recruitment challenges. "I think the outlook for biotech in the state is quite positive," says Janet Yancey-Wrona, director of Maine's Office of Innovation.
"Although one of the many things we have to do is make stronger connections between industry and research. Where our companies are strong are areas that are not necessarily aligned with our research strengths, and we really want to open up communication between those two sectors." (See "Research driven," cover.)
Missing ingredients
So, what is holding Maine back from greater things in the biotech industry? As the report "Signs of Life: The Growth of Biotechnology Centers in the U.S." notes, the nine top biotech regions are leaders because they have two necessary elements for industry growth: strong research capacity and the ability to convert research into successful commercial activity.
But biotech research institutes are in short supply here, with the Gulf of Maine Research Institute, the Foundation for Blood Research, the Maine Medical Center Research Institute, Mount Desert Island Biological Laboratory and The Jackson Lab representing the most notable centers. With few major institutions, Maine cannot compete head-to-head with a much more research-laden state like Massachusetts, which has 10 research institutions that are among the the top 100 recipients of National Institutes of Health financing.
Another critical factor in the development of a major biotechnology industry is the availability of private-sector investment in product development, notes Joseph Cortright, an economist with Portland, Ore.-based consulting firm Impresa Inc. and co-author of the "Signs of Life" report, released by The Brookings Institution in 2002. As Cortright points out, most biotech firms operate at a loss, spending a great deal of money on research and development for several years in advance of meaningful revenues. Such companies depend heavily on venture capital investments, on sales of their company stock in public markets, on research contracts and on equity investments from large pharmaceutical companies ˆ usually granted in exchange for marketing rights.
Most companies in Maine, though, are small, private firms that don't have stock to trade. "When you look at this area, only two biotech companies are publicly traded," says Michael Brigham, president and CEO of Portland-based ImmuCell, which provides biotech products related to cattle. "It's a story of big versus small, with Idexx being the one massive company and then [Maine having] lots of smaller ones. We have $4 million in revenues and 28 employees compared to Idexx's 3,000 people."
As for venture capital, it does exist and has been helpful in giving biotech startups ˆ including Chemogen of South Portland in 2004 and Stillwater Scientific Instruments of Orono in 2005 ˆ a financial boost. But venture capital opportunities are limited in Maine. Government funding, particularly from the state, has helped make up some of the investment gap, Brigham says, but biotech firms in Maine may be relying too much on that kind of money. He says many of the smaller companies need to become more commercially oriented and move from research to marketing products and services that will add money to their coffers.
Despite the negatives, the biotech community here is more vibrant than one would expect for a state this size that has traditionally focused on lower-tech industries, says Charles Colgan, a public policy professor at the Muskie School of Public Service. While there is limited research showing how the state stacks up against larger biotech centers when you adjust for population and other factors, Colgan does believe Maine has a leg up in the biotech sector compared to many small states, thanks to a consistent presence of biotech companies going back a few decades. "As of five years ago when we last studied this, we found that virtually all of the biotechs in Portland, for example, were directly or indirectly descended from Ventrex Labs, which started in the '70s in Portland and then got bought up by a company in California," Colgan recalls.
All of Ventrex's operations were transferred to California in the early 1990s, but many of its people stayed in the Portland area to start their own companies, Colgan notes. Idexx and Scarborough-based Binax, for example, trace their origins to Ventrex, he says. "It's quite remarkable how that one company and its peculiar circumstances 30 years ago gave rise to a pretty successful and diverse sector," says Colgan.
Sweetening the pot
To overcome the state's disadvantages, some biotech backers in Maine are working to play up a few of Maine's advantages for startups or company relocations and expansions. Nelle Hanig, a business development representative with Portland's Economic Development Division who is studying ways to boost that city's biotech cluster, sees Portland with benefits over larger metropolitan areas because of lower costs for commercial space and housing, and less traffic and crime ˆ all within two hours of Boston.
"At this point, the cluster of biotech companies in greater Portland is small compared to what's in Boston, but the possibility of pulling talent from that area, partnering with Boston-based companies on projects and otherwise tapping the potential of such a nearby resource bodes well for growing the biotech industry in southern Maine, in greater Portland and potentially the whole state," says Hanig.
But quality of life issues aren't sufficient on their own to attract and grow the biotech industry. One of the keys to attracting more business is giving companies someplace to settle. Portland is developing a six-lot industrial park just off the Maine Turnpike focused on attracting biotech companies. Also, a business-industrial park on Riverside Street in Portland that is home to one biotech company, SolidPhase, and soon to be home to second, Bioprocessing Inc., could become another biotech cluster, say Hanig and Jack Lufkin, director of Portland's Economic Development Division. "It's part of creating a range of opportunities for biotech companies to come to Portland," Lufkin says.
Portland isn't the last word in potential Maine biotech clusters. The Teague Biotechnology Center of Maine in Fairfield, for example, is still in the fledgling stages of its mission to attract biotech companies to central Maine. It currently rents space to The Jackson Laboratory, as well as being home to a company called Pharmacom, which identifies molecular, subcellular and cellular targets for biotech purposes. The center also provides office space for biosciences company P2TECH, based in Portland, Ore., which provides technical, analytical and research services to biotech companies and medical research labs.
The goal of creating biotech clusters in Maine is to create the opportunity of collaboration between companies, industry experts say. But creating a cluster also helps companies with recruitment efforts. "A lot of times when we recruit someone in the sciences, they have a working spouse who is also in the sciences, and it's important that if they relocate to Maine that both partners have job opportunities," notes Dr. Tony DiMarco, a division vice president in research and development for Idexx.
Also, having opportunities for people to move to other companies as they advance through their careers is important, notes ImmuCell's Brigham. "People often like living here once you recruit them to Maine, but you have to get them here first," Brigham says. "And if a candidate doesn't see that they have six or seven or more good companies they can jump to if it doesn't work out at your company, they are less likely to want to come here to begin with."
The lack of a large, visible biotech cluster is something The Jackson Laboratory has struggled with. Chuck Hewett, Jackson Lab's chief operating officer, says Bar Harbor doesn't have many nearby biotech firms, but it does have its own sort of sciences cluster, consisting of Eastern Maine Medical Center, the University of Maine and Mount Desert Island Biological Laboratories. This group helps create research synergies, he says, but he still faces recruitment challenges. "It's tough when someone expresses excitement about moving here and then the spouse says, 'What am I going to do within 50 miles of Jackson Lab in terms of work?'"
Colgan adds that educational efforts have to go hand-in-hand with aggressive recruitment, so that there is a good base of local skilled workers. "In the long term, the secret for the industry's growth is going to be workforce, workforce, workforce," Colgan says. "Recruitment is part of that, but you also need to be able to draw people in locally."
Developing homegrown scientists has been a problem, notes Colgan. Currently only the University of Maine is a Ph.D.-granting institution, with the University of Southern Maine offering one master's program in biological sciences. Educational institutions are starting to address the situation, though. The University of New England is working to develop a pharmacy school, and the University of Maine recently announced its plan for a graduate school of biomedical sciences, offering a doctoral degree in biomedical sciences with concentrations in molecular and cellular biology, neuroscience, biomedical engineering, and functional genomics. But the school will likely only have 15 students in its first year, which begins this fall, and will probably need a few years to get to 60 students.
As in the education field, recognition of Maine's biotech potential ˆ and the challenges the sector faces ˆ extends through state government and the private sector. But even as those groups look for ways to enhance Maine's biotech industry, no one is predicting quick success or quick fixes to problems that hold the state back. "We have a long way to go in Maine to be more than just the sum of our parts," Hewett says.
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