January 12, 2010

By hammersmith

Amid declining economic conditions in 2008 and 2009, Arizona’s bioscience industry continued its rapid growth in high-paying jobs and firms, and the state achieved notable gains in implementing its long-term plan to develop a thriving bioscience sector.  

However, Arizona could not escape the lowering tide of federal research grants and venture-capital investments that has plagued bioscience regions throughout the nation.

These are among the findings of an annual performance review of Arizona’s bioscience initiative released today by the Battelle Technology Partnership Practice.  The Ohio-based nonprofit technology-management firm has been assessing Arizona’s bioscience progress since the launch of Arizona’s Bioscience Roadmap in 2002.

Jobs in Arizona’s bioscience industry grew by nearly 4,900, or 5.8 percent, to 89,674 in 2008, the latest year offering detailed employment statistics.  In contrast to this strong showing, Arizona’s overall private sector lost 3.2 percent of its positions during the same timeframe, as the global recession began to take hold. 

“It’s too early to gauge how Arizona will fare in 2009, though several of the state’s major bioscience employers—W.L. Gore, Covance, Ventana Medical Systems, and sanofi-aventis—had announced expansions,” said Walter Plosila, senior advisor to the Battelle Technology Partnership Practice.

From 2002-08, Arizona bioscience jobs grew by 31 percent, compared to 12 percent across the nation.  The average salary of bioscience jobs in Arizona reached $55,749 in 2008, 33 percent higher than the average Arizona private-sector wage.

Several notable developments occurred in 2009 that address recommendations outlined in Arizona’s Bioscience Roadmap, a comprehensive analysis and strategic plan developed by Battelle and commissioned by the Flinn Foundation.

New bioscience and technology incubators, which help early-stage firms to become self-sufficient, were launched in Chandler, Phoenix, and Surprise, while the Biodesign Institute at Arizona State University announced plans for its own accelerator.  The University of Arizona broke ground on a major bioscience park, and Flagstaff’s new incubator graduated its first major tenant.

A “fund of funds” was launched that will raise and manage up to $200 million for private venture-capital investments in early-stage bioscience and technology firms in Arizona.  And a host of achievements were made to expand STEM (science, technology, engineering, and math) education programs in Arizona’s schools.

Of the Roadmap’s 19 recommended action items, progress has been made on 17, including substantial progress on 11.

“Overall, Roadmap implementation advanced during the recessionary year of 2009,” Plosila said.  “However, several items are in jeopardy of backtracking during 2010 if budget cuts continue to the universities, state and local economic development programs, and Science Foundation Arizona.”

Total academic research and development expenditures at Arizona’s public universities reached a new high of $435 million in 2008, though Arizona saw its grant funding from the National Institutes of Health—the industry gold standard—drop by 10.1 percent to $157.6 million.  This mirrors a national decline of 9.5 percent.  

The preliminary NIH outlook for 2009 data is encouraging, based on an improved overall performance and $33 million already secured from federal stimulus research funds.  From 2002-08, Arizona’s NIH funding increased by 14 percent, outpacing the nation’s top-10 states at 10 percent.

Like the nation overall, Arizona saw its bioscience venture-capital investments substantially decline in 2009, the worst year since 2003.  Arizona bioscience firms secured five VC investments during the year totaling $16.4 million, down from $65 million in 2008.

The budget crisis faced by state and local governments presents another challenge, as public investment in research and education programs is threatened.

“It’s admittedly difficult to sustain investments in bad economic times,” Plosila said.  “States like Texas, Colorado, North Carolina, and Ohio are doing exactly that, though, and gaining a competitive advantage over other states as the recession eases.  Protecting investments will lead to long-term economic gains for Arizona.”

A Battelle study in early 2009 showed that Arizona’s bioscience sector has annual revenues of $12.5 billion, which in turn creates an additional $8.6 billion in economic activity in the state, and in total generates more than $765 million in state and local tax revenues.

“High-quality, well-paying jobs are imperative to a healthy future for Arizona, and to weathering economic downturns like the one we’re struggling through now,” said Jack Jewett, president and CEO of the Flinn Foundation.  “The Battelle data suggest that the biosciences offer great promise in meeting this need and helping to diversify Arizona’s future economy.  Arizona must prioritize efforts to build knowledge-based industries, including the biosciences, in order to compete in the global economy.”

The Flinn Foundation is a Phoenix-based, private, nonprofit philanthropic endowment.  It was established by Dr. and Mrs. Robert S. Flinn in 1965 with the mission of improving the quality of life in Arizona.  The nonprofit philanthropy supports the advancement of Arizona’s bioscience sector, the Flinn Scholars Program, and the Metro Phoenix Partnership for Arts and Culture.

For more information:

Arizona’s Bioscience Roadmap: Performance Assessment 2002-2009,” Walter H. Plosila, Battelle Technology Partnership Practice, 01/2010

Overcoming Obstacles: 2009 Progress on Arizona’s Bioscience Roadmap,” Flinn Foundation, 01/2010