Industry all grown up and has places to go; 30th
anniversary of modern biotech sees firms ready to profit
Jon Van, Tribune staff reporter
9 April 2006
Copyright 2006, Chicago Tribune. All Rights Reserved.
As the global biotechnology industry gathers at Chicago's
McCormick Place on its 30th birthday Sunday, it celebrates
passage from raucous adolescence to stable maturity.
Long plagued by boom and bust investment cycles and oceans
of red ink, publicly held biotech companies have entered
calmer times, an Ernst & Young analysis asserts.
Collective revenues of the world's biotech companies
jumped 18 percent last year, reaching $63 billion. While
they collectively still spend more than they take in,
they are close to breaking even.
Modern biotech, which dates its birth to the founding
of Genentech in April 1976, grew out of academic research
and has mostly focused on devising new medical therapies
and diagnostic tools, said Donn Szaro, lead author of
the Ernst & Young study.
Health care is highly regulated, and it can take a decade
or longer for a promising lab result to make its way to
market, Szaro said. In the past 30 years biotech firms
have launched so many ideas that they now have more product
candidates in their pipelines than the traditional pharmaceutical
industry, Szaro noted.
While companies based in California and on the East Coast
have dominated biotech, other areas in North America and
around the world are making their presence felt.
"There's a lot of biotech in Chicago and the Midwest,"
said Szaro, "and they'll be coming out of the woodwork
onto the trade show floor [at McCormick Place]."
Landing BIO2006 in Chicago for its first Midwestern appearance
is considered a coup. Politicians and business leaders
tout biotech because of its economic attractiveness.
A Battelle study to be unveiled at BIO2006 notes that
the average bioscience worker in the United States earned
almost $66,000 in 2004, more than $26,000 greater than
the average private-sector wage. The study also suggests
that the nation's 1.2 million bioscience jobs generate
an additional 5.8 million jobs.
Jim Greenwood, executive director of the Biotechnology
Industry Organization, which is staging BIO2006, said
that it's not unrealistic for regions around the country
to aspire to become biotech hot spots.
"Unlike other industries, biotech isn't a zero-sum
game," Greenwood said. "If one community lures
a new automotive plant, that means another community loses
it. But with biotech, you can grow your own ideas among
academic researchers and invest in new companies to commercialize
them. No one loses."
Simple to say but not easily executed. Because of their
past successes, biotech clusters along the coasts have
plenty of investors eager to back new companies, but that's
not true in the Midwest.
"Geography does make a difference," said Joe
Shaw, chief executive of OpGen, a firm based in Madison,
Wis., that provides optical DNA identification as a service
business. OpGen will be at BIO2006 to launch the next
stage of its business which will provide equipment enabling
hospital labs to optically scan DNA.
Using this technology, hospitals should be able to identify
an infection source within hours rather than days, said
Shaw. The company seeks $15 million to move to this new
"There's a hesitancy of investors to look at opportunities
outside their geographic area," Shaw said. "I've
heard people in Boston and New York say they'd invest,
but they won't because of where we're located."
A major investor in OpGen is the Milwaukee-based Mason
Wells Biomedical fund, which raised $50 million from foundations,
pension funds and investors. Daniel Broderick, the fund's
managing director, said Mason Wells focuses on Midwestern
"There's a lot more money now available in the Midwest
than there was five years ago," he said. "I
know of 10 to 15 venture capital funds that have raised
money in that time."
Taken as a whole, the Midwest has as many biotech companies
as the San Francisco region, said Robert "Al"
Beardsley, chief executive of Kereos, a St. Louis-based
"There's a good amount of Midwest biotech, but you're
drawing a circle almost 1,000 miles in diameter,"
Beardsley said. "In San Francisco, the circle is
50 miles. So there people keep seeing each other at meetings
and seminars. Here, you're just not rubbing elbows as
Pat Morand, managing director of the Southwest Michigan
Life Science Fund, which started last year and has raised
$50 million, said there's no shortage of attractive biotech
ideas in the Midwest. He's looked at 120 opportunities
and is seriously considering putting money into four.
"Every day I come across new interesting companies,"
Many entrepreneurs view BIO2006 as a platform for launching
new ventures. Dr. Eric Bremmer, a researcher at Children's
Memorial Hospital in Chicago, timed a business launch
to coincide with the trade show.
Bremmer and several colleagues have years of experience
using automated DNA sequencing in their research. They
will launch Precision Biomarker Resources, a company based
in Evanston that will provide these services to other
Because the technology can be tricky to use, and interpreting
the results is often difficult, many scientists should
be pleased to pay someone else to do that work so they
can concentrate on their core research, Bremmer said.
There are perhaps 10 companies already established to
provide such services but none in the Midwest, he said.
"We'll sell to the national and international markets,"
he said. "But this is also a way to build up the
biotech infrastructure in the Midwest. We'll put a lot
of effort into serving the Midwest. It's a forgotten region,
to an extent."