Florida's bidding high for biotech
Florida offered about $1-million for each job a research institution would bring here. Some wonder if it can pay off.
By SYDNEY P. FREEDBERG
Published October 2, 2006
In October 2003, state and local governments promised $510-million to lure southern California's Scripps Research Institute to Palm Beach County with 545 jobs. That's about $935,000 for each job.
In August, they pledged $310-million for the Burnham Institute for Medical Research to open a branch in Orlando with 300 employees. Estimated cost per job: $1,033,000.
And Tuesday, they sealed a deal to bring Torrey Pines Institute for Molecular Studies to Port St. Lucie with 189 jobs. Estimated cost: $90-million, or about $476,000 per job.
Sound like a wise investment?
The pricey deals are part of Gov. Jeb Bush's moves to outbid 40 states and other countries for a chunk of the biotechnology industry - the companies that crossbreed species and modify crops to make them stronger and create drugs to cure diseases ranging from cancer to bird flu.
Cash. Land. Free rent. Roads. Utility hookups. Salaries. Tax breaks. Florida and its local government partners have dangled at least $1-billion in incentives - among the most state and local money ever offered to recruit a select group of businesses.
Florida hopes the biotech push will pay off with an explosion of high-wage jobs, tax revenue and lucrative products that will not only transform the state's economy but improve the health of people around the world.
"This is a once-in-a-lifetime opportunity to build an economic engine with the power to drive this state forward," Bush said in promoting the deal to bring Scripps to South Florida three years ago.
He likened biotech's potential impact on Florida to the coming of the railroad, the invention of air conditioning and the arrival of Disney World.
But what will the final price tag be? And is it worth it?
A draft of a report commissioned by the state suggests that Florida will have to spend a lot more money - in tax breaks, job training and other benefits - to make the biotech big leagues.
Some experts cast Florida as a long-shot bet.
"The new game in town is telling governors and mayors if they invest enough in medical research, the economic bonanza of biotech will be theirs," said Joseph Cortright, an economist who co-wrote a 2002 report on governors' and mayors' efforts to woo the industry. But "it's an extraordinarily risky industry ... like buying lottery tickets."
When Florida joined the biotech bidding war in 2003, Gov. Bush said the state's $310-million (plus interest on unspent state funds plus Palm Beach County's $200-million) would generate thousands and thousands of jobs.
In seven years, he told the Legislature, Scripps would have helped create 2,741 jobs here. In 15 years, the number would rise to 6,466 with a "biotech cluster strong enough to create an additional 44,293 jobs, bringing the total impact of the Scripps presence in Florida to 50,759 new jobs."
All those jobs would generate $1.6-billion in additional income for Floridians, he said. And the company would eventually repay up to $155-million to the state.
But some economists say the job forecast is inflated. The financial benefits may never compare to the money paid by Florida's taxpayers.
Biotechnology is "probably the most expensive way to create jobs that you can imagine," said Cortright, who worked on the 2002 report for the Brookings Institution.
Bush said recently that judging the $310-million Burnham deal based on 300 jobs is shortsighted.
"The whole point of this isn't related to the 300 jobs," the governor said. "It's related to an economic cluster (of related firms) that will diversify the economy of Central Florida."
In 10 or 15 years, Bush hopes the state will duplicate La Jolla, Calif., where the three biomedical companies are based: a dense cluster of research centers, profitable biotech companies, pharmaceutical firms and hospitals - each an engine for high-paying, high-skilled jobs.
But some say those projections may be overly optimistic.
For starters, biotech remains a money-losing industry.
More than 4,000 biotech companies have been created in the past 25 years, but even industry boosters acknowledge that only about one in 20 becomes profitable.
Only one in 1,000 patented inventions becomes a commercial success.
And, typically, it takes a decade and $1-billion to develop a drug that wins Food and Drug Administration approval.
According to Cortright, most biotech firms remain concentrated in San Francisco and Boston, where they do research near prestigious academic centers Stanford, Harvard and MIT.
"Imagine being a brilliant biochemist," Cortright said. "Are you going to go to a place that until recently never had a medical school, no venture capitalists, no peers, and the question answers itself. The top-notch people will be drawn to where there's buzz."
The governor's Office of Tourism, Trade and Economic Development says the Brookings report is out of date.
"When you consider that California, Massachusetts and others have been in the life sciences arena quite a number of years longer than Florida, it is not surprising that they are ahead of the Sunshine State in some areas," Scott Openshaw, a spokesman for the trade office, said in an e-mail.
"But that's really not the point; in many ways Florida is not in competition with those other states. Florida's only competition is itself - finding a way to remain focused and committed to the best Florida can be."
Last year, state officials agreed to pay $237,500 to the Milken Institute, a consulting firm in Santa Monica, Calif., to examine Florida's biotech potential.
The study is not complete, and Milken officials declined to discuss it. But material prepared by Milken and the draft of a report show that Florida lags five leading biotech states (including California and Massachusetts) and struggles to keep pace with five wanna-be states (including North Carolina).
While Florida has a business-friendly environment and some strong cards to play, the report says, the state also gets weak scores in key measures:
Its biotech workers are paid well below the national average. Its research funding trails leading states. And Florida ranks poorly in numbers of degrees awarded in life sciences.
Among other missing ingredients cited in the study: a large pool of private funds to help startup firms, a "sufficiently strong" university system and enough adequately trained workers.
"The result is a work force not ready to go," the draft of the report says. "There remains a structural deficiency in long-term funding and development of the life sciences as a whole throughout the state."
State officials question some of Milken's statistics and findings. Florida's emerging biotech hub already has made big strides, they say.
In 2006 alone, Openshaw notes, the governor and Legislature approved $295-million to recruit scientists and companies, beef up university research programs and foster Florida's position as a biotech hub.
Said Openshaw: "Florida has all the resources: a robust economy, skilled work force, significant pools of private wealth and private capital waiting to be invested and a university system (including top-notch research and development) that rivals any state in the nation."
[Last modified October 2, 2006, 01:31:36]
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