Houston working to step up to the plate in biotech world

Houston Business Journal, by Al Massey

Houston, we may have a problem.

In spite of the more than $1 billion being pumped into funding life sciences and biotechnology research at the Texas Medical Center, The University of Texas M.D. Anderson Cancer Center and other Houston research facilities each year, the city has failed to take its rightful place as the preeminent leader in biotechnology.

"The skills and resources required to take good science or good technology in the medical Or scientific world and transfer it into a marketable product requires a huge investment, and an equally huge leap of faith," says Pamela M. Murphy, vice president of Houston based Texas Biotechnology Corp. "While Houston has always been world-class as a research center and in the treatment of patients - at the Texas Medical Center and M.D. Anderson for example - we have fallen short when it comes to transferring that technology into marketable products."

The city, home to the world''s largest medical center and posting the nation''s second largest medical research budget at $1.5 billion annually - compared to Boston''s $1.6 billion - lags behind 29 other states in developing a biotechnology industry. "For
Houston to take its place alongside other biotech centers like Boston or San Diego, we are going to have to educate local investors as to how the industry works and how it is developing," says Kenneth M. Williams, executive vice president of Prost Bank in Houston.

EXPLODING INDUSTRY

With the rapid deployment of the Internet, technology and information systems, biotechnology is no longer considered a fledging industry. The marriage of science and technology has resulted in what some call a new renaissance in the world of research.

The astounding growth of biotechnology is taking place on many different fronts. A quick read of the news shows the impact biotechnology is having on medical research and drug development. During the past decade, it has helped bring to market a vast array of new treatments for chronic diseases and ailments that were unthinkable just 10 years ago.

But Houston''s fledging biotechnology sector is still in its infancy when compared to those in Boston and San Diego where so-called "life science economic clusters" - including research facilities, investment capital, biotech corporations, business support services and a host of other factors - have combined to develop into a cohesive system.

Most, if not all, of these services, are present in
Houston, but so far the sector has been hampered by a lack of early stage development capital. And experienced life science business executives are in short supply.

"A great deal of the technology being developed in
Houston is licensed to the, East and West coasts," Williams says. "It''s not being turned in to for-profit companies here. For us to succeed in this industry, it is going to take entrepreneurs who are capable of understanding the risk inherent in the industry, along with knowledgeable venture capitalists."

In addition to the
Medical Center, the area is blessed with a great many facilities serving as incubators to growth, including the Houston Technology Center, Rice Alliance, Texas Healthcare and Bioscience Institute; the Greater Houston Partnership and the Biotechnology Industry Association.

But in order to bring biotechnology to the forefront, companies are being forced to adapt to a new mindset and grow from a research-centric organization to one focusing on the commercialization of a product.

This growing trend toward commercialization can be seen in Texas Biotechnology Corp.''s recent move to bring Dr. Bruce D. Given on board as president and CEO. An industry veteran, Given was brought on to help the company navigate the treacherous line between research and commerce.

"Gaining a foothold in biotechnology, you not only have to contend with the science and the risk that imposes on a company, you have to contend with the FDA, which in many respects is just as unpredictable," Given says.

Industry experts say it is this unpredictability, combined with a regulatory minefield, that is standing in the way of venture capital.

"The East and West coasts have venture capitalists capable of understanding biotechnology and the risk inherent in the industry and they are flourishing, while we are still playing catch-up," says Frost Bank''s Williams.

SOLUTION TO THE PROBLEM

Biotechnology, like most developing industries, grows most rapidly when regional dusters are available to provide the resources necessary to nurture their development. Development of regional economic dusters is usually a partnership between the public and private sectors of a community.

With plans for the $630 million, 64-acre
BioHouston Park project currently under way adjacent to the Texas Medical Center, and with the existing biotech infrastructure in The Woodlands, biotechnology could become a significant component of Houston''s economy and offer a source of much needed diversification.

For all of its advances, the industry reports that more than 325 million people worldwide have been helped by more than 130 biotechnology drugs and vaccines during the last few years. But there can be little doubt that the industry still has a long road ahead.

Of all the biotech medicines on the market today, more than 70 percent were approved in the last six years. There are more than 350 biotech drug products and vaccines currently in clinical trials targeting more than 200 diseases, including various cancers, Alzheimer''s, diabetes, AIDS, arthritis and multiple sclerosis.

A recent study conducted by McKinsey & Co. predicts the industry will spawn more than 50 new companies a year, a figure that is supported in a report titled "Delivering on Discovery" by London-based research firm AltAssets.

Chris Davison, head of research at AltAssets, believes the sector has been historically under-funded and that the 300 or so venture capital and private equity firms worldwide that currently invest significantly in biotech will grow to 350 over the next five years.

Biotechnology''s contributions to medicine and health care are growing rapidly, promising to increase human longevity and healthiness. To the extent that biotechnology results in new treatments for old ailments, people will become more productive over their lifetimes.

Dr. James T. Willerson, president of the UT Health Science Center, believes
Houston is well positioned to meet the challenge.

"The potential for biotechnology in
Houston, collaborating with the Texas Medical Center, is absolutely enormous," he says. "This is an opportune time and a wonderful place for this type of development to occur."

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