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Betting on biotech: Greenwood leads S.C. into the life science business

Submitted by: John Warner on Mar 16, 2003 at 6:00 am Tagged with: General Archives Source:

Swamp Fox

Betting on biotech: Greenwood leads S.C. into the life science business
Posted Friday, March 14, 2003 - 10:00 pm

By Rudolph Bell
The Greenville News
BUSINESS WRITER
dbell@greenvillenews.com

GREENWOOD --- During his first 12 years as economic development director for
Greenwood County, Peter Arnoti helped land nearly 4,700 new manufacturing jobs.
His successes during that time included the recruiting of Fuji Photo Film Inc.,
which opened its first U.S. plant in Greenwood in 1989 and today employs 1,600
in the county.
Even so, five years ago, Arnoti came to a sobering realization: Greenwood was
losing as many manufacturing jobs as it was gaining, and many of the losses had
nothing to do with the long-term decline in the textile industry.
It was a wakeup call for Arnoti and his board, and they resolved to take a
different tack. They drew up a plan to add a layer of high-tech jobs to
Greenwood's traditional manufacturing base --- specifically, to foster biotech
startup companies by leveraging cutting-edge research at the Greenwood Genetic
Center.
Scientists at the nonprofit genetic center --- founded 29 years ago to fight
mental retardation and birth defects --- have made breakthroughs in discovering
the genes behind mental retardation.
The center was founded in 1974 with a $150,000 gift from the Self Family
Foundation. Since then, the foundation established by the Greenwood textile
family has given the center almost $5 million.
Arnoti figured discoveries made at the center could lead to new products and
services --- and new biotech companies in rural Greenwood.
''Honestly, I'd never paid much attention to it before,'' he recalled. ''I was
more concerned about manufacturing. That's what my vision was. But here we had
some resources that really could take us to the next level.''
He secured $4 million from the Legislature to launch South Carolina's first
business ''incubator'' for hatching biotech startups. The six-laboratory facility
opened in Greenwood in October, right next to the genetic center. Greenwood has
also designated 500 adjoining acres in hopes of developing a biotech business
park.
So far, no homegrown companies have emerged from the South Carolina
Biotechnology Incubation Program, but Karl Kelly, its chief executive, said he'
s identified eight possiblities, including a diagnostic firm flowing out of
research at the genetic center.
''We'll see some success stories over the next three to five years,'' Kelly
promised.
Statewide efforts
When Arnoti began work on his plan in 1998, South Carolina was doing very
little to develop biotechnology, but today the state is making strides.
Kelly, an industry veteran, is planning to put an incubator at each of the
state's three research universities --- Clemson University, the University of
South Carolina and the Medical University of South Carolina.
The first outside of Greenwood would go to Charleston, where MUSC's ''big
engine'' of biotech research is creating demand for startup space, Kelly said.
He said the proposed Charleston incubator would have 40,000 square feet,
compared with 8,000 square feet at the Greenwood facility.
Meanwhile, the South Carolina Commerce Department is focused on recruiting
biotech companies.
Commerce got serious about the task about two years ago after efforts to land a
semiconductor plant became increasingly doubtful, said Scott Derks, the
department's marketing director. Since then, Commerce has recruited four small
firms, most of them to the Charleston area.
''But the Greenville market is well prepared and very active in this search, and
is a very likely place for biotech companies to land,'' Derks said. ''There's a
lot of focus in the Upstate on knowledge-based industries. It's an enormously
attractive area for these companies. Clemson makes a difference.''
Commerce's efforts to lure the industry include an ad campaign set to start in
May, a cooperative program with local economic development officials and plans
for a big presence at the industry's leading trade show this summer in
Washington, D.C.
South Carolina's sales pitch to the industry will emphasize the concept of
''speed to market,'' Derks said.
''We believe our ability in South Carolina to work together allows us to have
better speed to market, and that's one of the things we're talking to companies
about,'' he said.
In another statewide effort, Commerce and the incubator program hosted a
first-of-its-kind biotechnology conference last week in Charleston.
The conference was designed to teach business recruiters about the industry's
needs and introduce industry leaders to South Carolina's charms. Speakers
included Charles Hamner, retired director of the North Carolina Biotechnology
Center, and Bob Faith, South Carolina's new commerce secretary.
Also, Kelly is developing a professional organization, the Palmetto
Biotechnology Initiative, that he hopes will sponsor the show each year.
Manufacturing opportunity
In trying to develop biotechnology, South Carolina's aim, in part, is to
diversify its economy beyond manufacturing. It's ironic, then, that the state's
biggest opportunity in biotechnology may lie in that very area.
Experts say the industry has developed a large number of new products, but
lacks the manufacturing capacity needed to bring them to market.
According to the Biotechnology Industry Association, the number of patents for
biotech products rose more than eight times in 15 years --- from 1,500 in 1985
to more than 13,500 in 2000.
''We don't have the capacity to make all the things that are in the pipeline,''
said Garheng Kong, a principal with Intersouth Partners, a Durham, N.C.-based
venture capital firm that invests in biotech startups.
According to an analysis that Kelly helped prepare for the Upstate Alliance,
the regional economic development organization, key biotech companies are
evolving from research firms to full-scale pharmaceutical firms and will soon
require manufacturing capacity.
''These firms will continue to drive research from the historic centers such as
San Francisco, Boston, San Diego and Philadelphia, but manufacturing operations
will locate to regions that can provide resources and speed to market,'' the
analysis says.
''In addition, many California biotech companies are quietly making plans to
establish new production facilities in manufacturing-oriented locations outside
of California that can meet long-term water, wastewater and electrical power
requirements.''
The analysis concludes that the industry will soon need at least two to four
times its current level of manufacturing capacity.
One advantage the Upstate enjoys in the heated competition to land the plants
is the presence of large engineering and construction firms such as Fluor
Daniel and Suitt Construction in Greenville and Lockwood Greene in Spartanburg,
said Doug McKay, point man for high-tech recruitment at the Commerce
Department.
''Those guys probably touch half the projects in the world, or more, at some
part of construction and design,'' he said.
Global competition
Greenwood and South Carolina, of course, are not the only communities that have
set out to profit from biotechnology.
North Carolina, for example, launched a biotechnology program more than 20
years ago, and today claims 157 companies --- two-thirds of them homegrown ---
with a combined employment of 17,000.
Steven Burke, a vice president at the North Carolina Biotechnology Center at
Research Triangle Park, said more than 200 communities worldwide have biotech
initiatives.
''As a result, what we have now is probably the most competitive technological
sector worldwide --- 200 plus places scrambling to find their place in the
sun,'' Burke said.
He said developing the industry takes an enormous amount of time and resources
as well as a ''long-term commitment that often is not consonant with short-term
political agendas.''
Burke said he expects the world to have 25 to 30 biotechnology centers by 2010.
In the United States, those will include San Francisco, San Diego, Boston,
Washington, D.C., and North Carolina's Triangle area.
Still, he said South Carolina's efforts are not necessarily in vain.
''South Carolina, like a lot of places, will probably benefit from an aggressive
niche strategy.''