From the perspective of Brian Darmody, among many others, the biotech community is facing some challenges, including issues that have plagued the overall economy in recent years.
“Biotech nationally, and to some extent globally, has faced some headwinds due to various factors like financial downturns and inflation,” said Darmody, chief strategy officer of the Tuscon, Ariz.-based Association of University Research Parks, from its College Park, Md., eastern second headquarters.
That’s true enough. But those issues have also led to other problems, such as the lack of ample venture capital and other forms of investment, including big infusions from the federal government.
However, Darmody feels that biotech is poised for positives soon, too, including more available lab space (wet and dry) and more access to government funding that bolsters the sector, as well as the hoped-for improvement of the general economy.
Today’s Market
One positive about the U.S. biotechnology market size is simply its size, which was estimated at $552.40 billion in 2023, with an expected compound annual growth rate of 12.4 percent from this year to 2030, according to Grand View Research ― which also relayed that “government support plays a major role in propelling market growth, focusing on modernizing regulatory frameworks, enhancing approval processes and reimbursement policies and standardizing clinical studies.”
While Darmody pointed out that COVID-19 stimulated a rush of research work on vaccines that saved millions of people worldwide, the ensuing “general financial uncertainty, coupled with capital markets in the U.S. being more cautious, meant we’ve seen a downturn in investment in early stage biotech companies.”
And he noted that what government funding has come into play lacked its prior impact. For instance, “at the federal level, the National Institutes of Health is receiving a slight increase in its proposed budget,” Darmody said, “though that increase is barely keeping up with inflation.”
However, he also cited a new federal money source.
“There is a new agency called ARPA-H (for Advanced Research Projects Agency–Health),” he said, “that is providing some new investment in speculative research (via) Cancer Moonshot,” the Biden administration’s campaign to prevent 4 million cancer deaths per year by 2047 and improve the experience of those who are touched by cancer-related illness.
Another point is that before COVID-19, there was a shortage of wet lab space, but due to the drop in investment in bio startups, more space became available to new entrants. “In fact, the biotech industry is now in a period where in certain markets, like Boston, San Diego and Greater Washington, D.C., now have an ample supply,” Darmody said, adding that there is even some speculative wet lab space in the pipeline.
On the flip side, he said, “That’s not to say there isn’t activity” on the playing field.
“There is still some merger and acquisition activity that is inspiring demand for new space, as well as continuing work on vaccines, therapies and biomanufacturing. Another major impetus for new bioresearch and expanded demand for life science space are new biotech hubs funded by the U.S. Economic Development Administration and the National Science Foundation across the country through the multi-billion-dollar CHIPS and Science Act.”
These new biotech hubs will be among the topics addressed in San Diego from June 3-6 at a national conference presented by the Washington-based BIO: The Biotechnology Innovation Organization, which will attract talent from 30 countries as the world’s largest gathering of bioscientists.
Another meeting of the industry’s minds will occur just before BIO: the AURP Bio Health Caucus on June 2-3, which will focus on building life science communities of innovation through international bio partnerships.
Hot Zones
Among the hot areas in biotech that will be discussed, said Peter Pellerito, senior policy advisor for BIO, “include those focused on gene therapy, as well as developing new treatments for cardiovascular diseases, neuro diseases and oncology.”
Then there’s that other hot zone that the world knows quite well as of four years ago. “There will be continued interest is in infectious diseases,” Pellerito said. “We got a real wake-up call from COVID-19. While scientists understood the real challenges, we as a society didn’t really pay as much attention to what was happening until we didn’t have any choice.”
Julie Lenzer agreed. The chief innovation officer of the Manchester, N.H.-based Advanced Regenerative Manufacturing Institute discussed how to address that issue faster. The first way is “moving to automate biomanufacturing, especially for cell and gene therapies. The costs and inherent inconsistencies of the manual manufacturing methods common with these types of products make them hard to scale,” she said.
Additionally, Lenzer said the medical supply chain disruptions we saw with COVID-19 “taught us we need a resilient, domestic supply chain. No longer can we risk U.S. health and safety by relying solely on a limited number of suppliers, especially those in foreign countries,” adding that these moves forward will “help mitigate costs and ensure life-saving therapies reach patients.”
Capital Gains
Among the hot regional markets for biotech is the National Capital region, which encompasses Washington, D.C., Virginia and Maryland, and is home to Maryland’s Route 270 Technology Corridor.
From her viewpoint on the northern end of that expanse in Frederick, Md. (also a tech haven and home to Fort Detrick) Kelly Schulz, CEO of the Maryland Tech Council, is observing an upward trend in investment after what she termed the recent “hibernation” in the overall market.
As Darmody noted that lack of activity had to do with COVID-19 and the ensuing uneven economy. Today, however, she’s liking what she’s seeing.
“We’re trending upward here in Maryland,” said Schulz. “We had better results last year and we’re on the rise again as we’re moving forward with everything from clinical trials to approvals for commercialization.”
But that upward swing has resulted in some dilemmas, too, that often still concern funding just as often as another issue that affects many industries, workforce development. “There is a continuing need for training in labs, as we need to boost the workforce,” she said, “and not just via recycling of the current workforce.”
What the MTC has done, she said, is continue to boost the biotech workforce via BioHub Maryland, “where we have picked up steam during the past 18 months and now offer training to supplement the needs of our biotech manufacturing base and entice more entry-level workers to participate in the industry,” she said.
Towards that end, the MTC has received $ 2.5 million in funding from the federal government and $3 million from the state in recent years.
Schulz said the curriculum the MTC will use is that of the National Institute for Bioprocessing Research & Training, which has developed a curriculum in Ireland that has experienced robust growth. “It’s the standard. We own the rights to use it in the mid-Atlantic to train entry-level workers who only need a high school diploma to learn core biopharma concepts.”
“This is a big deal in terms of workforce development,” she said. “People who don’t have a degree had no idea this option was available; and every time we look to attract a life science company, NIBRT is a big part of their attraction because they know it provides workers with the skillset they need.”
Going forward, Schulz said the state needs to distinguish between companies that are in the R&D phase and others that are getting closer to coming to market.
“That brings us to clinical trials,” she said. “We don’t have an overabundance of space for clinical trials for our specialties, which are cell therapy and diagnostics. They have a specific set of criteria because it calls for implanting cells into someone’s body.”
And she, also like Darmody, said that lab space seems to usually be in ample supply, especially along the 270 Corridor, where there had long been a dearth of it. “Developers there have been able to repurpose unused office spaces. That’s not the case in Baltimore, though you might think it would be due to the availability of older buildings in that submarket.”
So all told, Schulz likes where Maryland and its surrounds stand: The BioHealth Capital Region, as defined by Genetic Engineering & Biotechnology News, ranks at No. 3 in the country as an ecosystem, behind only Boston and Silicon Valley, and boasts 52,899 patents― far more than any other ranked markets and almost twice as many as Silicon Valley.
And “That’s great, but we still have to speak to that every day or the market won’t know it,” she said. “We need to do a better job promoting our resources.”
Tech Parks
While Maryland is making progress training high school graduates, the hope it that some of those workers will move on to the college ranks and contribute to advances “at the institutional level,” said Carol Stewart, vice president, University of Arizona, Tech Parks Arizona.
“We’re seeing many startups gaining traction from the science and tech fields at the University of Arizona,” said Stewart, noting $1 billion in research and development activity from the Research 1 (Tier 1) university.
She is also reporting success via foreign direct investment in biotech with companies such as French testing giant Eurofins Scientific, which established a new lab division called CellTx. It screens for human tissue-based products from donor source to transplantable cell-based products and is expanding in Southern Arizona.
Stewart also pointed to other companies that have grown in Southern Arizona like Roche, the Swiss multinational health care holding company. In one case, a Tucson-based maker of drug testing instruments spun out of UA and was acquired by the corporation, which established Roche Tissue Diagnostics’ global headquarters and jobs for more than 1,300 employees.
She then cited the industry’s great capacity for innovation and deemed its current state “very robust,” noting its incubator network, the University of Arizona Center for Innovation, “is seeing about 40-50 percent of its clients in the biotech field, as it satisfies infrastructure needs, including wet labs, dry labs and shared equipment.
That said, there isn’t enough infrastructure and resources in place for the biotech industry to maximize the entrepreneurial ecosystem. Key to improving that scenario is seed funding, and Stewart pointed out that the investment group Desert Angels “consistently ranks in the Top 5 of angel networks in the U.S. according to the HALO Report (currently listed at no.1 in the
Southwest Region and no. 4 in the nation based on the number of deals).
She also relayed that more than 60 percent of the companies that present to Desert Angels are biotech companies. As for what keeps CEOs awake at night, Stewart echoed a familiar response: workforce.
“Biotech is not like most industries looking for four-year degrees or more. Every community that supports biotech needs a very strong college system from all levels,” Stewart said. “But they also need techs, who sometimes only have a two-year degree. Today, given the dramatic need, entry is also being made from the high school level, where new programs are developing in joint-technical education programs.”
It’s all part of the larger web, which she referred to as the “stickiness factor” for startups: it’s the effort “to create companies that can scale up and grow in our communities.”
World View
The approach to observing the market at Advance CT, of New Haven, Conn., is on a macro scale; in this case, internationally.
While it’s not hard to find differing viewpoints on the state of the domestic venture cap market, Tim Miller, senior director of business development for AdvanceCT, said, “Funding drives innovation and the U.S. is in a favorable position. More money is available now than there was a year ago.”
That’s good and critical when an entity like AdvanceCT is courting international clients; what Miller is seeing is that while “seed funding is available in Europe, Series A, Series B,” etc., “it’s hard to come by. So European companies are seeing opportunities in the U.S. once they’ve gained traction with their products.”
He said firms that want to expand domestically “are typically looking for East Coast locations due to the time difference being only five to seven hours, as well as general convenience and the other perks of being in striking distance of three major bio markets― Boston, New York and Washington―along the Northeast Corridor.
“We think Connecticut is the right for those reasons, since expanding European companies need an ecosystem like a domestic company does, only they want to ensure that everything is in place before they set up shop in the States,” Miller said. “That’s especially true in the event of a tight venture capital market. That issue makes the connectivity available in the Northeast even more important.”
That connectivity doesn’t just refer to reliable 5G. That mix includes educational outlets, workforce availability, opportunities for collaboration and quality of life.
Miller also discussed the importance of available commercial real estate. “There has been a huge uptick in biotech as a whole with the conversion of office space to wet labs, dry labs,” etc., he said. “But what these expanding companies really need are central offices with smaller square footage for what usually turns out to be a hybrid setup.”
However, if research is part of the equation that’s a different game. “Anything that happens in a lab setting needs to be done in person,” he said. “So biotech firms want enough space for in-person collaboration in the right geographic location.”
Policy Matters
Schulz is hopeful that what’s happening in the top biotech markets will translate into the desired stronger national and worldwide profile. However, she expressed concerns about policy issues.
“We’re poised as a nation to be a leader in R&D,” she said, “though I think there have been some policy initiatives that could hold that up progress, such as drug pricing mandates or march-in rights that allow governments to reclaim patents that resulted from federal funding.
“If we take that path,” said Schulz, “it will slow American innovation.”
Despite those real concerns, Miller sees a brightening of the overall horizon.
“During the coming months, the venture cap market will continue to improve,” he said. “The election will bring some volatility, but all told I think the industry in Connecticut is going better than ever; and nationally, in terms of new technologies, health care and patient advocacy, the global community is more collaborative than ever.”
“So after the struggles of recent years,” said Miller, “it looks like good times are ahead.”
Odenton, Maryland-based Mark R. Smith joined Expansion Solutions after having written about site selection among the vast number of topics he has covered in the 
business universe. That part of his career began in 1993 when he joined The Daily Record, a Baltimore business and legal publication, where he delved into the worlds of economic development and commercial real estate, among numerous other industries; in 2003, he was named editor-in-chief of The Business Monthly, another Maryland publication that covers the scene in the Baltimore-Washington Corridor counties.
