By Allain C. Andry
Robinson, Bradshaw & Hinson, P.A.
Allain Andry
North Carolina is widely recognized as the third leading state in the U.S. for biotechnology – behind only California and Massachusetts. The Research Triangle Park region of North Carolina has been a highly successful and rapidly growing biotechnology cluster area.
Successful, integrated biotechnology clusters have the following attributes:
- Diverse Industry Presence. The core of a biotech cluster is the quantity and diversity of biotech companies located within the region. The most successful clusters include large and established biotech and pharma companies, early stage and developing companies, and critical service providers like contract research organizations. Market diversity – pharmaceuticals, biologics, medical devices, diagnostics, agricultural biotech – also is important.
- University Research/Medical Centers. Every successful biotech cluster includes the presence of top level research universities and academic medical centers. These institutions attract the significant grant funding and essential research talent required for the basic research, invention and innovation that ultimately leads to commercialization of biotech products. Academic medical centers also conduct and lead the clinical trials for new product approvals.
- Funding Availability. The development of new biotechnologies and the start up and growth of biotech companies requires capital. Biotech clusters traditionally have relied on the large and active presence of venture capital for this funding, although public funding, bank financing and funding partnerships with established companies are additional sources of growth capital.
- Business and Regulatory Environment. Many states and regions have looked at biotechnology as a source of economic development and job growth. Most successful clusters have benefited from public policies intended to encourage the investment, infrastructure, education and training that support biotechnology. But the overall business environment – taxes, regulatory barriers, operating costs, cost of living – is important as well and is seen as a challenge in the most established biotech clusters in California and Massachusetts.
How does the North Carolina Biotech Cluster Compare?
The Massachusetts Biotechnology Council published a Strategic Plan in 2009 that includes a competitive analysis of the leading biotech clusters in the United States, including the RTP, and the rest of the world. Biotech leaders in North Carolina could quibble with the analysis, but it offers a useful outsider’s perspective on both North Carolina’s successes and challenges.
The MassBio report identifies North Carolina’s key strengths in manufacturing and contract research organizations. Other noted strengths are its strong academic bioscience research institutions, its cluster of highly ranked medical schools, the strong concentration of agricultural biotechnology companies and comparatively favorable costs of doing business.
North Carolina’s relative weaknesses are in innovative research (measured by bioscience patent activity), lower levels of VC investment and limited commercial talent.
There are numerous efforts underway in North Carolina that may address any perceived weakness in innovative research. One promising example within the greater Charlotte region is the North Carolina Research Campus in Kannapolis, N.C. The NCRC is a private-public venture established by David H. Murdock with a focus on nutrition, health and biotechnology research.
It consists of a research campus as well as nearby industrial sites for manufacturing and other larger scale commercial activities. The research campus is anchored by the David H. Murdock Research Institute, a basic research institution that provides advanced core laboratory technologies on the campus.
Many North Carolina universities have established research centers at the NCRC and companies including LabCorp, Monsanto and General Mills also have placed R&D facilities at the campus. The goal of the NCRC is to become a biotech mini-cluster that will support and build on the existing biotechnology success in the RTP.
This article is the second in a four-part series that examines the emerging biotechnology and life sciences industries in the Southeast. The next entry will focus technology licensing and other financing and transactional issues in the life sciences industry. For part one see: Incentives available to life science manufacturers
Allain Andry serves as chair of the Life Sciences Practice Group at Robinson Bradshaw & Hinson, a corporate and commercial law firm with more than 125 attorneys. The firm has offices in Charlotte, the Research Triangle and Rock Hill, South Carolina. He can be reached at aandry@rbh.com. On the Web at www.rbh.com.
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