Read the original article from Business North Carolina magazine featuring comments from John Cavanagh, PhD, interim president of the David H. Murdock Research Institute.
North Carolina’s reputation for research, workforce and quality of life attracts international biotechnology companies.
The discussion was moderated by Ben Kinney, Business North Carolina publisher. It was hosted by the N.C. Biotechnology Center, which also provided support. The transcript was edited for brevity and clarity.
What makes North Carolina a global leader in biotechnology?
EDGETON: It starts with the university and community-college systems, which are known worldwide. As the universities grew, so did their intellectual property. They commercialized it, while the community colleges focused on training workers. Companies want an educated and skilled workforce. They want access to resources — land, talent, money, technology, quality of life. North Carolina has all of them, which has propelled it in the global marketplace the last 20 years. RTP is one more important ingredient in that mix. It took time to build, but the federal government, [Armonk, N.Y.-based] IBM Corp., [England-based] GlaxoSmithKline PLC, RTI International and others with global ties found homes there, and their presence helps draw even more international attention. At a recent conference organized by the [North Carolina] Biotech Center, I spoke to people from Switzerland and several states. They mentioned North Carolina’s quality of life several times. Boston is a biotechnology hub. It is wonderful but cold and expensive. North Carolina shares many of its business attributes, but they cost less here.
DONOFRIO: I spent 22 years at GSK. The people we recruited loved Raleigh’s quality of life, weather and educational opportunities. But it wasn’t a big city. That was about 2005, when locals didn’t go downtown. People can’t wait to go downtown today. Developments such as mixed-use Glenwood South District, the convention center and other attractions have made a difference. They are the big-city amenities that recruits want, whether they are single, empty nesters or have a family.
TAYLOR: We recently hosted a panel discussion featuring [Germany-based] BASF SE, [Switzerland-based] Syngenta International AG and Bayer CropScience, a unit of [Germany-based] Bayer AG. We asked, “Why North Carolina?” One interesting answer was its time zone. It’s tough to schedule conference calls between workers in Switzerland and California because there’s rarely a time when half of them aren’t asleep. But we’re awake in North Carolina. The availability of flights to Europe also was mentioned. It’s hard to overestimate the importance of our brand. When you say RTP or North Carolina, people take notice. It’s a combination of factors, but its creation has been a conscious effort. The state’s tax code and economic-development processes have changed, but we’ve left the brand in place.
CAVANAGH: Many people from [Westlake Village, Calif.-based] Dole Food Co. like North Carolina Research Campus in Kannapolis, whose largest benefactor is [Dole’s] CEO. It’s an easy jumping-off point to Latin America, where they manage crops such as pineapples, bananas and coffee.
MURPHY: North Carolina feels familiar to many Europeans, especially to the Danish. They are focused on sustainability and the environment. Many types of manufacturing are done in a green way here. That’s not the case in the Northeast or Rust Belt. That’s important to Novozymes’ leaders. It helps keep the company here.
LOMAX: North Carolina has many well-kept secrets, such as strong univer-sities and companies. RTI is one of them. Most people don’t realize its size or breadth of work, which includes policy, advanced technology, statistics and energy. It’s a common deficiency we find in our recruiting, so we’re telling that story better. But the thing that’s unique about RTI is its international reach. Our work — pulling expertise from many fields to solve the grand challenges — takes us to more than 75 countries..
How important is the industry to the state?
EDGETON: Two years ago, the biotechnology industry had an annual eco-nomic impact of $58 billion on North Carolina. Now it’s $73 billion, just behind $78 billion from agriculture, the state’s largest economic contributor. The number of biotechnology companies is increasing. There are about 2,100 companies that provide accounting, legal, catering, building and other services to biotechnology companies. Direct employment grew 4.6% last year to 63,000 jobs. Each life-science job creates four more on average. The biotechnology jobs are not all for Ph.D.s and scientists; they are one-fourth of the workforce. North Carolina has trained a workforce that attracts big companies, which provide good-paying jobs to many people. The state is a science engine because while many research dollars are counted elsewhere, they are spent on research that is done here on contract. We haven’t been able to capture how much, but it plays a role. We talk about the economic pieces, but the industry also is providing products that help people feel, look and live better. If you got a flu shot in the past year, no matter where you live, there’s about an 80% chance it was made within 100 miles of this table. The microbiome is an area of study that could lead to more growth in the sector, because understanding what’s in our gut is going to make a big difference in improving our health and food supply over the long term.
Are these companies interested in a region or the state as a whole?
EDGETON: Each region has unique assets that attract biotech companies, but you have to follow each company to where it wants to go. We advise them of opportunities statewide. When it’s a nutrition and health-sciences company, for example, we send them to Kannapolis. If tissue engineering is its focus, then talk shifts to Winston-Salem. Twelve years ago, the Biotech Center didn’t have regional offices. The first opened in Winston-Salem. Before it did, life sciences employed less than 1% of the city’s workforce. It’s now 10.5%. We have five offices, and each has brought economic growth to its region. It’s about bringing attention to the state and local levels.
MURPHY: It’s easy for this conversation to stay within the research box, but we need to think of North Carolina biotechnology in the broader terms. Novozymes came to North Carolina 30 years ago with manufacturing in mind and went to Franklin County. [Denmark-based] Novo Nordisk SA went to Clayton. The industry provides great opportunities across many economic strata, particularly at the manufacturing level.
TAYLOR: This industry’s manufacturing footprint is rural. The research may be done in Raleigh, Durham, Chapel Hill, Winston-Salem, Greenville or Charlotte, but the products are made statewide. [Deerfield, Ill.-based] Baxter International Inc. has one of the world’s largest intravenous-solution factories in Marion. [Durham-based] Patheon Inc. bought the former [Netherlands-based] DSM Pharmaceuticals Inc. plant in Greenville. [New York-based] Pfizer Inc. is in Sanford. Franklinton is where Novozymes AS has its North America headquarters. Companies go where it’s best for them, and they make that decision. Our attempts to make them aware of other places are factored in and sometimes successful, but in the end it’s about where are the needed resources.
CAVANAGH: It would be nice if everything was available everywhere. But it also is nice to sell your location’s expertise. Food and nutrition, for example, is the next great wave of biotechnology. The ability to develop more nutritious foods that are customized to grow in changing climates — whether that means drier, wetter or hotter — will become increasingly important in the next 10 years. People look carefully at what they eat and where it’s grown. Vertically integrated science and commercialization capacity is important. We must ensure that we have covered the entire spectrum when we work on ag biotech. It’s important, for example, that N.C. State’s College of Sciences and College of Agriculture and Life Sciences collaborate. The early stage molecular biology will be done at the science school, applications will come from the College of Life Sciences and dietary expertise from UNC Greensboro. That was the thesis on which Kannapolis was built.
How important is workforce training to these international companies?
MURPHY: It’s vital. We recruit 25% to 30% of our white-collar workers from local universities. But for the hundreds of people we need to fill well-paying blue-collar jobs, we hire graduates from the local community college and residents of surrounding communities, many of whom have suffered through a couple decades of hard economic times.
TAYLOR: We did ourselves a huge favor by investing $75 million and expanding our statewide biomanufacturing training network. It develops customized curriculum in any biotech domain at any community college. And the companies that utilize the service incur no costs. Companies, especially manufacturers, need skilled labor, so providing that training is critical to recruiting them. Recent capital investments for training have been made in the Triangle. But $10 million in training and equipment grants were recently allocated to the community-college system. If we want a larger biotech footprint, we need to continue investing in a diverse curriculum at community colleges and universities statewide.
DONOFRIO: Merz’s North America headquarters was in Greensboro for more than 30 years, but it moved to Raleigh about 18 months ago. That was a big decision. It had outgrown its building, which was primarily a distribution warehouse, because it grew from a $20 million company to almost a $400 million company. It had choices: expand the current location, find a bigger Greensboro location or move. We looked at RTP and sites nationwide. But the choice came down to one thing: The parties that we deal with and workers we recruit are in the Triangle. That’s not a ding on Greensboro. We had fantastic people there, and about 60% of them still work for us in Raleigh. Some commute from Greensboro. But it was difficult to recruit Ph.D.s and scientists for research and development to Greensboro. When they did come, they moved to Chapel Hill or Raleigh. We had five to 10 interns each year in Greensboro. In 2015, we had 31 interns. They came from Duke University, N.C. Central University, N.C. State, UNC Chapel Hill and Campbell University.
What will keep international biotechnology companies in North Carolina?
MURPHY: We have a great life-science environment, and we need big corporate citizens. That will enhance our international reputation. We can’t get too comfortable with what we have, so it’s important that investments are made across the board, from our academic system to municipal operations. As long as that continues, North Carolina will be one of the greatest places in the nation for biotechnology companies.
DONOFRIO: We’ve had big players that consolidated, and that spawned smaller companies. I went through all of GSK’s big mergers and watched the research-and-development and business spinoffs. The state’s biotech industry still feels like a small family despite its size. I can’t go anywhere without running into somebody that I either met at a function or workplace. That culture works here, and it’s important that it continues. Businesses evolve. As the industry becomes more competitive, companies aren’t so much interested in what you did to recruit them. They want to know what you can maintain for them. There aren’t many places that have mountains and beaches in a convenient location, the midpoint of the East Coast. It’s affordable to live here. If the state moves away from those assets that it can control, it’ll open the door for the next state that wants to be No. 1.
EDGETON: We’re seeing competition from Texas, Florida, Georgia and South Carolina. Virginia’s governor just announced an $800 million proposal to grow his state’s life-science industry. But it’s not only about money. It is the business climate. There are many considerations when you build factories. Somebody has to manage the infrastructure such as wastewater. That takes a coordinated effort with municipalities and state departments, including regulatory. North Carolina has done that well. Many big companies are acquiring smaller companies as part of their research-and-development efforts. So a mix of startups and established companies strengthens North Carolina’s position. We recruit companies and stay with them, making them part of the family and learning about their business so we can anticipate their needs. We’re trying to move companies from one or two employees to 10 to 20 to 50. We have a biotechnology cluster, and that brings expertise. We have a big information-technology cluster, too. We think about possible mergers as more cloud-based computing is pulled into science and medicine. It requires groups such as the Biotech Center, [Microelectronics Center of North Carolina] and North Carolina Biosciences Organization making sure that there is a place for entrepreneurs and solutions for established companies that are struggling with an issue or organizing an expansion. A thriving infrastructure attracts big companies.
LOMAX: Even before I was a Biotech Center board member, I was a proselytizer. I came here in the mid-1990s on a sabbatical and immediately recognized the Biotech Center’s power, bringing together universities, companies and scientists. It also has a system of grants and loans that go all the way from innovative investigations just starting out to major instrumentation for the universities. Capital availability is important.
CAVANAGH: I’ve been here for about 16 years. I received money from the Biotech Center, and from that my work helped spawn a spinoff, which the center also helped. We wouldn’t be in business without that support. The center helped us from a twinkle in our eyes to 10 employees and a couple of drugs headed to trial. So it helps companies from soup to nuts. It’s a nurturing environment.
TAYLOR: North Carolina always has had diverse tools for attracting large companies. The Biotech Center has helped grow smaller companies. We’ve moved from a posture of targeted incentives to lower corporate tax rates. There are many positive opportunities there if it’s exploited properly. But some things still need attention. Small companies haven’t been reached with the tax-code changes yet. The Qualified Business Venture Tax Credit, for example, was repealed. We’re waiting to see how that plays out. I don’t think the architects of the plan have finished it, so we’re at the General Assembly educating legislators about the help small and large companies need. Manpower and expertise will always attract companies. Incentives can induce their behavior, but North Carolina only has those through the Job Development Investment Grants.