The Data of Life

The National Institutes of Health has helped Maryland build a $571 million biotechnology region

P> Martha Knight left the National Institutes of Health 11 years ago to start her own company. As a mid-level biochemist in neuroscience, she wasn't sure what future she had at NIH. So she started Peptide Technologies in 1984, one of Maryland's 265 thriving biotechnology companies. In fact, Knight tells the story of how an entire biotechnology region formed in Maryland -- good old-fashioned entrepreneurship coupled with the highest concentration of scientific brain power in the world.

Hers is a typical story for Maryland. And her kind of entrepreneurship in the early 1980s helped the state build the third largest concentration of biotechnology companies in the nation. The entire industry is valued at $9.3 billion and has 1,308 companies nationwide. In fact, the state is working with Synergistic Designs Inc. of San Francisco to find a label for the area. Some of the candidates are BioBeltway, BioCapitol and Bio Peake Bay.


It's no wonder economic development types want a catchy label. Biotech companies in Maryland generate 12,013 jobs, and some believe the industry could generate 20,000 jobs for the state by 2000. With so much at stake, the state wants to find the right formula for converting more of its considerable intellectual capital into capital of the hard, cold kind.

"Scientists want to get away from the bureaucracy and want to become entrepreneurs," said William Washecka, director of high technology for Ernst & Young LLP.

But why Maryland?

Maryland's biotech companies spend $250 million in research and development each year. The area holds federal research and development institutions such as the National Institute of Standards and Technology, the Agricultural Research Center, the Biomedical Research Technology Program, the Food and Drug Administration and the National Institutes of Health. The state also is home to private research and development institutions, including Johns Hopkins University, the University of Maryland and the Christopher Columbus Center. A 1995 study conducted by the Maryland Department of Business and Economic Development found that NIH, which has an annual budget of $11 billion, puts at least $1.7 billion into the biotech region of Maryland.

"We, as an industry, support increased appropriations for NIH," said Carl Feldbaum, president of the Biotechnology Industry Organization in Washington, D.C., which represents more than 600 biotechnology companies nationwide. "We haven't found the cure for AIDS, but we've learned a lot about the immune system from the research."

But the area's biggest asset is brain power. The Baltimore-Washington corridor contains the highest concentration of scientists and engineers in the nation. Most of them come out of academic institutions such as Johns Hopkins University and the University of Maryland, two of the best medical schools in the country.

Maryland also gives biotech companies access to key federal agencies, including the Environmental Protection Agency, the U.S. Patent and Trademark Office and the U.S. Department of Agriculture -- just as telecom companies often set up shop here to be close to their own regulators such as the Federal Communications Commission. The Food and Drug Administration approves new products, the Environmental Protection Agency handles toxic waste disposal regulations and the USDA regulates the agricultural side of biotechnology.

Maryland has been very aggressive in attracting biotech companies to the region. The state has invested more than $72 million in incentive programs for biotech companies. The state spent $42 million on the Biotechnology Processing Center, $19 million on the Maryland Venture Capital Trust Fund, $500,000 on the Challenge Investment Program, $250,000 on the Enterprise Fund and $10.8 million on the Maryland Industrial Training Program.

When Knight decided to expand Peptide Technologies into Gaithersburg, state officials from the office of Business and Economic Development helped her find engineer and advised her on the state's fire and safety requirements.

"Maryland has been very successful in attracting this business because they know the needs of biotech companies -- like how to find the right site for them and help them figure out the financial issues," said Feldbaum.

The history of biotechnology is even shorter than that of the personal computer. Nelson Schneider was the first person awarded a trademark on the word. In August 1979, when Schneider was working as a senior health-care analyst for E.F. Hutton, the word biotechnology didn't even exist. Schneider wrote the first Wall Street report on biotechnology, and a month later planned a meeting at New York's Plaza Hotel for institutional investors interested in the subject. When Schneider was asked to explain the "subject," the word biotechnology was used. Investors liked the term and in December 1979, Schneider filed for a trademark on the word in the United States, Canada, the United Kingdom, Germany and France.

"Then there was an explosion of technology, and clearly, within a year, it had become a household word," said Schneider in a 1986 Washington Technology article.

According to Rita Colwell, president of the University of Maryland Biotechnology Institute, the cloning of genes in academic institutions in the early 1970s opened up the industry for Maryland.

The original company in the region is Life Technologies in Gaithersburg, Md., which resulted from a 1983 merger between Bethesda Research Labs and Grant Island Biologicals Co. in New York. The $272.2 million, 1,400-employee company, which specializes in molecular and cell biology, is the biggest biotech company in Maryland.

The company originally had its headquarters in Ohio and moved to Gaithersburg in 1984 because "they felt it was important to their customers to be located near NIH, academic institutions, a large talent pool and the state and county interest," said Chris Culotta, spokesperson for Life Technologies, which was started by a former NIH scientist.

Other NIH offspring include Cellco in Germantown, Genetic Therapy and Lofstrand Labs in Gaithersburg, GenVec, The Institute for Genomic Research, R.O.W. Sciences and Veritas in Rockville, and Kemp Biotechnologies in Frederick.

That entrepreneurship helped build a $571 million biotechnology region in Maryland.

But one point of debate in the biotechnology industry is how to define the term. According to Knight, biotechnology implies products generated by gene engineering.

Feldbaum said, "It's the understanding of life itself and how humans have defended themselves against disease," he said.

Bob Eaton of the Suburban Maryland High Technology Council said biotechnology means using DNA to produce a new product. Computer technologists process data; biotechnologists process the data of life.

Colwell defines biotechnology as the use of living material for commercial applications including medical, agricultural, marine and protein or bioengineering applications.

The biotech region of Maryland itself specializes in therapeutic research, diagnostic development, agricultural development, bio-remediation cures and supplies.


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