Biotech Is More Than Wall St
At the Southern BIO Summit, Dan Eramian
Thanks very much.
And thanks for giving me a good reason to come back to Texas.
I love this state -mostly because it's built on energy.
I don't mean oil.
I mean entrepreneurial energy.
If you've lived here a while, you may not feel how much of that energy rolls through this large chunk of America - you get used to it. But we visitors feel it instantly: it's the big, booming kind of energy that makes me feel anything is possible.
Today, I want to talk to you about the changes you and I have seen - here in the United States - and around the world - as the
business of biotechnology has grown.
That growth has been nurtured by a lot of hard work - not just in science and business building - but in the careful crafting of a political and cultural environment in which our products are anticipated and our voice is heard and responded to.
ONLY when those factors are in place and working, your business and our industry can grow at a faster clip.
And there has been lots of growth and some big changes since the Biotechnology Industry Organization last staged its annual meeting in Texas, six years ago. Back in 1997, George W. Bush, then governor of Texas, opted not to attend BIO's annual industry convention in Houston that year. Six years later, as president, he was the keynote speaker at BIO 2003 this past June in Washington, D.C.
You can't blame him for not showing up back in 1997. After all, the fledgling biotechnology industry's total value was less than a single pharmaceutical company - Merck. Today, the industry has long since eclipsed Merck and is now at more than three-quarters the market-cap value of the U.S. chemical or automotive industry. Just to give you a snapshot of how much we've grown and how fast:
- That Houston convention to which we invited President Bush attracted 3,200 participants - in Texas there are high-school football games that draw more than that.
This past June, more than 16,000 scientists, businessmen and industry leaders came to BIO 2003 in Washington.
- Since 1997, we've gone from about 60 approved biotech medicines to more than 160.
- Biotech crops had just been introduced in 1997...
Today, biotech crops represent 40 percent of the corn, 81 percent of the soybeans, and 73 percent of the cotton grown in the United States.
This has been the most rapidly adopted technology in the history of agriculture.
- In 1997, only five biotechnology companies were profitable.
Today, the industry is on track to become profitable in the aggregate before the end of the decade, according to Ernst & Young.
- Indeed, all the stats Wall Street likes to watch are up sharply since our last visit to Texas:
- biotech product sales, up 68 percent;
- revenues, up 74 percent;
- R&D investment, up 81 percent.
Biotechnology has grown because people - like many of you in this room - were willing to take on the risks associated with growing this industry.
All research is a gamble. As many of you are well aware - maybe even painfully aware - only five in 5,000 compounds that enter pre-clinical testing make it to human testing, and only one of those five will end up approved for marketing.
But discovery and understanding in all the biosciences has increased the development - and approval - of new products at a faster rate.
50% of all biotech medicines have been approved in just the last five years. So while the investments - and the risks are large the tens of billions invested over the last two decades in biotechnology industry are now beginning to pay off.
But - let's be clear about this: biotechnology is not just another industry, and our impact today and tomorrow cannot - and should not - be defined or predicted by Wall Street measures alone.
That's why I want to share with you today some other dimensions by which we calculate this industry's growth -its potential and impact on our lives.
These other critical measures of success fall into two categories -
- Political and
The growth of political interest in biotechnology comes from two positive factors:
- first, the public's increasing awareness of our product's benefits in their lives, and
- second, our increasing position as economic and employment drivers wherever we do our research or build our facilities.
This was highlighted by President Bush's overwhelmingly supportive speech at BIO 2003.
For any Washington trade association, life just doesn't get much better than when the president of the United States says,
"My administration is committed to working with your industry so that the great powers of Biotechnology can serve the true interests of our nation and mankind." The president's message of encouragement and support was echoed by a roster of other major political leaders at that same convention.
- FDA Commissioner Mark McClellan
- HHS Secretary Tommy Thompson
- Homeland Security Secretary Tom Ridge, and
- Senate Majority Leader Bill Frist
That's a powerhouse political line-up to have as cheerleaders.
But as Tip O'Neil used to say, all politics are local and biotech's political strength is also being exercised outside Washington.
At BIO 2003, nine governors were personally competitively pitching their states' virtues for new biotechnology enterprises.
And a record 17 states hosted elaborate pavilions on our exhibit floor, and more than 30 states were represented either by
economic development agencies or a state biotech association.
So, despite the fiscal crises in most statehouses - and perhaps because of it, support and recruitment efforts for biotech business are growing in a big way.
To give just a couple of examples:
- Pennsylvania is using $60 million in tobacco settlement funds in venture funding for biomedical startups under the tri-city Life Sciences Greenhouse program.
- Arizona invested $30 million to land the Translational Genomics Research Institute, an academic center in Phoenix that will serve as the nexus of a biotech cluster.
- And of course, there are some wonderful biotechnology initiatives under way here in Texas, which Tom will tell you about in a few minutes.
But biotech has also gone global...
55 countries from Europe and the Pacific Rim were active as both exhibitors and attendees at BIO 2003. There were large countries like Germany, France, Switzerland, Australia, Japan, China and Canada. But there were small countries like Slovenia, Kenya, Morocco, Croatia and Kazakhstan.
Many of these nations are investing heavily in what they perceive, and rightly so, as THE transformative technology for their economies. And they are thinking big - REALLY big: in Singapore, for example, a $1.7 billion Biopolis research park is attracting big pharma and startups alike.
India, a first time exhibitor at BIO 2003, is also racing to build critical mass in biotech. Already, the state of Karnatak boasts of 85 biotech companies.
And in Africa, scientists are developing hardier, more nutritious crops, in the hopes of igniting what renowned geneticist Florence Wambugu calls a gene revolution. So the political power of biotechnology is now measured globally, as more governments seek to build new economic foundations for the future.
But there's another reason biotech is big news:
Government decision makers - in the U.S. and overseas - also see value in the life-enhancing products the science creates.
President Bush gave biotechnology industry three Presidential orders in June:
One: end hunger.
Two: cure disease.
And three: protect America.
I believe we are well on our way to delivering the goods.
- Biotechnology has created staple crops that allow farmers to increase yields and reduce pesticide use as the world's population explodes.
According to the National Center for Food and Agricultural Policy, in 2001 biotech crops:
- increased crop yields by 4 billion pounds,
- saved growers $1.2 billion by lowering production costs, and
- Reduced pesticide use by 46 million pounds.
On the pharmaceutical side, researchers have tackled widespread health problems - such as diabetes and heart attacks - as well as extremely rare diseases that afflict only a few thousand patients worldwide.
- ...And more than 350 million people around the globe have been helped by biotech medicines.
- More than 100 biotech companies are already working on defense or security-related projects, such as new vaccines, diagnostics and therapeutics for the pathogens that may be used in bioterrorism.
Not on the President's order form - but very important in America's economic future is industrial and environmental biotechnology.
This technology is already in your home - it is used in:
Faded blue jeans, detergents, plastic cups and polyester, fructose for soft drinks, vitamins and antibiotics, paper and fuel.
McKinsey & Co. projects industrial biotechnology will have a more than $160 billion impact on the chemical sector alone in the coming decade by making existing manufacturing processes cheaper and boosting profit margins.
Think about this: there may be a day soon when you will get into a car made from bio materials that runs on biofuels.
I suppose to some Texans, that may not be the happiest prediction I could make, but I also know that Texas' huge grain crop industry might find a whole new market if biofuels can be made economically.
The last non-Wall street measure of biotechnology's growth and position in our lives may ultimately be the most important: the deepening cultural and public influence of the technology.
We see this most obviously in day-to-day news coverage.
Fifty years ago, when Watson & Crick unveiled the structure of DNA in the scientific journal Nature, the news landed with a thud. Not one single major newspaper covered the story.
Back then, people were a lot more interested in the science of nuclear energy and bombs than in biology. But today, the New York Times, the Washington Post, the Boston Globe, the Seattle Times, the Los Angeles Times, the San Francisco Chronicle, the Associated Press - all have dedicated biotechnology reporters. We are now "news" to editors all over the country and that interest can only mushroom with our society's interest in health. At BIO 2003, there were over 500 print reporters from the US and around the world. And CNN, FOX, Reuters, MSNBC, and European and Japanese television networks all broadcast live from our convention to hundreds of millions of people around the world.
Biotechnology has also taken hold of the public imagination like atomic physics did in the 40s and 50s, and space exploration in the 60s and 70s.
You can see the shift in technologies in the popular press and in science fiction.
Just think about some of the new blockbuster movies and books incorporating biotechnology:
The bite of a genetically modified spider transforms Peter Parker into a New Spider Man.
The New Hulk is the result of a biotechnology experiment gone awry.
The original Spider Man and Hulk were the result of radiation - not biotechnology.
Michael Crichton's book, "Prey," deals with nanotechnology run amok.
Even Danielle Steele got into the act, with a book called "The Klone and I."
Meanwhile, some of the science-fiction elements of the technology are, in fact, becoming reality, and that's something that BIO and THBI has to deal with on a daily basis.
Almost a decade after Jurassic Park hit the screen, the San Diego Zoo worked with a biotechnology company to create a clone of an extinct species - the banteng - using a stored DNA sample.
In fact, biotechnology gives us no end of "fun" news stories.
Many of you are probably familiar with Genetic Savings and Clone, a company based here in Texas that aims to develop a pet cloning business and last year put pictures of CC the cloned kitten on every front page in America. And somewhere in between fact and fiction are the sensational stories about using Ted Williams' DNA to make batting champ clones as well as the Raelians apparent human cloning hoax. But beyond the sensationalism, what's clear is that biotechnology has become part of the cultural and economic landscape.
It no longer operates solely within Wall Street's boundaries or can be defined solely within financial borders.
It is everywhere.
And the bottom line - for those of you who are more interested in the business than in the cultural impact - is that when a technology goes mainstream, it eventually becomes big business.
In the middle of the past century, General Motors took off and became the largest corporation in the world when cars became a part of every adult American's life. Perhaps some day, a biotech company will become the new GM.
But what does all this new political credibility and public interest mean to you - and your enterprise?
As I proposed in the beginning, it means that your business will grow because of it.
But this delicate framework of credibility and trust must be carefully maintained.
And that only happens, folks, when state and federal and global political decision-makers view us as good partners and our products as good news.
BIO and Tom Kowalski of THBI work every day to keep the benefits of our science in the front of the minds of millions of people, and the political tides rising in our favor.
We at BIO - and everyone here in Texas who is an active advocate - helps create that happy relationship, and that effort truly helps your biotech business- and everyone's biotech business to "go forth and multiply."
And the end is nowhere in sight. Every expert who watches this industry agrees that we have more industry expansion ahead.
I saw an analyst report from Bank of America last month that projects 33.5 percent earnings growth for the top nine biotech companies in 2004.
But the growth isn't limited to the largest companies - venture capital funds still have billions of dollars to invest in the life sciences, because ideas, good ideas in this field are endless. And as you all recognize, that's where the real opportunities lie for Texas. To continue to channel research at your top universities and medical schools into venture-stage companies, nurture those companies, help them grow, and someday, one of them will become the next Amgen or Genentech, or perhaps something altogether bigger and better.
Bigger and better - that's Texas all over.
And, from where I stand, it's biotechnology's future as well.