Market Information
United States

Biotechnology Sector Profile
U.S. Mid-Atlantic

November 2002

Canadian Embassy
501 Pennsylvania Avenue NW
Washington, DC 20001
Contact: Manuel Ellenbogen
Business Development Officer
Tel.: (202) 682-7766
Fax: (202) 682-7619
E-mail: manuel.ellenbogen@dfaitmaeci.gc.ca
Internet: www.canada.de

MARKET OVERVIEW

Revenues for the biotechnology industry in the United States reached $36.4 billion1 (US$25 billion) in 2001, generated by 1379 biotechnology companies. By comparison, the Canadian biotechnology industry had 358 biotechnology companies in 1999, with revenues of $2.8 billion. Based on revenue alone, the Canadian biotechnology industry is less than a tenth (about 8.5%) the size of the U.S. biotechnology industry.

In addition to having the largest biotechnology industry, the United States is also the world's largest provider of funds for research, including biotechnology. Total federal research and development (R&D) spending reached $150 billion (US$103 billion) in 2001. As a measure of the current importance of the biotechnology industry, the budget for the National Institutes of Health (NIH) will reach $39.3 billion (US$27 billion) in October this year.

The two agencies with the largest budgets are the NIH and the Department of Defense (DoD), which together account for 70% of the $150-billion (US$103-billion) R&D budget, a major portion of which has been allocated to biotechnology and associated research. Smaller research budgets for biotechnology also exist at the Department of Energy and the new Department of Homeland Security.

The Mid-Atlantic States

States in the mid-Atlantic region are becoming increasingly interested and involved in the biosciences, and continue to develop new initiatives to address the specific needs of biotech companies. Important incentives include the potential of biotechnology to improve health and quality of life, and the promise of human genome mapping. New sources of funding have been provided by state tobacco settlements, and to some extent by the demise of the "dot-com" phenomenon, which is freeing up capital to be spent elsewhere.

The mid-Atlantic region already has the third-largest concentration of biotech companies in the United States, after California and New England. The current status of biotechnology activities in individual states can be summarized as follows:

Delaware Although the biotechnology industry here is comparatively small, it is growing quickly. NIH support to Delaware institutions increased by nearly 81% from 1996 to 2000, and the state is developing a strategic plan that includes a focus on biotechnology.

Maryland initiated a comprehensive biotechnology strategy in 1991 and now is reaping the benefits, with 320 companies in the state. Federal facilities such as the National Institutes of Health, and academic institutions such as Johns Hopkins, all serve as a magnet to attract biotech companies.

Pennsylvania is using $2.9 billion (US$2 billion) of its tobacco settlement funds to boost biotechnology in the state. It is investing $94.5 million (US$65 million) per year in universities and research institutions, and $145 million (US$100 million) to create Life- Science Greenhouses in the biotech hubs of Pittsburgh, Philadelphia, and the central region. The state is also setting up additional funding through a Life-Science Venture Fund.

Virginia is starting to catch up and now has about 160 biotech/life sciences companies. Organizations such as Virginia's Center for Innovative Technology and the Virginia Department of Business Assistance provide strong support for the industry. Howard Hughes Medical Institute plans to complete its research labs and conference facility by 2005, ready to create and disseminate the research tools needed for biomedicine in the 21st century. Other organizations for promoting biotechnology include the Center for Innovative Technology (CIT), the Virginia Economic Development Partnership (which helps companies relocating to Virginia) and the Virginia Biotechnology Association.

Washington, D.C. provides political power and influence through the various federal departments, and also offers support infrastructure such as conference facilities that enables networking and growth to take place. The District has a number of biotechnology efforts under way, such as the Washington D.C. Technology Council, the Greater Washington Board of Trade International Gateway, the Georgetown University National Reference Center for Bioethics Literature (information resource on Ethics and Human Genetics), and the Washington D.C. Biotechnology Directory.

OPPORTUNITIES

The best opportunities for Canadian researchers to participate in the mid-Atlantic biotechnology market lie in the medical, agriculture (plant, animal, and food), bioterrorism, and environmental biotechnology segments. Much of the research in these areas is carried out by universities who receive funding from NIH, DoD, and the Department of Agriculture (USDA). Canadian researchers are able to collaborate with U.S. universities on projects jointly funded by the National Science Foundation (NSF) (www.nsf.gov) in the United States and either the Natural Science and Engineering Research Council (NSERC) (www.nserc.ca) or the Social Sciences and Humanities Research Council (SSHRC) (www.sshrc.ca) in Canada.

The National Science and Technology Council (NSTC) is developing a coordinated, inter-agency R&D plan for antiterrorism that will identify many priorities, such as rapid detection and verification of biological threats. For more information on this important area, request a copy of the report on security research from NSTC, www.ostp.gov/NSTC.

The following research areas also present opportunities for Canadian companies:

• Stem Cell Research: After much debate and controversy, federal funds are now available for research using human embryonic stem cell lines certified by the Government.
• Nanotechnology: The current implications of nanotechnology for the biotechnology industry are chiefly in the fields of diagnostics and therapeutics.
• Bioterrorism: Continued concerns about bioterrorism have focused interest not only on the development of vaccines, antibodies and biomedical therapies but also on biosensors for security.
• Mapping vs. Drug Discovery: Investment is moving away from gene- and proteinmapping and into drug development and marketing.
• Wet Lab Space: Wet lab space continues to be in short supply, and therefore presents opportunities to Canadian firms that can offer expertise in designing, constructing, or managing such facilities.

Major new developments under way or in the planning stages include:

• Eli Lilly is establishing major manufacturing facilities for Eli Lilly in Manassas, Virginia, and
• The Hughes Medical Institute is planning a $727-million (US$500-million) research facility in Loudoun County, VA. This facility will act as the nucleus for a series of ancillary companies and service industries. Although the focus is expected to be more on bio-informatics than biotechnology, there should be plenty of scope for Canadian biotechnology companies and laboratory construction firms.

The most important event next year will be the Biotechnology Industry Association annual convention, BIO2003, taking place from June 22 to 25, 2003, at the new Washington Convention Center. In addition, each of the state biotechnology associations holds annual conferences, such as Virginia's VABIO, which is likely to take place in October 2003. (For more information on this event, visit the Virginia Biotech Association's Internet site at www.vabio.org).

KEY PARTICIPANTS

Canadian Position

Canada is often a research partner of choice for U.S. organizations seeking to outsource their R&D, thanks to geographical proximity and similar business culture. However, foreign governments are making considerable efforts to pursue potential collaboration with U.S. government departments, research organizations, and industry.

Initiatives to promote biotechnology include the Delaware Biotechnology Institute (DBI), the Delaware Biomedical Research Infrastructure Network (BRIN), and the Molecular Biotechnology Center, established in the University of Delaware Technology Park (DTP) by the German Fraunhofer Society.

Canada offers a number of advantages to U.S. government departments and companies that are looking to spend research dollars outside the country. Canada's high standard of research, proven track record, well-equipped laboratories and favourable exchange rate all serve to attract contracts and investment from the United States.

Competitive Advantage through Canadian Government Policies and Initiatives

Several years ago, Canada launched a major drive to improve the Canadian competitive environment in the U.S. biotechnology market. The Government has done so by increasing the funding for institutions such as universities and hospitals, creating biotechnology incubators for medical, plant and animal research. With considerable foresight, Canada also established specialized genomics centres.

PRIVATE- AND PUBLIC-SECTOR CUSTOMERS

Delaware has the smallest number of bioscience companies in the four mid-Atlantic States, but the sector appears to be growing rapidly. Delaware's established mediumsized biotech companies of potential interest to Canadian firms include ABS, Hercules, New Photonics, Optigenix, Strategic Biosolutions and Intervet. Agricultural biotechnology is also conducted by such companies as DuPont.

Maryland now has the third-largest concentration of bioscience companies in the nation, behind California and Massachusetts. Included are some of the best-known biotech companies, such as MedImmune, Celera Genomics and Human Genome Sciences. The state is also home to several important federal facilities, including the National Institutes of Health, the Food and Drug Administration, the Walter Reed Army Institute of Research, the Naval Medical Research Institute, the National Institute of Standards and Technology and the Agricultural Research Center.

In addition, major academic institutions incorporate science and technology research centres, such as the University of Maryland and Johns Hopkins University. Other significant organizations include the High Technology Council of Maryland, a bioscience alliance; MdBio, a private non-profit; and a network of biotechnology incubators in College Park, Rockville and Baltimore. Maryland now has about 330 biotech companies, many of them small to medium-sized. Firms such as Antex Biologicx, Avancis Pharmaceuticals, BME Systems, Genetic Therapy, Intellivax, Protiveris, Psychiatric Genomics and Viaken Systems are of potential interest.

Pennsylvania has three centres that provide technology transfer and interdisciplinary research: The University City Science Center in Philadelphia, the Ben Franklin Innovation Center at Delaware Valley College, and the Penn State Nanofabrication Facility. Associations that provide networking and support for biotechnology include the Pennsylvania Biotechnology Association (PABiotech) and the Pittsburgh Technology Council. Over 160 biotech companies reside in Pennsylvania. Some of the established small to medium-sized firms include Calcigen, Centocor, Cephalon, Delmont Laboratories, Life Sensors and Neose Technologies.

Virginia is home to 160 bioscience and pharmaceutical companies, dispersed throughout the state with growing clusters in Richmond, Blacksburg, Charlottesville and the Greater Washinton/Dulles area. Virginia's bioscience research universities include Virginia Commonwealth University in Richmond; Virginia Tech in Blacksburg (Fralin Biotechnology Center); University of Virginia in Charlottesville; and George Mason University in Manassas. Virginia also has a number of research parks, including Virginia Biotechnology Research Park in Richmond; Fontaine Research Park in Charlottesville; Virginia Tech Corporate Research Center in Blacksburg; and the Fairfax Economic Development Authority Incubator in Springfield. Virginia's established biotech companies include American Type Culture Collection, Aptagen, Commonwealth Biotechnologies, Covance Laboratories, CropTech Development, Empirical Technologies, Insmed Pharmaceuticals and PPL Therapeutics.

KEY CONTACTS

Canadian

Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, ON K1A 0G2

Market Support Division (TCM)
Tel.: (613) 996-1793
Fax: (613) 943-8820
Contact: Chris Duggan, Trade Commissioner-Health and Biotechnology Industries
E-mail: christopher.duggan@dfait-maeci.gc.ca
or Michelle Morris, International Market Analyst-Health and Biotechnology Industries

United States Division (NUB)
Tel.: (613) 944-5912
Fax: (613) 944-9119
Contact: Diana Nichols Nelson, Trade Commissioner-Biotechnology
E-mail: diana.nichols-nelson@dfait-maeci.gc.ca

BIOTECanada
130 Albert St., Suite 420
Ottawa, ON K1P 5G4
Tel.: (613) 230-5585
Fax: (613) 563-8850
E-mail: info@biotech.ca
Internet: www.biotech.ca

Industry Canada
235 Queen St.
Ottawa, ON K1A 0H5

Bio-Industries Branch
1505 Barrington St.
PO Box 940, Station M
Halifax, NS B3J 2V9
Tel.: (902) 426-9958
Fax: (902) 426-6094
Contact: Mark Craig, Trade Development Officer
E-mail: craig.mark@ic.gc.ca
Internet: http://strategis.ic.gc.ca/SSG/bo01376e.html

United States

Delaware Biotechnology Institute: www.dbi.udel.edu

Delaware Economic Development Office (DEDO): www.state.de.us/dedo

Maryland Bio (MdBio): www.mdbio.org

Maryland Department of Business and Economic Development: www.choosemaryland.org

Pennsylvania Biotechnology Association (PABiotech): www.pabiotech.org

Pennsylvania Department of Community and Economic Development: www.inventpa.com

Virginia Biotechnology Association (VABio): www.vabio.org

Virginia Economic Development Partnership (VEDP): http://yesvirginia.org

Washington DC Technology Council: www.dctechcouncil.org

BIBLIOGRAPHY

BioPharm. Biotechnology in the Limelight: the Year Ahead, January 2002

Biotechnology Industry Organization. State Initiatives in Biotechnology, 2001

BioWorld Financial Watch, 2002

Committee on the Biological and Biomedical Applications of Stem Cell Research. Stem Cells and the Future of Regenerative Medicine 2002

Ernst & Young. The Biotechnology Report: Focus on Fundamentals. 2001

NIH. Stem Cells: Scientific Progress and Future Research Directions, 2002

Nordic Embassies. Bio-Informatics in the Greater Washington DC Region. 2001

Statistics Canada. Biotechnology Use & Development Survey, 1999

The Scientist. Bioterrorism Projects Boost US Research Budget, March 2002

The Scientist. Funding Flows of Stem Cell Research, March 2002

The Scientist. Nanotech Dreams, March 2002

Washington Post. Big potential from Small Things, March 2002

Useful Internet Sites

Canadian Trade Internet Sites

Canada's Trade Commissioner Service: www.infoexport.gc.ca

Canadian Business Services Centres: www.cbsc.org

Export Development Corporation: www.edc-see.ca

Team Canada Inc.: http://exportsource.gc.ca

U.S. Internet Sites

Please consult our office for a comprehensive list of federal, state, and general Internet sites relating to the biotechnology sector.

1 All monetary amounts are expressed in Canadian dollars, unless otherwise indicated. The conversion rate to Canadian dollars is based on IDD Information Services, Tradeline, March 2002.