Editor’s note: BioWatch is a regular feature on Fridays.Although the biotech community in North Carolina celebrated the Golden Leaf Foundation’s commitment of $60 million and additional state and private industry money to training future workers for biomanufacturing jobs this month, not everyone thinks it is such a great idea.

Tom Vass, owner of The Corporate Investment Center Inc., which connects entrepreneurs with investment banks, thinks the whole thing is a government boondoggle. Vass, a Republican activist, often couches his arguments in partisan terms, but he raises valid questions about the state’s much-lauded biotech initiative.

Vass, who says he obtained reports Golden Leaf used to help it make its decision through stealthy means when the Foundation would not give him copies, sees numerous things wrong with pumping a huge amount of money into training workers for biomanufacturing.

Vass contends:

  • The number of jobs biomanufacturing may create in the next decade is far less than claimed. Among other things, Vass says, the method used to estimate the number of jobs used the growth rate figure for booming contract research organizations (CROs) rather than a slower biotech growth rate.
  • When biomanufacturing matures and its processes become routine, those jobs will go overseas to cheaper labor just the way textile jobs did.
  • Supporting biotech work training may actually help keep biomanufacturing wages lower by reducing the need for biotech companies to take workers from each other.
  • The state would be far better served by supporting small, homegrown companies, local governments, and dropping tax rates.

Flawed projections?

Vass complains that “the method the NC Department of Commerce used for predicting the number of jobs biomanufacturing might produce is flawed. So they threw everything they could into the mix, such as using CRO growth rate numbers. It’s ludicrous.”

He suggests that the markets for biotechnology and biotech manufacturing five to ten years out are uncertain. “Given that you can’t predict, to hold out the prospect of 100,000 jobs is irresponsible.”

Vass believes the state is making a mistake similar to its investments in textile manufacturing and microelectronics, which he claims are among the reasons North Carolina now has one of the highest unemployment rates in the nation. “In an early stage of innovation, more jobs get created in a regional economy,” he says.

“But as a process or product becomes standardized, as in the cases of tobacco, textiles and fiber optics, those processes are easily shipped overseas to countries with cheaper labor. It’s a fool’s game for NC to promote this.”

Vass notes that PriceWaterhouse Coopers’ recent Money Tree report on venture investment in North Carolina lists biotech investments by venture capitalists from 1996 as last. It follows VC investments in medical devices, electronics, software, IT services, financial services, media, telecommunications, semiconductors and computers.

“The VCs in the southeast are selecting biotech last. Doesn’t that suggest a more diversified approach,” asks Vass.

Focusing all that money on biomanufacturing, Vass contends. is primarily of interest to the 11 large pharmaceutical companies in the state.

“The strategy for NC is for the government to create a business and financial infrastructure targeted to the needs of native new ventures,” Vass says. “That’s our economic strength. We need a comprehensive capital markets infrastructure that goes from friends and family to the investment bankers and merger and acquisition guys.”

Vass says he often puts his arguments in political terms because he believes the process of deciding these things has been politicized. “Golden Leaf is not accountable in any way to the taxpayers or voters of the state,” he says. “They’re appointed by the most powerful Democrats in the state. This thing has committed the taxpayers of the state to an ongoing boondoggle.”

Vass has ideas for what he thinks the state should do and raises other issues we’ll deal with in other columns along with responses to some of Vass’ arguments. But Noah Pickus, director of the Institute for Emerging Issues at North Carolina State University, offers some initial replies.

Some answers

One of Vass’ arguments is that the state needs a way to involve its citizens and government in open debate of issues of economic importance rather than deciding them in closed sessions of foundations run by political appointees.

“I think we offer the best opportunity for that,” says Pickus, who suggested the need for a similar statewide initiative to bring government, private industry, and citizens together to discuss such issues when we first interviewed him two years ago. Pickus says the Emerging Issues Forum is working toward creating something of that nature, but it’s slow going.

“It’s two steps forward and one back,” he says. Pickus also agrees with Vass that the state needs to seek ways to evaluate such plans objectively. “Some states have even created commissions that outsource evaluations to people outside the state. But you have to realize,” he cautions, “there are models we would do well to consider, but there is no perfectly objective evaluation.”

Pickus says that NC’s emphasis on biotechnology “strikes me as a powerful and creative synthesis of the old and new economy. It’s a big picture idea that’s different from the past.

“If it turns out we don’t get quite the number of biomanufacturing jobs we expected, we’re actually betting on transferable capacities and skills. If you know how to work in a clean room, those skills apply to more than biotech manufacturing. You’re basically betting on training that can be transferred rather than on a particular industry.”

Pickus says Vass may have a point about manufacturing going overseas when it becomes standardized, “But the response to that is not to just ignore large manufacturing jobs,” he says. “You have to find ways to be competitive with cheaper labor overseas. If we stay on the cutting edge of manufacturing, we’ll always be ahead of that curve.” Pickus says he thinks the bioworkforce training helps the state to do that.

Pickus asks, “what is the alternative? To say we’ll never have those jobs again?”

Stay tuned. More to come.

Milestone for Alveolus

Alveolus, a Charlotte-based start-up that makes stents to open non-vascular passages blocked by tumors or other obstructions, had its devices implanted in human patients for the first time this week.

The company says Dr. Gerard Silvestri, a lung cancer specialist of the Charleston SC Medical University, implanted the stents in two human patients successfully.

Traditionally, stents have been used to keep coronary arteries or peripheral blood vessels open. Alveolus specialists are pursuing the same stent concept in other areas of the body including the airways, esophagus, and colon. The need for such stents is particularly great in treating cancer blockages of airways, esophagus, and colon, the company says.

Georgia Life Sciences Summit

The Georgia Biomedical Partnership presents the Georgia Life Sciences Summit 2003: “The Power of Collaboration, featuring hundreds of life sciences representatives is Sept. 24. G. Steven Burrill, of Burrill & Company, and Georgia Gov. Sonny Perdue keynote the event.

Corporate Investment Center:

Emerging Issues Forum

Georgia Life Sciences Summit