North Carolina’s life science leaders can no longer consider South Carolina or Virginia or Georgia their competitors.
That’s one warning from Matthew Szuhaj, director of operations and strategy for Deloitte Consulting and the site selection company’s life sciences industry service leader.
The real competition, said Szuhaj, is from places like Ireland, Switzerland and other far-flung global hubs of health care, ag and pharma commerce. Far-flung, as in Brazil, India and China, too.
Szuhaj was among a group of industry leaders who huddled with more than 100 North Carolina economic development gurus recently at the Marriott City Center in downtown Raleigh for a Life Science Economic Development Summit organized by the North Carolina Biotechnology Center.
Summit gathers intelligence from intelligent people
Bill Bullock, MBA, the Center’s lead corporate recruiter as vice president of bioscience industrial development, has organized several such summit meetings. They’re designed to pick the brains of key players in the global life science site selection business, and simultaneously share the news about risks and opportunities with North Carolina leaders who need to confront changing realities for continued success.
NCBiotech President and CEO Doug Edgeton and Bullock opened the day-long event with newly published statistics from Battelle showing North Carolina’s life science sector growth continues to far outpace other sectors – not only in North Carolina, but in large measure, globally.
Change, however, is happening quickly, noted Bullock – especially in pharmaceuticals. A big shift away from chemicals, or small molecules, to biologicals, made from large and complex proteins, is the primary reason.
Biologicals are more costly and time-consuming to develop and make, but they can also be made in smaller factories in more locations, noted Szuhaj. And because new biological therapies will increasingly need to target or avoid people with certain genetic traits, so-called companion diagnostics that detect specific biomarkers represent “a huge growth area.” Szuhaj said North Carolina and the Southeast is well poised to be “a big player in companion diagnostics.”
Panel rich in site selectors’ insights
Szuhaj was later joined by two other life science site selection consultants on a panel discussion. They shared their insights gleaned from locating hundreds of economic development projects worldwide.
That panel included Katie Culp, president of KSM Economic Development, part of the Katz, Sapper & Miller Network, and Andrew Shapiro, managing director of Biggins Lacy Shapiro & Co.
Here’s a thumbnail rundown of questions posed by Bullock, as moderator, in boldface, and some of the site selectors’ thoughts:
What trends are working in life science site selection? What are the best practices for economic development organizations?
- Szuhaj – All people in one place – same logo on business card, so the economic development organization appears seamless to the client. The best economic development organizations are nimble. They’re ahead of the curve in customer service.
- Shapiro – Put all information in one place, don’t make them hunt. Katie Culp calls this brain damage. Know your community better than anybody. Maintain your credibility with local businesses. Target your info to site selectors.
What creative ideas are helping to land economic development projects?
- Culp -Incentives aren’t rocket science, but there’s an art. Incentives programs are similar across states. The deal maker is the user-friendliness of the programs. They must be well-funded, accessible, easy-to-use programs.
- Shapiro -On talent, pay attention to pipeline. Everyone in this industry knows that you’ve got to get kids interested in STEM by middle school. Workforce development programs that reach students early in middle school in the STEM courses.
- Szuhaj – The life science world is proprietary. Employees must be licensed in the process. Learning and processing is different. We do this really well here. Training has to recognize proprietary nature; it can’t be a blanket grant to get equipment for a university. It’s good to have one place that says we’ll train people. If you don’t like them, you don’t have to hire them. Georgia built a pilot facility for Baxter, and they will operate it for 20 years.
What about less-urban areas – how do they compete?
- Culp – It’s tough – rural areas don’t have the same benefits and resources. Define a practical, realistic game plan. For instance, consider targeting the supply chain companies (supplying to a larger manufacturer in an urban area) that don’t have to be close by.
- Shapiro – Clinical studies can be done in a rural setting. Telemedicine and remote healthcare are evolving in ways that can benefit rural areas.
- Szuhaj – Changes in healthcare – informatics is one thing, telemedicine is another. Healthcare is changing, not just because of ACA. Private practices won’t be able to sustain themselves. They’ll increasingly need to affiliate themselves with hospitals, rural hospitals, be acquired or go bankrupt. Telecare steps in. But in the interim, keep practitioners in your geography by helping them connect with resources they need. The big constraint on telemedicine is cell phone battery life. Even so, in five years, private medical practices will be gone. We’ll continue to see aggregation of hospital groups — mergers and buy-outs. Rural hospitals will go out of business due to legislative acts. Be proactive in working with medical groups in your area.
- What’s the current perception of North Carolina?
- Shapiro – North Carolina historically is a good brand. My Dad would try to move us to high point for access to the furniture market. (But that also contributed to a confusing, sometimes negative, image of the state). Now it has taken a 180 degree turn. North Carolina is one of the premium life science brands. It’s not California or Massachusetts, but it’s certainly ascending. But NC is also a state that struggles with itself. Sometimes within and between administrations. Every couple of years, it has to decide whether it wants to be a player or not be a player. Other states plow ahead; in North Carolina we stop and consider, and then move forward. I look forward to the day when we pull it together. NC needs to rally around a common ground, and refocus.
- Culp – You’ve got a great product to sell. However, my clients see North Carolina as too difficult, with all the statutes and legislation. I have had projects think, ‘Do they even want us to come here?’ Some of it you can’t control. Our job is to shield our clients from all of the brain damage; when the pain level is reaching them, it’s not a good thing. You have a lot of great things going on. Unifying that — and having a common message — would go a long way.
- Szuhaj – North Carolina has a great brand. To have a common message, you have to be pragmatic that not every community in the state is suited for the life sciences. Still, there are many opportunities in life sciences. The best brands don’t trip over themselves. In North Carolina, the bureaucracy sometimes gets in the way. Everyone doesn’t think every project is suited for them. Sometimes there’s a perception that the state is competing with itself, which doesn’t help.
- Shapiro – Think about the auto market. Every strata of the market. States should be doing the same thing. On one hand there’s an overarching state brand, but you have products in every segment of the market. Stay in the game longer. You’re not one thing, you’re many things to many people.
What are the biggest mistakes that economic development organizations make? What are your pet peeves?
- Szuhaj -Not asking the right questions to find out whether you qualify for a project. It doesn’t matter what the name of the company is. Ask questions. Not, ‘when’s the deadline/’ Is it an expansion? Is it a market entry? Qualify the opportunity to find out whether you can compete.
- Culp – Lack of responsiveness by economic development organizations or an economic development director who can’t find the answer. Site selection consultants need help finding particulars. Answer all of our questions.
- Shapiro -Not getting answers from economic development organizations and having them answer questions that aren’t being asked. Give specific, not off-the-shelf, answers.
- Szuhaj -Site selection consultants don’t want to miss anything.
What are the biggest challenges for your clients?
- Shapiro – Lack of available facilities. The recession put a damper on building so there’s less supply now.
- Culp – The cost of doing business and workforce. Economic development organizations need to provide reassurance of low risk to the companies. They don’t want to fail.
- Szuhaj – Lack of creative incentives. One rural incentive program for a life science project encouraged the company to buy local by giving them $200,000 to spend on anything in the local economy (office supplies, restaurant meals, facilities services, etc.). What creative incentives are you working on?
Editor’s note: This report was written by Sarah Bernart, Robin Deacle and Jim Shamp of NCBiotech Corporate Communications.
(C) NC Biotechnology Center