Biotech Strategy Blog

Commentary on Science, Innovation & New Products with a focus on Oncology, Hematology & Cancer Immunotherapy

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I was recently in San Francisco so thought I would continue my theme of writing about biotechnology regions that I visit around the United States.

Growing up in England, I remember listening to the radio broadcasts of the late Alistair Cooke, who from 1946 to 2004 shared his “Letter from America“; the longest running radio programme ever produced.  In the pre-internet era his mixture of anecdotes, insights and reflections reminds me of modern day blogs.

San Francisco remains a favorite city of mine. Fueled by access to venture capital and proximity to major research universities such as Stanford, University of California at Davis, Berkelely & San Francisco, start-up companies continue to thrive in the Bay area. BayBio, Northern California’s Life Science Association runs many excellent events. Their annual conference in April is focused on “Powering Global Innovation.”

The anchor tenant in the San Francisco biotech mall remains Genentech, and no other company in the area has had the same growth trajectory.  What catapults a company forward is a combination of a breakthrough product and ability to capture its value. The licensing deals and acquisitions we see today in the biotechnology industry, to some degree limit the ability of emerging biotech companies to repeat Genentech’s model. Risk sharing, partnering and the desire of venture capitalists for an early return on investment, all limit the ability of a biotech company to make it to the major leagues. In the end, even Genentech ended up being acquired by Roche.

What’s the future in San Francisco? It remains a high cost place to live but with a pool of talent in the entrepreneurial culture of the West Coast. There is also the uncertainty about the California economy and the cost of doing business, which is most likely set to increase.  In some way, my impression is that San Francisco has not quite taken off as a biotechnology city in the same way that Boston and Cambridge has. Feel free to comment if you disagree or have an opinion otherwise.

I was in Austin last week for a business meeting (spot the snow around the State Capitol) and was interested to learn that Austin, TX is an emerging and growing biotechnology cluster.

Michael Porter in the Harvard Business Review has written about the importance of clusters of interconnected companies, universities, suppliers and service providers and how these drive increased productivity, innovation and stimulate further new businesses.  An important contributor of growth and economic development is the pool of talented workers that develops and is attracted to the local area around the cluster.

Despite being better known for its high tech companies such as Dell, and as the “live music capital of the world”, there is an emerging biotech cluster around Austin. Austin boasts warm winter weather (most of the time), proximity to the flagship University of Texas at Austin, and the incentives of a tax friendly, State of Texas (no personal or corporate taxation).

According to the Austin Chamber of Commerce, there are now more than 100 companies in the areas of research, diagnostics, pharmaceuticals and medical devices. These include Abbott Spine, Arthrocare Corp, Agilent, Alk-Abello, Asuragen, Luminex, Viagen and Zimmer Biologics. Although the University of Texas at Austin lacks a medical school, MD Anderson established a Science Park for basic and translational cancer research in the area.  This reminds me of similar facilities in La Jolla.

The University of Texas at Austin also provides a growing pool of educated workers, and I see the convergence of information technology in drug discovery, as where the many IT graduates with an interest in life sciences, can have an important role to play.  Bioinformatics and computational biology is becoming increasing important in cancer research, for example.

The University, like many others, provides an incubator for technology start-ups that has raised over $725M in funding.  You can read about the important role incubators have to play in the development of biotechnology companies in Christopher Pirie’s interesting article in the MIT Entrepreneurship Review).

However, what cements my view that Austin is an emerging cluster, is the fact that growing start-up companies are now choosing to relocate to Austin, rather than move to more established biotech areas such as Boston or Seattle.  Pain Therapeutics Inc. a San Mateo, CA company announced in October last year they would be moving to Austin by the end of 2011 and planned to hire 50-100 employees in Research & Development.  As more companies move to the Austin area, this trend is likely to continue.

If you are a growing, biotech start-up company, Austin should be on your radar of potential areas to build your business.

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