July 1, 2006 (Vol. 26, No. 13)

Results-Oriented Marketing Plan Would Refocus Players Beyond Individual Motivations

For decades we have attended international biotechnology conferences and marveled at the economic development-focused exhibitions. Even though only a small percentage of life sciences companies actually relocate to form companies away from their roots, international and domestic exhibitors espouse a common theme; site here and bring your friends. Their motivationjobs, jobs, jobs.

Exhibitors entice founders and CEOs with a wide spectrum of inducements: institutional and technological excellence, free land, preferential tax rates, and low electricity and/or water rates. They punctuate the sale with regional culinary novelties: home of the famous crawfish (with plush toy), tasty sour mash whiskey (no samples).

The Illusive Carrot

Generally speaking, cities and towns welcome biotechnology to their commercial mix. They perceive the industry as on fire with potential, the stuff to underwrite communities for decades to come. Economic development interests, elected officials, and Chambers of Commerce make the case that biotechnology equals jobs, especially in regions where legacy industries have faltered or failed. Dangling the illusive carrot of jobs, and the presumption that the biotechnology industry will actually deliver substantial additional jobs or tax base is a dicey metric.

As we strolled through the international BIO exhibition this year, we asked ourselves what if we refocused the evaluative criteria for economic development success from jobs to the number of products a region&#8217s businesses produced directly on their own or indirectly through sales and marketing partners, universities, and biotechnology companies? What if an important goal was creating an innovation milieu that was focused on scouting out and mitigating roadblocks to commercialization of products?

The financial success of pharmaceutical giants is tied to delivering and building value every year. These companiessome of them centuries oldare dependent upon a steady, rich pipeline of assets in development. They now embrace augmentation of their product pipelines through in-licensing, comarketing, and copromotion agreements from the biotechnology sector. This focus ensures balance in their R&D portfolios and is the basis for sustainable growth.

The key to product relevancy and financial success is for the life sciences company to understand, quantify, and meet the needs of customers with the tools of biology that can actually target disease and disorders. Biotechnology can also target conditions of aging at a time when a significant marketbaby boomerswith all kinds of needs are vitally concerned with keeping their bodies fun to live in for as long as possible, and they&#8217re willing to pay for it, exhibiting solid buying power.

So, what can we learn from this? There is a willing buyer at the other end of the innovation process that&#8217s not necessarily tethered to reimbursement. Also, in addition to finding cures for humanity&#8217s scourges, there is a burgeoning market for so-called lifestyle interventions, e.g., vision repair, looking good through cosmetic surgery, pain-relieving measures that restore mobility.

Another point to keep in mind is that biotech academic research organizations and start-ups may, in fact, not matriculate to FIPCOs (fully integrated pharmaceutical companies), providing lots of employees to communities and tax revenues, as did legacy companies in decades past. There&#8217s a high probability that biotech companies will represent research innovation to major pharma, which in most cases are geographically distanced from the regions who wish to create biotech corridors.

Decision-Support Tools

It occurred to us that with the certainty of rapid change, it behooves state economic development departments to spend more time in industry breakout sessions, keeping abreast of the industry&#8217s financial, clinical, and business development trends. They should also add to their promotion staff subject-matter expertise in customer/market trends, industry finance, and cost-benefit/ROI analysts who can provide forecasts as thoughtful decision- support tools for local economic development and elected officials.

While there are many inexplicable roadblocks that drain the life energy out of young start-ups that yearn to get their enterprises under way or expanded, one in particular caught our attention; state legislatures who allow needlessly restrictive conflict-of-interest statutes to remain on the books that hog-tie private industry&#8217s ability to license technologies from research entrepreneurs at state universities and in doing so, create attitudinal barriers to commerce.

Ironically, some biotech companies are looking to bring products into their organizations to double down on product introductions and move their operations into the black after years of burning investors&#8217 cash.

Ethical behavior is often the stuff of example, not statutes. &#34Sunshine&#34 should be the hallmark of all transactions with potential conflicts of interest. We need to be concerned with building and sustaining collaborative relationships between business and academia so that the taxpayer ultimately wins. We need to remember that cancer, multiple sclerosis, and diabetes are the enemies.

Beware the Bait and Switch

A reporter writing for one of Florida&#8217s Treasure Coast newspapers called recently to discuss what made tier-one biotechnology regions successful. The Treasure Coast, he explained, was being repositioned to the Technology Coast.

So, we went up on the Technology Coast&#8217s Website that featured links to the three counties that formed the enterprise. The three-county area has good bones: research institutions and relevant government and industry players where basic and applied research is being undertaken. On closer read, we observed that the three counties were actually competing with each other for the visitor&#8217s mind share and business rather than the turn-key corridor as originally portrayed.

Florida is not alone. This good faith &#34bait and switch&#34 is repeated all over the country because the success metric of city and county economic development departments has equaled companies sited and jobs created; pluses at election time. We&#8217ve served on committees populated with county representatives, planning appearances at international biotech conferences, contributing expertise on messaging strategies that present the state or region as a whole rather than focus on the sum of its parts. These committees are chronically under-funded.

We have seen representatives intellectually, and later physically withdraw because members can&#8217t agree to a regional message: they can&#8217t run the risk of losing out to another county. This is a no-win game, and some counties and trade organizations are deciding not to exhibit, because success is hard to quantify.

Perhaps keeping track should be how many building permits for new construction and additions were written in a timely fashion using an efficient cross-counties process that is sensitive to the industry burn rate, which can be a million dollars a month. Are there local VCs, and are they wooing university-based entrepreneurs? Are local service industries being supported by core biotech companies, or are the biotech companies shopping elsewhere? Why are they doing so? How many products are being produced? Who&#8217s tax base are they accruing to?

All players need to open a dialogue about need-based relevant metrics by which to judge success. This approach could lead to a results-oriented marketing plan that would refocus the players beyond their individual motivations.

We challenge the organizations involved in these enterprises to turn the looking glass around and view the life sciences industry from its &#34ouch&#34 points. Crawfish and sour mash become relevant with the celebration of a product launch or M&A activity.

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