The Wisconsin Biotech Story: Slow and Steady Wins the Race

12/10/12Follow @xconomy

[Updated 1:04 pm PT] They say you can’t go home again. But sometimes you can go home after a few years and notice that your home has changed quite a bit.

This past week, I went back to Wisconsin, where I’m originally from, to visit family and do some reporting. I stopped by the capitol, Madison, to take stock of what’s happening in Wisconsin biotech, and maybe come away with a story idea or two.

My bias coming into this visit was bi-coastal: Most of the action in biotech happens on the East and West coasts. Wisconsin, like several other Midwestern states, has a great research university, but hasn’t quite been able to leverage that asset into a thriving commercial biotech cluster. Like a lot of states and regions around the world, Wisconsin officials have worked hard to create a biotech hub, without making it into the major leagues. There’s a lack of venture capital, and the business culture doesn’t really support super-speculative biotech startups. When I left Wisconsin a dozen years ago, it was famous for its work in human embryonic stem cell research, but many people were moaning about how the commercial rights were licensed to a company in the San Francisco Bay Area (Geron).

Those perceptions, as I soon realized on this trip, are out of date and only half-true. It’s true that Wisconsin today has only one publicly traded biotech company headquartered in the state, Exact Sciences (NASDAQ: EXAS), and it had to dangle various state incentives to import that one from Massachusetts. There’s no locally based anchor tenant that area businesspeople can look to with pride, like Minnesotans look to Medtronic (NYSE: MDT). And despite years of concerted effort to lure more venture capital, there’s only one VC firm in Madison—Venture Investors.

But there are some surprising things happening. Wisconsin had about 31,000 bioscience sector jobs in 2010, according to an analysis of all 50 states by Battelle. Even from 2007-2010, the recessionary period when the biotech industry saw a 1.4 percent nationwide job decline, Wisconsin managed to buck the trend, as its bioscience job rolls grew by 5 percent.

Wisconsin benefitted in that analysis partly because Battelle chose to define biotech broadly, to include work on drugs, medical devices, research/testing, and agricultural chemicals/feedstocks. Using that definition, there were only eight states that saw 5 percent job growth or greater in that period of downturn. If you look a little closer at the data, there were really only three states—Utah, Arizona, and Wisconsin—that were able to produce 5 percent job growth from an already-large baseline of jobs.

Part of the reason few people take much notice of Wisconsin nationally, I think, is because the kind of biotech happening in the state just doesn’t tend to make headline news. There’s no massive 1,000-person R&D center here for Pfizer or Merck. Wisconsin can’t claim to have created the latest whiz-bang targeted cancer drug. Instead, the cluster tends to be strong in behind-the-scenes biotech functions like research instrumentation, reagents, medical devices, and agricultural biotech applications. And even though the University of Wisconsin has suffered from a steady erosion of state support, like many public research institutions, it is still a magnet for smart young people from around the world—an essential ingredient for all biotech clusters.

Laura Strong, president of Quintessence Biosciences

“The people that come out of the university, they like Madison. They enjoy being here,” says Laura Strong, president of Madison, WI-based Quintessence Biosciences. “You end up with a lot of people who want to stay.” [Updated and corrected, 1:04 pm PT. Strong's title is president and COO, not CEO.]

Factors like high quality of life, good public schools, and low cost of living will always make some people want to stay. But ambitious people want action, and a taste of success … Next Page »

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