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Standing at the Crossroads
Biotech's promise threatened by brain drain, lack of lab space
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Business New Haven
5/3/1999
By: BNH
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Are you looking for a job? Then you might want to consider sending your resume to Connecticut's fast-growing biotechnology and pharmaceutical companies. No Ph.D. required.
Last year, more than 1,000 jobs were created at pharmaceutical and biotechnology companies with average annual salaries of $50,000, according to the annual economic report prepared by Connecticut United for Research Excellence Inc. (CURE). The seven biotechnology companies surveyed for the report noted a 41-percent increase in employees in 1998, with almost 200 employees added among them.
At the same time, the state's four major pharmaceutical companies - Bayer Corp., Bristol-Myers Squibb Corp., Boehringer Ingelheim and Pfizer Inc. - reported employment growth of 15 percent over the past year, adding more than 800 jobs in 1998.
Despite the phenomenal growth, executives from the state's biotechnology companies and organizations note that many positions remain unfilled and there is a lack of qualified candidates for the additional jobs that are being created.
CURE's annual economic report notes that almost all of the companies surveyed for the report have current openings for people with varying levels of education and experience, particularly in biochemistry, chemistry, microbiology, molecular biology and pharmacology.
Additional openings exist for non-scientific infrastructure positions such as accounting, business development, clerical, engineering, facilities management and legal, according to CURE.
Of the nearly 11,000 jobs in pharmaceutical and biotechnology companies in Connecticut, only one-third are at graduate-degree levels. The remaining two-thirds of positions are for recipients of bachelor's degrees, associate's degrees, or specialized training certificates, according to Debra Pasquale, president of CURE.
In partnership with the state's Department of Economic and Community Development as Connecticut's BioScience Cluster, CURE is the forum for the state's bioscience research organizations to exchange information on issues and opportunities for common interest. CURE also works with its more than 80 member organizations and companies to develop collaborative strategies and grow the bioscience sector in Connecticut.
“Finding the qualified people to grow the biotechnology sector in Connecticut is a major concern,” notes Jon Soderstrom, director of Office of Cooperative Research at Yale University. “We ought to be out there preaching to kids to stay in school and take science classes.
“The biotech industry should be encouraging students to get the educational skills necessary to compete successfully,” Soderstrom adds. “The unskilled jobs of the past are disappearing. Today, every job needs a skill.”In New Haven, Yale University, Gateway Community-Technical College and Career High School are working closely together to encourage students to pursue the sciences because there are jobs waiting for them, says Soderstrom.
“There is a tremendous opportunity for Connecticut to cultivate its own skilled employees through our school systems and higher education as well as attract scientific and entrepreneurial talent to relocate to our state,” he notes.
In April, the West Haven-based pharmaceutical division of Bayer Corp. announced an alliance with the University of New Haven designed to create significant changes to science and technology education at UNH. The alliance is valued at $1.1 million over five years.
“Our future depends on talented young scientists receiving the training and education they need to move into discovery laboratories,” said David Ebsworth, president of Bayer's pharmaceutical division, at the time of the announcement.
“The University of New Haven has educated many Bayer employees and business leaders. We look forward to developing a stronger relationship in the science and technology areas.”
The alliance combines a cash and gift in-kind donation and internships. It emphasizes “achievement and excellence by providing the stability and resources for outstanding students to get a quality education,” according to Lawrence DeNardis, UNH's president.
According to Gary Wilson, Bayer's director of science and technology, the potential for future jobs at the company is virtually limitless. In 1989, the company had only one employee working in discovery research in West Haven. Today, there are approximately 315 employees, and projections call for an additional 200 positions to be added over the next five years, he adds.
Branford-based Neurogen Corp. is another biotech company that has experienced tremendous growth. Yet many positions at the firm remain vacant.
In 1989, the company had just two employees. Today, Neurogen is traded on the NASDAQ exchange, employs 165 people and has tripled the size of its facility. More expansion is being planned.
Last year, Neurogen President Harry H. Penner Jr., served as chairman of the Public Agenda Advisory Council. The 15-member council of business, government and education leaders was named by the state's Board of Higher Education to help define an agenda for higher education in the state.
The group made 25 recommendations for change across the state's colleges and universities, including establishing closer alliances with business to meet employer requirements, and linkages with elementary and secondary schools to better prepare students for college.
“We have a tremendous shortfall of trained employees,” acknowledges Penner. “A high percentage of our jobs will be filled by those with bachelor's degrees, associate's degrees or training certificates. There are a lot of chemistry and biochemistry programs at our schools that are not filled. Students are not taking these classes.
“Our job is to help educate students about the benefits of taking science classes and pursuing a career in science,” Penner adds. For its part, Neurogen often hires students for summer internships - a relationship that is a “beneficial way to take advantage of the energy and interest of young students and help them see that there are job possibilities in the sciences,” says Penner.
“The number of jobs that have been added over the past years points out that we are growing and that the bioscience and biotech industry is a place where there are going to be jobs,” he adds.
“As Connecticut establishes itself as a national and international center for bioscience research and development, the future, long-term potential of the sector is tremendous,” explains Penner. “To achieve this growth we must focus our collective energies on the development of a skilled workforce, the availability of laboratory space and competitive business incentives for the bioscience companies.”
Besides being in need of trained employees, the state's biotech companies, pharmaceutical corporations and academic research institutions are in dire need of lab space.
The Connecticut operations of the four major pharmaceutical companies currently occupy more than 3.7 million square feet of space, with the majority of it devoted to research labs. The biotechnology companies currently occupy more than 300,000 square feet of space, 75 percent of which houses research labs.
Within the next three years, nearly all of the state's biotech and pharmaceutical companies will need to construct new facilities. The biotech companies, according to CURE, will lead this trend, as they anticipate a 32-percent average annual growth rate for lab space. For the pharmaceutical companies the average space expansion is projected at eight percent.
Existing companies will require 230,000 square feet of laboratory and office space for use by the year 2000, estimates CURE's Pasquale. Add the needs of the emerging companies and that number reaches nearly 400,000 square feet.
Additionally, Yale University is developing spin-off biotech companies that will need at least 50,000 square feet of lab space each year. The University of Connecticut and Pfizer Inc. have proposed building a 64,000 square foot animal vaccine research center in the Mansfield area.
Pfizer is also in the process of building a 550,000-square-foot general research center in Groton which will add an additional 700 employees to its staff of 4,000. And the University of Connecticut Health Center in Farmington recently began moving in to a brand new $46 million, 11-story research tower. The new edifice adds about 170,000 square feet of research space to the existing 300,000 square feet.
Neurogen is looking to expand into an 80,000-square-foot building adjacent to its existing site. New Haven-based Genaissance Pharmaceuticals recently added an additional 20,000 square feet of lab space - doubling the company's physical size - and still needs an additional 20,000 square feet.
“Space is our biggest constraint,” affirms Kevin Rakin, executive vice president and chief financial officer at Genaissance. “We can always import people from other states to be part of our workforce, but we have nowhere to put the lab space.”
Genaissance was the first and only biotech company to tap into a $30 million bioscience facilities fund administered by Connecticut Innovations Inc., a quasi-public corporation formed in 1989.
Through the loan program, Genaissance secured $950,000 to expand and modernize its laboratories in New Haven's Science Park. The company plans to tap that fund again for additional lab space.
Last year, Genaissance also raised $10 million in private, international venture capital to fund additional research and development activities.
“In order to become a world-class bioscience cluster, the state and the private sector will need to leverage and expand this initial $30 million allocation,” Rakin says. “The tremendous growth of the bioscience cluster in Connecticut demonstrates a clear cost benefit to this program.”
Connecticut Innovations Inc., is the state's lead investor in emerging high technology. For the fiscal years 1995-98, CII invested $11.1 million in bioscience companies in the state; $10.3 million in information technology; $4.8 million in photonics; $4.8 million in energy and environmental businesses; and $6.5 million in other businesses.
More than $10 million annually is available to entrepreneurs who seek risk-capital investments and are unable to secure private funds on commercially reasonable terms, according to CII President and Executive Director Victor Budnick. In addition to capital, CII provides counsel and advice to fledgling companies.
The startup companies CII has invested in include Genaissance, CuraGen Corp. in New Haven (which was the state's largest private biotech company, but recently went public) and Cyberian Outpost, based in Kent.
According to CII's Budnick, there are a number of sites in the state that could be converted in to usable lab space. However, he notes, they must all be retrofitted from current warehouse, manufacturing or office space configuration to lab space, which has special requirements such as plumbing, etc.
“We need to find developers who understand the special needs and opportunities of the bioscience industry,” says Budnick. “They have to be willing to take on the risk of developing a lab, which requires much more than office space. Developers in the Boston area have been willing to build lab space from soup to nuts, and they've seen that the space is quickly filled.”
Pasquale notes that CII's $30 million fund could be exhausted in as little as 12 to 15 months based on the funds already allocated and inquiries from other biotechnology companies.
“Connecticut has the full potential for being recognized as a leader in this industry,” says Pasquale. “The need for lab space is critical if we're going to continue this tremendous growth.”
“This $30 million fund is part of the answer to the backlog of demand for lab space that is not being met,” says Yale's Soderstrom. “The lack of lab space is a very real issue. If we don't meet this need, the biotech companies are going to go somewhere else.”
According to Soderstrom, it can take six months to one year to build a wet-lab facility. When looking to build space, the biotech industry is looking at several key issues, he adds: the building must be in a convenient location; the building can be neither too fancy nor too bland; the companies would rather lease than buy the space; they have to be able to occupy the space immediately; the building needs to be near an academic research center; and there has to be a good quality of life in and around the community to attract top researchers.
“It's hard to find these places,” acknowledges Soderstrom. “Despite this, companies still want to be here in Connecticut.”
“The growth of the bioscience cluster helps every other industry in the state,” Pasquale adds. “There are very real and tangible economic benefits to growing this industry. For every job that's created in the bioscience cluster, 2.6 jobs are created outside in support of the industry.”
Last November, CURE and the state's Department of Economic & Community Development (DECD) forged a partnership to stimulate the growth of the state's emerging bioscience cluster. That cluster is part of the state's economic development initiative to nurture Connecticut's key industries.
The six industry areas identified as key to Connecticut's economic competitiveness are: tourism, financial services, health services, telecommunications and information, high technologies and manufacturing.
The bioscience cluster has really taken off. Last year, the Connecticut operations of four pharmaceutical companies generated more than $1.7 billion in research and development spending. That figure, according to the CURE, represents a 19-percent annual increase, significantly more than the national pharmaceutical R&D growth rate of nearly 11 percent.
Additionally, seven biotechnology companies in the state achieved an aggregate 44-percent annual increase in R&D spending. Last year, these companies raised a total of $11 million through venture capital funding, and $57 million through public equity financing.
Also, the Yale School of Medicine and the UConn Health Center received more than $349 million in research and development funds in 1998, compared with $296 million the year before. Much of that funding goes to biomedical research - $57 million at UConn and $198 million at Yale. More than 83 percent of biotechnology expenditures are in research and development.
“Biotechnology will continue to grow in Connecticut,” says Bayer Corporation's Wilson. “The state is in the unique position of having two major research universities to provide the feeder for biotechnology research.
“The biotechnology companies and the pharmaceutical companies and the research institutions all need each other in order to get a bioscience product to market,” he adds.
“The number of jobs that have been created points out that this is a growing industry,” says Neurogen's Penner. “The DECD and the state are to be complimented on their interest in growing the various clusters. The cluster concept certainly makes it easier for us to pull together to make growth happen.
“We've created a nice climate in Connecticut,” he adds, “for future growth.
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