Maryland’s Biotech Industry Recession Report Card

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A look behind the numbers shows our strengths and unveils some potential weaknesses within the Biotech industry.

The Battelle/BIO: State Bioscience Industry Development Report (See p 86 for MD) did an accurate job of portraying the struggles that the Maryland Bioscience industry had over the recession, as further outlined in Bill Flook’s WBJ article “Maryland Biotech Jobs dropped by 1.2% during recession”.  If you take a closer look at what is behind the numbers though, you’ll find some more surprising data that sheds some light on a potentially greater problem hiding beneath the surface; the exit and decline of commercial drug manufacturing companies in Maryland.

The total industry job loss through 2010 was only about 400 jobs when all was said and done.  During that time innovation and entrepreneurship flourished in the R&D / Testing Laboratory sector which grew by 210 companies and 230+ jobs.  Compared to most states, I’d say we made it through the recession in pretty good shape and poised for strong rebound, but not without some worry.

I’d like to focus on the State’s drug and pharmaceutical cluster which was calculated to have grown at 5.71% or about 360 jobs during the recession years.  Though this is great news for a sector that suffered losses in many areas of the country, it may actually mask a potentially greater problem for long term growth and sustainability.  When you look closely at these numbers you will uncover that these gains were actually made by just a few main companies.  In fact, most of our drug companies suffered hiring freezes, cutbacks, great losses or closures during this time.  If it weren’t for the growth of MedImmune, Life Technologies, Emergent BioSolutions, and HGSi we may not be so optimistic about where we are today.  MedImmune alone hired over 800 people between 2008 – 2009, and another 200+ in 2010.  Life Technologies grew by over 350 in Frederick; HGS staffed up by at least 200 to prepare for the launch of Benlysta; and Emergent Biosciences grew its operations by 100+.  If you take away the 1,650-ish jobs these 4 companies created, then this sector would have been decimated by losses across the board in Maryland.

As seen on p.86 of the Battelle/BIO State Bioscience Industry Development Report

So, outside of the four white knights who saved the day, where did the regional job losses come from?  Well, between 2007 – 2010 doom and gloom was felt for many bioscience workers in Maryland’s drug and pharmaceutical cluster, especially if you were a part of the manufacturing subsector in the Baltimore region.  In fact, the job losses suffered during this period will probably take years to make up since a large chunk of them came from a few core manufacturing companies that closed down or left the state.  The closing of Baxter Biosciences (Beltsville), Lonza Biosciences (Baltimore), Shire Pharmaceuticals (Owings Mills), and Osiris Therapeutics (Osteocel Division, Columbia), and Actavis (Woodlawn) resulted in the loss of well over 1,000 jobs in Maryland during that time period.  The loss of these four large companies, which were crucial components to the stability and depth of our state’s bioscience industry, will have a negative impact on future job growth within our region for many years to come.

These manufacturing jobs are so crucial to the health and growth of a region’s bioscience industry because they employ the most diverse sets of skills and workers in the field from PhD’s to trade school level lab techs.  Additionally, manufacturing companies employ the largest percentage of middle wage, BS/AS technology jobs which are crucial to a stable economy.  We are very fortunate to have the MedImmune’s, Life Tech’s, HGS’s and Emergent’s in our state and they have truly been pillars of light for an otherwise shrinking drug manufacturing sector in Maryland for these very reasons.

A few large commercial drug companies, however, aren’t enough to sustain a region in the long term.  In order for us to build a sustainable bioscience economy here in Maryland, biomanufacturing is a crucial component.  Therefore, we need to either attract more commercial companies, or grow and commercialize new drug and pharmaceutical companies here in the state; and then keep them here.  Keeping them here is clearly an issue that we have here in Maryland, and not just in the Biotech industry.  A recent article in the Sun, “As Medifast expands, will it outgrow Maryland?”, discusses this very same issue for the nation’s third largest manufacturer of weight loss food products.  Michael C. MacDonald, Medifast’s CEO, clearly states, “There’s no question that Maryland could have more favorable incentives for manufacturing,” and the tax environment is an important variable in this.

The Battelle/BIO report clearly shows that our R&D sector has grown substantially over the past decade, so it’s obvious there is very strong State support for our innovation economy that will eventually produce our next home grown drug and pharmaceutical companies. But those companies will take 8-15 years and hundreds of millions of investment dollars before any of them will commercialize a product and provide a solid base of stable jobs that we need for sustainability.  That’s just too long of a growth cycle with too low of a success rate to create the jobs impact we need.  So the question I pose is: What are we doing to attract new drug and pharmaceutical companies, support existing ones and grow the commercial sector of this crucial bioscience industry in Maryland?  If we don’t answer that question successfully we may not fare so well in the next recession, or if something bad were to ever happen to our MedImmune’s and HGS’s.

Chris Frew, TechUSA // @BiotechMd

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