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COMMENTARY
A Site Selection Web Exclusive, April 2012
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Emerging in South Carolina

Challenges include work force development and venture capital.

by WAYNE ROPER,
President, SCBIO

COMMENTARY
R

umbling bulldozers had barely scraped the sandy loam at the groundbreaking of Nephron Pharmaceuticals’ new South Carolina plant when CEO Lou Kennedy began talking about doing more.

“This could be bigger and better than we dreamed,” she told The State newspaper. She was already working with University of South Carolina researchers in nearby Columbia to make research and development a key at the new $313-million facility with the goal of expanding product lines.

Having announced 700 new jobs at an average annual wage of about $70,000, her words took on a hopeful forecast of the coming of age of South Carolina’s life sciences industry.

For a decade, the state has been investing in life sciences research and entrepreneurial infrastructure in its efforts to “grow the innovation economy.” This year the green shoots of a distinctly South Carolina life sciences industry are emerging from the shadows of its neighbors.

Weeks before Nephron’s groundbreaking, a series of genomic medicine announcements rippled through the state:

  • Lab 21 inc., the new U.S. headquarters of Lab 21 Ltd., announced it was establishing a Clinical Genomics Center to provide real-time second-generation genomics services for the Institute of Translational Oncology Research (ITOR) at Greenville Hospital System University Medical Center.
  • The Greenwood Genetic Center, a 34-year-old center located south of Greenville, will use a Duke Endowment grant for next-generation clinical genomics for autism, seizures, birth defects and skeletal disorders.
  • The Medical University of South Carolina in Charleston announced its Center of Genomic Medicine that would be a companion to the genomic clinical practice at the Hollings Cancer Institute, one of 66 NCI institutes in the country.

Harmonic Convergence

Nephron’s groundbreaking was just one of the state’s record project announcement binge in 2011 that announced 20,000 new jobs and more than $5 billion in new investment.

All this comes as the first South Carolina-made Boeing Dreamliner is set to roll off the new line in Charleston this month and BMW’s new second production line rolls X6s out of the door in Greer.

The growth is keyed to the state’s core competency at advanced manufacturing, its ability to produce high value in a low-cost environment and its enviable quality of life. Forbes magazine named it as the fifth best pro-business regulatory environment.

Competency for advanced manufacturing figures prominently in the state’s life sciences industry, where more than 100 medical device, medical equipment and surgical supply companies operate alongside a healthy pharmaceutical and bio manufacturing industry.

It is why regional economic development groups in Charleston and Greenville have targeted biomedical companies as a key strategic interest in building their clusters.

This coming of age for life sciences includes SCBIO, the South Carolina Biotechnology Industry Organization that is just rounding out its first year with professional staff. It has set out to grow the nearly 600 businesses in life sciences that employ 13,500 people, and to support the community of maturing start-ups and commercialization ventures. The industry has a $2.6-billion impact on the state economy, according to Battelle Institute figures, roughly 2 percent of state GDP.

SCBIO strategic goals for 2012-2014 include:

  • Creating more capital opportunities for the booming portfolio of maturing start-ups;
  • Developing a “ready-to-grow” life sciences work force initiative that will be unparalleled in preparing workers for the advanced regulated environments;
  • Accelerating the commercial partnerships among its research universities, entrepreneurial health care systems and private industry.

The Lab21- ITOR - Greenville Hospital System Medical University partnership is a demonstration of what a small state like South Carolina has learned to do well — work together in biomedical research and industry partnerships.

Other industry partnerships include:

  • A collaborative partnership among six hospitals, three research universities and Stryker Corp., one of the world's largest providers of medical technology, to help fund clinically relevant medical technology through the state’s Bioengineering Alliance.
  • SeniorSMART, a partnership with Palmetto Healthcare that has put $2 million into a senior mobility research, resulting in a driving assessment simulator and a novel fall detector that can detect a human falling anywhere in a house. Both are headed to commercialization.
  • Health Sciences SC, the nation’s only statewide health sciences research organization, is a collaborative of the state’s universities and hospitals which has built an impressive biomedical informatics program, built clinical trial participation, and developed a clinical data warehouse for real-time data.
  • Innovista, The University of South Carolina’s innovation center that includes a Colon Cancer Research Center and Public Health Research Center and support for start-ups.
  • The Medical University of South Carolina’s new $100-million Drug Discovery Center and its Center for Innovation and Entrepreneurship (CIE), whose mission is to create entrepreneurs and spin out companies from research.
  • CUBEInC, Clemson University’s bioengineering innovation research campus with a number of industry partners for translational research in bio imaging, regenerative medicine, biomaterials and implants, and medical device recycling.

Pretty heady stuff for a state that 10 years ago saw itself as “not even in the race” for biomedical economic development, according to Speaker of the House Bobby Harrell.

Laying the Groundwork

It was in 2002 that the state legislature passed some hallmark measures to start the state on a trajectory toward the knowledge economy. They included:

  • The Life Sciences Act that offered tax incentives for major life sciences companies creating jobs;
  • The Research Campus Act that provided funding for research chairs to build facilities;
    The Innovation Centers & Industry Partners Act, establishing innovation and incubation centers across the state;
  • The Venture Capital Act that provided a one-time, debt issue for venture funding.

The Centers of Economic Excellence Act — what is now called SmartState — is now a nationally recognized program that matches state lottery funds to private investment to attract world-class researchers and their companies. The program has attracted $1.2 billion in investment and created 7,000 jobs. Half of the 49 endowed chairs are in life sciences.

Six years ago, the South Carolina Research Authority, a tax-exempt applied research and commercialization company mandated to grow the innovation economy, took $6 million in retained earnings and started SC Launch to provide seed funding and support services for start-ups.

Forbes named SC Launch one of five top programs that support entrepreneurism. It has launched 251 companies that have drawn $167 million in follow-on funding.  About half of these new companies are in life sciences.

This includes CreatiVasc, a start-up spawned by a Greenville Hospital System vascular surgeon that the FDA picked as one of three companies for its Innovation Pathway program to speed important medical device breakthroughs to market.

The state still ranks near the bottom in venture and capital formation for these companies. Many are at the second stage looking for $2 million to $5 million in commercialization help. Efforts are under way to improve the state’s access to angel funds, provide locally generated private venture funds and create a state division of innovation and entrepreneurship.

The state could benefit from life sciences industry headquarters that bring in top CEOs and national caliber executive leadership. Some of this talent is coming from within but still on the grow.

Work force, too, is every state’s issue in life sciences, and South Carolina has its challenge to move its already highly productive work force to the next level of advance manufacturing and science skills.

So much state and private infrastructure has now been planted with teamwork and clear results that South Carolina life sciences enterprises are now breaking out into national prominence.

“When we first started down this path, we didn’t know for certain what direction this would lead us,” Harrell told a group of 120 life sciences industry executives and state legislators at the first Life Sciences Industry Day.

Nephron’s Lou Kennedy may be prophetic: it could be “bigger and better than we ever dreamed.”


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