Md. Biotech Thrives, But Not in East Baltimore

The John G. Rangos Sr. Building

BALTIMORE – East Baltimore is still waiting for the biotech industry to blossom there as it has in other parts of Maryland.

Maryland saw a 45 percent increase in biotech employment from 2001 to 2008, according to a report released this month by Battelle Technology Partnership Practice, an independent research and development organization. And biotech employed 32,383 Maryland residents in 2008 — the second most of any state, the report said.

But the vast majority of biotech companies are in Montgomery County. East Baltimore Development Inc. has not seen the same success.

Nearly a decade after making biotech the cornerstone of East Baltimore Development Inc.’s revitalization plans for the neighborhood north of the Johns Hopkins medical campus, just one biotech building has opened in what was planned as a biotech park.

The John G. Rangos Sr. Building was finished in 2008. It’s 70 percent leased, and it employs 285 people. Plans for four additional lab buildings have been delayed indefinitely. No neighborhood residents have biotech jobs there.

Christopher Shea, chief executive officer and president of EBDI since December, said the project’s biotech goals — five buildings and 8,000 jobs in about 10 years — may never have been realistic.

“The concept of us banging out one building every two years and filling them up with the magic of science isn’t real. And it wasn’t real in the best of times,” he said recently.

But many, including Gov. Martin O’Malley, who spearheaded the project when he was mayor of Baltimore, believe in the project’s original concept.

“It’s Johns Hopkins. It’s life science. It’s biotech,” the governor said. “It’s one of the strongest sectors of Maryland.

“I mean, the land was cleared next to Johns Hopkins because it’s an ideal place for life sciences, for biotech,” O’Malley said.

Yet, the nature of the biotech industry — which is composed of many small companies who do research to create new products, treatments, drugs and diagnostics — complicates EBDI’s task.

Industry analysts say that biotech companies tend to locate in larger biotech clusters, such as the Shady Grove Life Science Center in Montgomery County. Shady Grove is the third-largest biotech cluster in the United States and is home to the Johns Hopkins University Montgomery Campus.

This puts a five-building park, such as the one envisioned for EBDI, at a disadvantage, analysts say.

Companies need a critical mass of resources that the larger clusters provide, said Steven Casper, professor and director of the master’s of bioscience program at the Keck Graduate Institute of applied life sciences in Claremont, California.

Because biotechnology companies are a high risk for investors, the companies don’t start off with a lot of capital. They begin with a small, but highly educated, group of employees.

EBDI’s developers use proximity to Johns Hopkins Hospital as a marketing point. But “universities alone cannot create biotech clusters,” Casper wrote in the current issue of Biotech360, a trade magazine. Access to universities is important, Casper said, but biotech companies need other biotech companies nearby to collaborate and share resources.

Cities such as Los Angeles, Chicago and New York have not been able to create large biotech clusters despite the presence of well-known research institutions, Casper wrote, because strong networks don’t exist there.

The industry needs rich social networks connecting scientists, entrepreneurs, managers and venture capitalists who share information, Casper wrote in his paper, “How to Build a Biotechnology Cluster.” Companies with access to these networks are more innovative, he said.

“These smaller cluster companies are working in areas where they don’t share a labor market, and it’s really hard for them,” said Casper, who teaches courses on bioscience business strategies.

More than 200 private companies are located in the Shady Grove cluster — which allows firms to share resources and which helps recruit employees.

Companies in small clusters have a harder time attracting staff members from stable jobs at universities to a high-risk job at a biotech company if other opportunities don’t exist nearby, Casper said.

Because companies prefer to be near each other, “the locus of the (biotech) industry has always been and will continue to be in Montgomery County,” said Richard Clinch, of the Jacob France Institute at the University of Baltimore.

The biotechnology cluster is much stronger in Montgomery County than it is in Baltimore, said Clinch, who has completed two studies of EBDI. “The industry is moving not toward Baltimore, but out toward Frederick.”

Seventy percent of companies in Maryland are located in the Montgomery or Frederick regions, according to a 2007 study by MdBio, a division of the Tech Council of Maryland.

Across town in Baltimore, the University of Maryland BioPark has had more success. Since 2005, the university has built and leased all but one floor in two biotech buildings to 20 tenants. A third building is set to begin construction this year.

EBDI’s website said the construction of five lab buildings will create 6,000 jobs — down from long-time projections of 8,000. But the University of Maryland buildings employ a total of 500 people, said Jane Shaab, senior vice president of the Research Park Corporation, the non-profit organization managing the University of Maryland, Baltimore BioPark.

Many biotech companies employ a small staff of people, especially when they are young: 34 percent of biotech companies in Maryland employ fewer than 10 people, according to the same MdBio study.

Cheryl Washington, EBDI’s senior director of community and human services, said the companies in the Rangos building are not able to hire lab technicians or fill similar jobs until they do research, have success and receive investments. “For the first year or so they’re working with skeleton crews,” she said.

But analysts say the timeline is often much longer.

A biotech firm may spend 10 to 15 years researching and testing its first product before winning approval from the Food and Drug Administration, said T. Christopher Caffrey, a partner at the Ernst & Young audit practice that oversees the life science field for Greater Washington.

Before that approval, Caffrey said, companies do not have the venture capital that would allow them to hire more staff members — including lab technicians and other employees who do not need more than a high school diploma and some job training. EBDI wants to place neighborhood residents into those job categories.

“You’re going to see companies that have three people, five people — you know, 10 people in these smaller drug discovery, venture-backed companies,” Shaab said. “For the most part they’re not spending money on lab techs.”

A View from Inside the John G. Rangos Sr. Building

A View from Inside the John G. Rangos Sr. Building

Jack Ellinghaus, facilities manager for Forest City, EBDI’s master developer, said that the 285 people working in the Rangos building are “a lot of M.D.s, Ph.D.s and M.D.-Ph.D.s” — not employees with only a high school diploma.

Clinch found in his 2009 EBDI study that “while a large number of jobs will be created inside of the EBDI redevelopment area as the planned buildings are completed, the goal of placing large numbers of residents in jobs inside of the redevelopment area may be difficult to attain as a result of the high levels of education and training required for many of these jobs.”

Despite the uncertainty that surrounds the project, EBDI’s website continues to refer to the biotech park as an “economic engine” that will create “up to 6,000 new jobs and business opportunities, with one third filled by high school graduates.”

Some city leaders, including City Councilman Carl Stokes, who represents East Baltimore, are not worried about the low biotech job numbers. “I don’t have a reason to be concerned today,” Stokes said.

Copyright 2010 Capital News Service. All rights reserved.