Human health is playing a role in the modern economy like never before. Political debates over prescription drug benefits for individuals and the shift toward defined-benefit pension plans for companies reflect the successful development of life-extending technologies and knowledge. With each new year, the average human lifespan grows longer, and this demographic shift will dramatically affect the long-term growth rates of the economy and the industries that serve human health.
Health care is increasingly driven by the continued integration of bio-based and information-based technologies into the health care industry. Together, these vastly different industries will result in a new era of bio-based products and services that are designed, manufactured, and delivered to extend human lifespans. By our account, these technologies now form a new global industry, one we describe as the "bioconvergence industry."
Bioconvergence merges previously distinct technologies into a new form, including new theories, new practices, and new products. Indeed, we see massive convergence of information technologies, telecommunications, biotechnology, robotics, optics, sensors, materials science, physics, chemistry, and nanotechnology - all designed to positively affect the health of humans, plants, animals, and the environment. Even some consumer products such as plastics are evolving into bio-based systems.
Stop to consider the many areas and industries that bioconvergence promises to touch:
• Homeland security: The U.S. government is demanding new biological detection agents and biometrics to detect and protect against chemical and terrorist attacks.
• Energy: Biofuels will help reduce our dependence on oil and improve the quality of our environment, while bringing new jobs to our agricultural states. President Bush has emphasized the need for new clean energies based in agriculture so that our long-term energy security is improved.
• Biodevices: Including drug makers and medical device manufacturers, the biomedical market is the largest submarket under the biotech umbrella. According to the Batelle study State Bioscience Initiatives 2004, there are 14,000 biomedical firms in the United States that employ 730,000 individuals.
• Biosourcing: Biopharmaceutical manufacturing organizations provide outsourced manufacturing services to drug makers to scale up the production of drugs or biopharmaceuticals. Many drug discovery bioscience companies are small and do not have the financial means to support capital-intensive manufacturing equipment. For these companies, the ability to outsource production is critical.
• Agribusiness: Agribusiness now uses biotechnology to modify agricultural feedstocks to be more productive. This could be an enhancement of crop productivity, resistance to disease, or a genetic modification for added human health benefits. Nutraceuticals is the use of food or agricultural inputs to provide health and medical benefits, including the prevention and treatment of disease. Batelle estimates that the agricultural and industrial bioscience markets comprise nearly 20 percent of total biotechnology employment.
• Clinical testing: New clinical testing organizations provide outsourced support to other biopharmaceutical companies, typically drug developers. The clinical testing organization can handle all or just certain stages in the clinical trial process that is mandated by the Food and Drug Administration (FDA) for drug approval. This requires identifying and screening test subjects, performing testing in accordance with FDA procedures, and certification of results.
The life sciences industries have experienced strong growth over the past five years. The general aging of the U.S. population coupled with higher disposable incomes is increasing the demand for life-enhancing products. Based on U.S. Bureau of Labor Statistics figures, employment in the cluster has expanded by nearly 100,000 jobs from 2000-2005. Average wages in the biosciences cluster have increased at an even more explosive rate - the average annual wage grew by 12.6 percent since 2000 to $71,000 in 2005. Growth in this cluster is projected to continue at a strong but slower rate. National employment projections indicate growth of 16.7 percent by 2014, compared to the overall national growth of 14.1 percent. Today, all sectors in the bioconvergence industry are growing, and many offer wage levels at least twice that of the U.S. average (see charts).
Site Selection for BioConvergence Companies
With so many regions vying for the attention of new bio-based companies, executives must engage in a formal site selection process that will deliver the maximum strategic and economic value to the company. AngelouEconomics employs a site selection process comprised of seven main steps:
1. Project setup/needs assessment
2. Determine incentives strategy
3. Issue a request for proposals
4. Evaluation of top locations and sites
5. Cost of operation benchmarking
6. Short-list communities and engage in closing negotiations
7. Final selection