Biotechnology in the Midwest: Biotechnology in the Midwest: A Perspective from a A Perspective from a Blues Blues AficionadoAficionado

Michael S. Rosen, MBAMichael S. Rosen, MBA,, ePrairieePrairie Biotech Biotech

ColumnistColumnist

Rosen Background• Academics

– B.A.: Beloit College, International Relations– MBA: University of Miami, International Business– Postgrad studies: Sophia University (Japan); Universidad

Tecnica Federico Santamaria (Chile)– Lecturer, International Management, Lake Forest Graduate

School of Management• Work Experience: 30 years pharma/biotech/ag

– Big Pharma/Big Ag ( 20 years)• Pfizer (10 years/6 countries): marketing/sales

• Bristol-Myers (2 years): business development

• Searle/Monsanto (8 years/3 countries): general mgmt

– Biotech (10 years)• PharmaMar (Spain): CEO

• Endorex Corp. (Chicago): CEO

• Barbeau Pharma (Chicago): CEO

Rosen Background

Other Activities:• IBIO: first vice-chairman and co-founder• Immune Cell Therapy (cancer vax): chairman• Microbial Cellulose Technologies: board of directors• Efoora: board of directors• ePrairie: biotech columnist• Lived in:

– Japan– U.K.– Italy– Spain– 5 L.A. countries

• PASSIONS:– 1970 Fender Telecaster/ 1968 Fender Super Reverb Amp– 1998 Gibson Les Paul– 1980 Guild Acoustic

What is Biotech

• A culture?– an extension of the rock culture of the

1960’s• A science?

– genetic engineering– recombinant DNA

• The future of the pharmaceutical industry?

ALL OF THE ABOVE!!!!!!!!

History of Biotech

• 1953 : Structure of DNA: Crick/Watson• 1958: DNA made in test tube• 1965: Fusion of mice and human cells• 1966: Genetic code cracked• 1969: Synthesis of an enzyme• 1971: Synthesis of first gene• 1972: DNA of humans 99% similar to chimps• 1972: First genetic engineering: Cohen/Boyer• 1974 NIH forms RAC to monitor DNA experiments• 1975: First monoclnal antibodies• 1977: First expression of human gene in bacteria• 1978: Human recombinant insulin produced

The Start of an Industry

• Pivotal cities: late 1970’s– San Francisco (Genentech/Cetus)– Los Angeles (Amgen)– Chicago (E. Goldwasser/UC- EPO)– Geneva (Biogen starts)– Boston (Genetics Institute)

• Pivotal events:– Cetus and Genentech go public

• raise $108 M and $36 M in IPO

Why is Biotech a Growth Industry?

• Healthcare– Aging of populations in U.S., Europe and

Japan • Baby Boomers = 30% of U.S. population

– Many diseases still unconquered:• Cancer, HIV, Alzheimers, Diabetes

– New Diseases:• SARS, Prion, West Nile Virus, Obesity

– Need for Personalized Medicine• Drugs don’t work in 40% of population

– Chronic Diseases (75% of all HC costs)

Why is Biotech a Growth Industry?

• Agriculture– replacement of old “dirty” industries,

e.g. agrochemicals/pesticidies– improved food productivity from

same amount of land– Utilization of land not currently

arable– Use of agricultural products for fuel

and plastics (bio-refineries)

Why is Biotech a Growth Industry?

• Industry– improved productivity of current

processes– environmental cleanup– apply same technology used in

medicine to chemistry for industry

The Biotech Revolution

Environment& Petroleum

Food Industry

PharmaIndustry

AgriculturalIndustry

BIOTECH

Medical DeviceIndustry

DiagnosticsIndustry

Nanotech

Largest Pharmaceutical Companies (2003)

Company Revenue (B)1. Pfizer (U.S.) $45.22. Johnson & Johnson (U.S.) 41.93. GlaxoSmithKline (U.S./U.K.) 35.04. Sanofi-Aventis (French) 29.35. Novartis (Swiss) 24.96. Roche (Swiss) 23.27. Merck (U.S.) 22.58. Bristol-Myers Squibb (U.S.) 20.99. Abbott Labs (U.S.) 19.710.Astra-Zeneca (British/Swedish) 18.8

Worldwide Pharmaceutical Market (2003)

Market Sales(B) Share Growth

U.S. $207.5 46% +11%

Europe 124.2 27% +8%

Japan 50.7 11% +2%

Asia 31.1 7% +9%

Latin Amer. 19.6 4% <3%>

Mid.East/Africa 13.1 3% 17%

Canada 9.8 2% 12%

TOTAL $455.9 100% +9%

Largest Biotechnology Companies (2003)

Company Revenue (B)

1. Amgen (U.S.) (16) $8.4

2. Genentech (U.S./ Swiss) (29) 3.3

3. Serono (Swiss) (39) 2.0

4. Chiron (U.S.) (43) 1.8

5. Genzyme (U.S.) (45) 1.7

Major Product Categories (2001)

Category Sales(B) Share Growth

Anti-ulcerants $19.5 6% +14%

Cholesterol reducers 18.9 5% +22%

Antidepressants 15.9 5% +20%

Anti-rheumatics 10.9 3% +16%

Calcium channel block 9.9 3% +4%

Anti-psychotics 7.7 2% +30%

Biotech in the United Biotech in the United States (2003)States (2003)

1473 COMPANIES314 publicly-traded1473 COMPANIES314 publicly-traded

Biotech in the United Biotech in the United States (2003)States (2003)

$311 billion market cap$39.2 billion in annual

sales$17.9 billion in R&D

expense

$311 billion market cap$39.2 billion in annual

sales$17.9 billion in R&D

expense

Biotech in the United Biotech in the United States (2003)States (2003)

370 biotech drugs/vaccines in clinical trials198,300 people employed37 biotech drugs/new indications approved by FDA (2003)

370 biotech drugs/vaccines in clinical trials198,300 people employed37 biotech drugs/new indications approved by FDA (2003)

Major Biotech Centers in the United StatesEmerging Biotech

CentersMidwest Biotech Centers

(300+ companies)

Biotech Profile in the Biotech Profile in the MidwestMidwest (8 states)(8 states) 2003

TotalPublic

Total Companies (estimated) 320 30

- Michigan 50 5- Illinois 80 6- Wisconsin 40 4- Iowa 20 2- Missouri 20 3- Indiana 20 2- Minnesota 60 5- Ohio 30 3

Biotech Profile in the Biotech Profile in the MidwestMidwest

Life Science Industry Employment Total Jobs - California 101,298- New Jersey 93,214- Illinois 57,930- New York 39,140- Pennsylvania

37,639- Minnesota 31,356- Indiana 29,541- Massachusetts 25,388- North Carolina

21,707- Ohio 17,298- Michigan 16,789- Wisconsin 8,530- Maryland 7,944

Total Midwest (6 states)

161,444Source: Dunn & Bradstreet 2-2000

Leading Midwest Biotech Companies(value >$100 M)Company State Focus

Mkt.Cap (M)

MGI Pharma Minnesota Cancer $1,886

KV Pharma Missouri Drug Delivery 880

Bone Care intern. Wisconsin Bone Disease 472

SurModics Minnesota Device 416

Northfield Labs Illinois Blood 286

Possis Medical Minnesota Device 284

Third Wave Tech. Wisconsin Genomics 278

Stereotaxis Missouri Device 260

Endocardial Sol. Minnesota Device 256

NeoPharm Illinois Cancer 199

BioSante Illinois Drug Delivery 166

Neogen Michigan Nutraceutical 157

Orphan Medical Minnesota Orphan Drugs 119

Synovis Life Tech. Minnesota Device 110

ImmTech Int. Illinois Infectious Diseases 105

National Institute of Health National Institute of Health (NIH) Support to Midwest (NIH) Support to Midwest

InstitutionsInstitutions

Funding $ Millions - Illinois 473- Ohio

444- Michigan 390- Missouri 367- Wisconsin 253- Minnesota 282- Indiana 141- Iowa

136TOTAL 8 States $ 2,486

Source: IMPAC, 2000

Biotech in Illinois Biotech in Illinois

Champaign-Urbana

Chicago

CarbondaleEast St. Louis

Biotech Profile in IllinoisBiotech Profile in Illinois

Companies

- Chicagoland- Downstate (Champaign/Carbondale/Springfield)

JobsMarket Valuation

200377

6710

2000+$1+ billion

2006150

100 50

5000+$3+ billion

2001 Merger of Two 2001 Merger of Two AssociationsAssociations

IBIO

Chicago Biotech Network &Illinois Biotechnology Industry

Organization

BIO State Representative25+ membersState Agencies & Big PharmaAdvocacy ProgramAg/Food Biotech

“Grass roots” Networking200 membersSeminars & ConferencesInformation “clearinghouse”Human Health Biotech

CBN

2001 Merger of Two 2001 Merger of Two AssociationsAssociations

IBIO

Chicago Biotech Network &Illinois Biotechnology Industry

Organization

CBNSYNERGY

225+ MembersBIO State Chapter

State & Local Representation

Advocacy ProgramHuman/Ag/Food Biotech

IBIOIBIO

Services that facilitate growth:

• “Breakfast series” at Universities

• “Biotech bootcamp” and competence seminars

• Annual Illinois (Midwest)Investor forum:

IBioMarketplace

• Job Fair

• Legislative presence in Springfield and

Washington• Midwest Biotech initiatives: Indiana, Ohio, Michigan, Wisconsin, Missouri, Iowa, Minnesota, and Illinois

• BIO- 2006: CHICAGO

IBIOIBIO

An organization focused on helping Illinois’ biotech industry grow

Connecting building blocks already in place

• Office/lab facilities: Chicago Tech Park

• Labor: Graduates of world class educational institutions and local skilled workforce

• Capital: “Angel” investors, venture capital firms

and state/local grants

Chicago Technology ParkChicago Technology Park

• Biotech incubator located in Illinois Medical District (3 miles west of downtown)

• 650,000 square feet of lab and office space on 56 acre campus

• 30 emerging companies

• $20 million in SBIR and state challenge grants

• $35 million in CTP revenues

Biotech in Midwest: Biotech in Midwest: IssuesIssues

• Lack of “anchor” biotech company in region

• Most local companies at “discovery” stage

• Lack of biotech/pharma “serial entrepreneurs” in area

• Lack of “cluster” effect due to distance between states

• mini – “clusters” not big enough

• How to progress our companies up the “food chain”

• Other states’ incentives: Michigan, Wisconsin, New Jersey

• Difficult financial environment (State & City Budgets)

• Consolidation of big pharma & local impact .

IBIO Goals: 2004- 2006IBIO Goals: 2004- 2006

• Increase biotech “critical mass” in Illinois:

– number of companies

– progression up “food chain”

• Complete successful ($$/attendance/satisfaction) BIO 2006 meeting

• Establish Illinois as Midwest hub

The Biotech Job Market

Direct Biotech Jobs• Business Development (marketing & sales)• Finance• Scientists (chemistry, biology, drug delivery)• Experienced CEO’s• Regulatory (FDA)

Indirect Biotech Jobs• Venture capital (seed and early stage)• Investment banking• Executive search• Architecture/engineering/real estate (wet labs construction)• Audit firms• Legal firms• Information technology (scientific and drug development software)

Leading Midwest Life Science Companies(valuation >$1 B)

Company State Area Mtk. Cap (B)

P&G Ohio Cons./Pharma $138

Eli Lilly Indiana Pharma 68

Abbott Labs Illinois Pharma/Diagn. 66

Medtronic Minnes. Medical Device 63

3M Minnes. Industry/Pharma 63

Dow Chemical Mich. Agroscience 42

Walgreens Illinois Drug stores 37

Guidant Indiana Medical device 21

Baxter Illinois Device/Pharma 20

Zimmer Indiana Medical Device 19

Leading Midwest Life Science Companies(valuation >$1 B)

Company State Area Mtk. Cap (B)

Stryker Mich. Medical Device $19

Cardinal Health Ohio CRO/CMO 19

St. Jude Medical Minn. Medical Device 13

Biomet Indiana Medical Device 12

ADM Illinois Food process. 11

Monsanto Missour. Agroscience 10

Hospira Illinois Medical Device 5

Sigma-Aldrich Missour. CMO 4

Dade-Behring Illinois Diagnostics 2

Stericycle Illinois Hospital waste 2

WHY THE MIDWEST LIFE WHY THE MIDWEST LIFE SCIENCE IS DIFFERENT FROM SCIENCE IS DIFFERENT FROM THE EAST & WEST COASTS ?THE EAST & WEST COASTS ?

• AGRICULTURE: “Breadbasket of the U.S.”

• MEDICAL DEVICE CAPITOL: Minnesota

•Medtronic

• ORTHOPEDIC/SURGICAL DEVICE CAPITOL :

• Indiana: Zimmer, Biomet, Guidant

• Michigan: Stryker

• DIAGNOSTICS CAPITAL:

• Illinois: Abbott, Dade-Behring

• Indiana: Roche

• NANOTECHNOLOGY CAPITOL: Illinois/Michigan

BIO 2006 Chicago is coming!BIO 2006 Chicago is coming!(Expected Attendance: 25-30k(Expected Attendance: 25-30k

persons) persons)

Catalyst for Growth: Get Catalyst for Growth: Get involved!involved!