Biotech Companies Seek Location Advantages

After two or three years in the incubator, those start up companies that survive will graduate to larger research parks, where they will take on more of a business look, including the hiring of a business management team and more employees, as well as fully assuming their day-to-day costs.

It’s a scenario that plays out countless times each year. One or two scientists working in an academic environment spend years researching a health care, agricultural, industrial or environmental product. They then feel confident enough to leave their academic cocoon and enter the business world.

What the new company lacks in money, it more than makes up for in the promise of a new drug therapy or vaccine.

These startups begin their journey an incubator, usually in a university setting, where the research continues. The incubator is an ideal place for a young company to grow because of the shared services, both scientific and business-like, offered at minimum cost. What little money the fledgling company has can be poured back into research.

But the metamorphosis from academia to the business world comes with added responsibilities — especially the need to begin securing venture capital funding to help the company grow.

After two or three years in the incubator, these companies can graduate to larger research parks, where they take on more of a business look, including the hiring of a business management team and more employees, and the full assumption of day-to-day costs.

By now, they’ve also secured that first round of funding.

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Today, 40 states target biotechnology or life sciences for development, and all 50 states have technology-based economic development initiatives that are available to biotechnology companies.

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It’s now put up or shut up time for these companies. Years of sweat and tears depend wholly on FDA approval of their product. If the approval comes, the subsequent growth spurt is unimaginable. If the approval is denied, the company will almost immediately find itself out of business.

For every drug that makes it to market, four never do, according to FDA. What that means is that a decade or more of work can be rendered worthless in the blink of an eye. It’s literally a roll of the dice, but these scientists have obviously decided that the risks are worth the potential rewards.

An Investment in the Future

Practically every region in the country clamors to grow a biotechnology cluster, even though few biotech startups ever become profitable.

By: Ken Krizner, Managing Editor

Full Story: http://expansionmanagement.com/smo/newsviewer/default.asp?cmd=articledetail&articleid=16422&st=3