Michigan’s Bio-Industry Sees Gains in Several Key Sectors and Success Indices
Wednesday, July 2, 2014
New Battelle/BIO report highlights depth and breadth of state’s bio-industry
Michigan’s biosciences industry saw significant gains according to the Battelle/BIO State Bioscience Jobs, Investments and Innovation 2014 report released last week during the annual BIO International Convention – see bio.org/Battelle2014 for the full report and bio.org/sites/default/files/SP_Michigan.pdf for the Michigan profile.
Michigan’s total employment was 41,892, a gain of over 2,600 jobs since the last Battelle/BIO findings in 2012. The increase was led by the medical devices/equipment, drugs/pharmaceuticals, and research/testing/medical laboratories sectors where employment improved by 7.5%, 8.7%, and 6.6%, respectively. The agricultural feedstock/chemicals sector, while small overall, realized a 20.1% increase in employment since 2012.
There was concomitant expansion in the number of bioscience companies as compared to 2012. The largest gains were seen by the medical devices/equipment and research/testing/medical laboratories sectors (slightly over 13% in both cases).
“The new Battelle/BIO findings once again reinforce the fact that Michigan has a robust and growing bio-industry, with specific strengths in several key sectors,” remarked Stephen Rapundalo, PhD, president and CEO of MichBio, the state’s biosciences trade organization. “While the numbers are very encouraging, continued growth is not guaranteed particularly in the absence of a coordinated strategic plan for developing the state’s bio-industry. We must identify, leverage, and promote our strengths if Michigan is to become a national leader in the global bio-economy.”
The Battelle/BIO report measures growth in the bioscience sector from 2007-2012 when the national economy was challenged severely. Several indicators for success were measured including the numbers of employees and companies, average wages, research and development dollars, and patents issued.
Over that longer term, Michigan’s bio-industry saw an 11% increase in total number of establishments. During that same time, the number of agricultural feedstock/chemicals, medical devices/equipment, and research/testing/medical laboratories companies grew by 58.5%, 18.2%, and 35.2%, respectively. The medical devices/equipment and agricultural feedstock/chemicals sectors were the only sectors to witness employment gains (35.7% and 16.1%, respectively)—a positive indicator for growth in those two areas.
The drugs/pharmaceuticals sector has largely stabilized from the industry’s consolidation during the middle of the last decade. Only small losses in establishments and employment were noted. Also, a portion of this decrease was due to reclassification of employees from this sector to other areas based on increased outsourcing by Michigan companies.
Michigan’s research institutions conducted more than $1.2 billion in bioscience-related R&D in 2012 and the state has an above average concentration of this key academic research relative to its population. NIH funding granted to the state’s academic research institutions dropped by 13.2% to almost $576 million from a peak of $663 million in 2010. This was due in large part to the overall decrease in Congressional appropriations to NIH.
The state’s diverse strengths in medical device manufacturing and drugs and pharmaceuticals are evident as they accounted for 54% of the 2,157 patents issued from 2009-2013. Michigan ranked in the top five nationally in the number of agricultural bioscience patents issued during that period. In addition, Michigan bioscience firms have seen an increase in venture capital funding in recent years which totaled $505 million in the biosciences since 2009, with a peak of $156.9 million in 2013.
“Clearly, the cutbacks in NIH funding are of grave concern, as the new discoveries and inventions of bioscience technologies seeds the commercialization pathway,” said Rapundalo. “We are encouraged by improvement in investment funding raised by our companies, but the capital markets remain volatile and competitive.” The Battelle/BIO report identified these two areas as “signs of stress in the U.S. bioscience innovation ecosystem,” along with international competition.
An analysis of the specific industry sectors revealed Michigan to be a top 10 employer, as well as a “sizeable” and “concentrated” state in the medical devices/equipment sector. This sector has seen rapid growth since 2007 as noted above. In addition to the statewide information, several Michigan regions and cities were highlighted for their employment concentration in the various bioscience sectors:
Michigan is home to the global headquarters for Stryker, Dow Chemical, Dow Corning, Kellogg Company, Amway Corporation, MPI Research, Diplomat Pharmacy, and Ferndale Pharma Group; the North American headquarters of Perrigo and the R&D headquarters of Zoetis. Pfizer, Beckman Coulter, Mead Johnson, Abbott Nutrition, Bayer CropScience, Cardinal Health, AmeriSource Bergen, Covance, Emergent BioSolutions, Parr (JHP) Pharmaceuticals, Orchid Health, Albermarle Corporation, and many other companies have major operations located within the state.
Kalamazoo-Portage metropolitan statistical area (MSA): The Kalamazoo area continues its reign as a major hub for biosciences in several sectors. It is ranked 20th overall in terms of the largest employment levels in drugs/pharmaceuticals. Kalamazoo, as a medium MSA (total private employment between 75,000 and 250,000) and location quotient (LQ, local job concentration versus nation) is 2nd in the medical devices/equipment category, 3rd in the drugs/pharmaceuticals sector, 13th in research/testing/medical laboratories, and 7th in bioscience distribution.
- Detroit MSA: The Detroit area is ranked 9th overall in employment as a large MSA in bioscience distribution; 12th based on its LQ in research/testing/medical laboratories.
- Ann Arbor MSA: Ann Arbor as a medium MSA is 6th in LQ in medical devices/equipment and 8th in research/testing/medical laboratories.
- Holland-Grand Haven MSA: The Holland-Grand Haven medium MSA area is 13th by LQ in the drugs/pharmaceuticals category.
- Niles-Benton Harbor MSA: In the medical devices/equipment subsector, the SW Michigan area ranks 7th by LQ for a small MSA.
- Jackson MSA: As a small MSA, the Jackson area is 9th in LQ in the medical devices/equipment sector.
- Saginaw-Saginaw Township North MSA: As a small MSA, the Saginaw area is 12th in LQ in the medical devices/equipment sector.