Washington State's life-sciences sector has remained, through the economic downturn, a jewel in the state's economic development crown. But the challenge of accessing capital that bedevils the industry's emerging companies, including the possible demise of the Life Sciences Discovery Fund, could hinder future growth.
The role biotech and biomedical companies have come to occupy as one of Washington's five largest and fastest-growing sectors, generating tens of thousands of high-wage jobs and more than $10.5 billion in economic activity, creates an important anchor for the state's economic future.
But as the Washington Biotech & Biomedical Association (WBBA) prepares for its annual meeting next week, in partnership with The Governor's Life Sciences Summit, there's an ongoing focus on seeking to ensure that emerging companies in the industry find the growth capital they need. And that could be increasingly challenging.
"With 70 percent of our companies having 50 or fewer employees, access to capital is the greatest challenge we face," said Chris Rivera, WBBA president.
An important part of that funding has been the Life Sciences Discovery Fund (LSDF), the program created by tobacco-settlement dollars that came into existence in 2008 and has been championed by Gov. Chris Gregoire as a key to fostering more biotech innovations and jobs in Washington.
But it has taken deep cuts each session as legislators grappled with yawning state budget deficits, and now could face elimination.
Rep. Glenn Anderson, the Eastside Republican who is one of four legislative trustees for the fund, says "it's an open question whether the fund will survive" the next session's budget cuts.
"The fund has done a good job of encouraging basic science and marketable, actionable, investable outcomes," Anderson said. "But I'd say there's only a 50-50 chance it will survive and if it doesn't survive, I think that would be shortsighted."
Rivera puts numbers on the fund's successes to provide definition to shortsightedness.
"LSDF awardees have been able to leverage their grants and bring in $9 for every $1 awarded," he said. "These are real dollars from out of state. This has led directly to job creation, and great innovation in our state.
"I believe that LSDF has proven to be a smart investment by our state into a sector of great current economic value and future potential," he added. "Other states have poured hundreds of millions into life sciences, as they see the potential economic value of this sector and are willing to invest strategically."
Beyond the fund, WBBA has mounted some initiatives, as have supporting organizations, in seeking to develop alternative sources of capital, given both the now-challenged traditional lending sources and the problems facing the venture capital industry.
Bruce Jackson, vice president for business development at EnterpriseSeattle and ex-officio member of WBBA's board, says that despite the success of the biotech and medical-device sector, these are "clouded times" for young companies seeking to ramp up.
"In addition to the fact federal regulations can create a headwind for companies, access to capital for some deserving companies can be difficult," Jackson said.
EnterpriseSeattle's year-old partnership with the City of Federal Way in a medical-device incubator called Cascadia MedTech Association is an innovative approach to helping grow the industry, though Jackson concedes "the model hasn't been proven yet."
"The companies we're supporting must transition from being supported by grants to creating cashflow," Jackson added.
WBBA itself touts the program it created called VIP Forums, through which quality investors and strategic partners (VIP's) are invited to Seattle for a showcase of the most promising life science companies and research opportunities.
In addition, in spring of 2009 the association formed a non-profit angel network called WINGS, whose role is to close the early-stage funding gap to speed medical-technology innovation "from lab bench to patients."
The gathering of industry leaders and others for whom the industry is part of the economic hope for the future will likely hear an upbeat assessment as they review the WBBA's third annual Life Sciences Economic Impact at their gathering on November 18 at Meydenbauer Center in Bellevue.
Comments from the governor, who will be attending her last WBBA annual conference, and University of Washington President Michael Young, attending his first, are likely to focus on upbeat prospects for the sector's future. But both may also share concerns about the impact of funding availability on that bright future.
And a comment from Rivera during an interview this week could set the stage for some discussion among attendees: "I understand and know that these are difficult times, but I hope that our state leaders are strategic in where they place our precious resources, and help this state maintain its competitiveness nationally and globally."