Note to biotech researchers: If you're looking for something to discover,
how about a good way to measure your own industry?
Despite all the discoveries, the ongoing research, the public speeches
and initiatives about a biotech revolution, there is still a lot of confusion
about the construct of the industry. For example, no one really knowsor
at least agrees onthe depth and breadth of the biotech industry
at virtually any geographic or economic level.
The main reason is that biotech is itself something of a scientific mongrel
that combines many different disciplines, making it difficult to define
or box in from an industrial standpoint. It is at once an industry unto
itself and an industry that is being integrated into many existingand
very differentindustries, including medicine, agriculture and manufacturing.
While scientists seem to agree that biotech firms are those involved in
genetic engineering or modification, that definition is not aggressively
applied elsewhere. Indeed, the term biotech is still used very loosely,
particularly where nonscientists (like policymakers and the media) are
Maybe the biggest surprise is that, despite its profile, biotech still
has not been categorized into the government tool that tracks firms (the
North American Industry Classification System, or NAICS)a fact one
university economist called "one of the big screw-ups" of the
2000 census, where such changes are implemented. With no official arbiter,
various sources try to fill the information void, and all of them come
with caveats, giving rise to disagreements over what the biotech industry
is and who should count.
The Biological Industry Organization (BIO) counted 1,457 biotech firms
nationwide as of 2002; the financial services firm Ernst & Young found
about the same number in its 2003 report on the industry. BioAbility,
a biotech consulting firm, puts the figure at about 1,700 firms nationwide.
None is going to be the last word on the industry, for several reasons.
For starters, different organizations trying to measure the industry often
use different counting methods. With no government tracking, particularly
through comprehensive tools like the census, many biotech firms are likely
overlooked, particularly outside coastal biotech hotbeds, because most
are small, private firms that are often hard to pick out of an economic
A study by Maryann Feldman of the University of Toronto points out that
BioAbility's database, for example, misses firms listed on other databases,
but also includes firms missed elsewhere. One industry source pointed
out some biotech firms exist in name only: "They are the result of
a patented technology and are created in advance of actual production."
Loosey biotech goosey
With fickle parameters around the industry, it's hard to get an accurate
picture of biotech in the district. Most national surveys attribute an
exceedingly small number of biotech firms to district states. BIO, for
example, identifies only 64 biotech companies in the Midwest. That has
some statesparticularly those that don't rank highlyprotesting
that such reports are not accurate portrayals of the local biotech scene.
And there is some meat to the argument. An oft-cited 2002 Brookings Institution
study by Joseph Cortright and Heike Mayer had regions and states wringing
their hands over the fact that "only a few" of the nation's
largest metros "demonstrated the entrepreneurial and financial capacity"
to consistently generate new biotech companies. The only district metro
to be analyzed-Minneapolis-was relegated to the second tier, a finding
widely fretted over by local leaders.
But a closer look shows that Cortright's study counted and analyzed only
those firms in the human diagnostics industry (biotech drugs, mostly)
and "didn't look at the whole [biotech] spectrum," said Gene
Goddard, a bioscience industry specialist with the Minnesota Department
of Employment and Economic Development. The narrow focus is explained
in the study and even rationalized but was widely ignored in most media
reports. Goddard conceded that Minnesota was a small player in the biopharma
sector, but the state "is much farther along" in other biotech
sectors, like environmental, agricultural and industrial applications.
"That's what differentiates us from the coasts."
He might be right. A 2003 state survey of Minnesota firms involved in
biotech found that among respondents, 37 percent were involved in bioprocessing-related
technologies, and one of five firms had products or services targeted
toward agricultural or environmental markets. Goddard has also done the
time-consuming work of creating a state directory, which he said includes
at least 170 firms; about two-fifths are in the agriculture and industrial
sectors. He said he was motivated by the Cortright study. "I wanted
to prove that we had more of an industry" than the Brookings study
While useful and unique in its detail, Goddard's list does not offer an
apple-to-apple comparison with other surveys. The threshold for making
the list was having or performing biotech activities as part of the larger
business (rather than being "pure-play" firms), meaning industrial
giants like 3M and Cargill made the list. Maybe more important in terms
of measurement, Goddard's list is one of bioscience, not biotech, companies.
It might feel like splitting semantic hairs, but many scientists use the
bioscience term to broadly refer to products or research that have a biological
component; biotech, on the other hand, specifically involves genetic engineering,
at least according to a number of industry sources. Such a distinction,
for example, allows a list of bioscience firms to include such things
as ethanol plants (as Goddard's does) because of the biological fermentation
process that turns corn into fuel.
This broader definition can change a state's bio-outlook significantly.
None of the national surveys credits Wisconsin with more than a dozen
or two biotech companies. But talk about bioscience, and that paints a
A 2001 report by the Wisconsin Association for Biomedical Research and
Education identified nearly 200 bioscience companies, including 56 in
the ag sector, employing some 21,000 workers. Another 5,000 are employed
in research and development organizations like universities. In all, it
was a $5 billion industry in Wisconsin at the time of the report, according
to WABRE. An updated version is due out in the fall.
Gale Davy, WABRE executive director, said via e-mail that defining biotech
"is an extremely daunting task. ... People are trying to measure
something'biotech'for which there is no real definition."
She pointed to an example from the Medical College of Wisconsin in Milwaukee,
where scientists have just created a company to spin off commercial applications
from their work in proteinomics, or the study of proteins produced in
cells. "This science is so new that it doesn't really fit into any
of the definitions. The scientists probably describe their company as
a 'biotech' company. But that doesn't mean that anyone else necessarily
And none of the existing measurement tools can even guess at the influence
of biotech and bioscience on existing companies in more traditional industries,
like agriculture and medicine.
The WABRE report identified 550 state firms in Wisconsin manufacturing
and services industries that derive "at least a portion of their
products or services from bioscience research and innovation." However,
it acknowledged that it was "far too difficult, if not impossible,
to measure the role that bioscience has played in the development and
success of these companies."