Biotech: The ‘Darling’ of Commercial Real Estate
By Norma Sutton, BioScience Specialist, NAI Realvest
Just How Big is this Business?
The global biotechnology market grew by 12.6 percent in 2006 to reach a value of $153 billion. The forecast for 2011 is $271 billion, an increase of 76.5 percent. Medical products represent 62.5 percent of the revenues and the Americas account for 58.3 percent of the revenues generated in this market. This is truly the great growth industry of our time. It has been said that the 21st century belongs to Molecular biology and the Human Genome. What does all this mean? Maybe that the quest for knowledge, control and immortality is surging. Maybe that technology is advancing so quickly that there will be a burst of new diagnoses, treatments and preventions in our lifetime. And surely that this industry is the darling of all.
We have moved from the industrial age to the informatics age and now it appears we have moved to the biotechnology age. Life sciences and biotechnology are terms you see everyday now in the media. There is so much to report on — so many discoveries that no one can keep up much less quantify their importance and potential for our benefit. A mouse loses 33 percent of its body weight just by living on a low vibration platform, a test tube baby is created from three sources of DNA, the skin cells can convert into most any type of cell, a tumor-suppressor gene called “Par-4” in the prostate kills cancer cells, but not normal cells. These discoveries and the hundreds of thousands of others could result in the disease-free, ultra-super human race. Although it sounds like science fiction, these promising revelations may indeed change mankind. But while merging technology with health care and preventative medicine is still far into our future, there is a long list of companies, new and old, diving into the economy of the science.
A huge array of science is simplified under the catch all term of Life Science and Biotechnology, just to mention a few: Biochemistry, Cell biology, Genetics, Mathematical biology, Molecular biology, Nanotechnology, Stem Cell Studies and Virology. Also included in the mix are the specialty companies focusing on areas such as drug development, diagnostics, medical devices, equipment and supplies. While this is the more traditional science that one can study in college, the forefathers of the Biotech age combined this study with a new focus and the objective of creating a company even before they had any idea that they could generate a product or service to actually sell.
The impetus that spurred the development of the biotechnology industry started around 1973 with the discovery of “molecular scissors” and a “genetic delivery device” to cut and paste a gene from one organism into another in order to read the gene and make a needed protein in large quantities. This first delivery system, a recombinant strain of E. coli, a common bacterium, became the basis for much scientific progress in cloning cells and drug production. These proteins, called lymphokines, were needed in large quantities so that they could be purified and studied. From there followed somatostatin (a hormone that turns off the secretion of other hormones in the brain), insulin, the growth hormone, and alpha and beta interferons, which can improve the body’s natural response to disease and slow the rate of growth of cancer cells. The first biotech companies, like Cetus, Hybritech and Genetech, lead the charge of combining biology and engineering under private management with private and venture capital funding. Not only did they revolutionize diagnostics and therapeutics, but they also started a whole new industry that will transform health care.
Former Governor Jeb Bush can be credited with the foresight and initiative to develop the life sciences cluster in Florida. He proposed budgeting funds to provide incentives and support research organizations to locate facilities in Florida. The State appropriated $310 million for the Scripps Institute for operating funds in 2003. The Burnham Institute for Medical Research received $155 million and the Torrey Pine Institute for Molecular Studies received $25 million from the 2006 Innovation Incentive Fund. Additional monies were committed by the cities, counties, companies and individuals enthralled by their potential. As summarized by Dr. John Hitt, President of the University of Central Florida (UCF), “this will improve our physical health, our educational health and our economic health.”
New Biotech Properties in Central Florida
The Scripps Institute Florida is currently operating in temporary facilities at Florida Atlantic University while its permanent facility is under construction in Jupiter. The campus at the Abacoa development will feature 350,000 square feet of administrative and laboratory space and a 134-foot spire, representing a double helix of DNA. The Institute has already generated $13 million in grant money and created 180 jobs.
A little further north in Port St. Lucie, The Torrey Pines Institute for Molecular Studies has established its east coast location. Laying the cornerstone for the 100,000-square-foot building sealed the commitment Port St. Lucie and the State of Florida made to supporting their research. The building is expected to be completed in 2009 and 190 new jobs are expected to be created with the potential for more due to spin off companies that are already in the works. Temporary facilities are located at the Florida Atlantic University where over 30 scientists work currently.
In East Orlando, the corridor from the UCF campus to Lake Nona by the airport will be the site of the biotech cluster. Already there is the UCF Research Center and Incubator. Groundbreaking for the Burnham Institute for Medical Research and the UCF College of Medicine was held in November. The Burnham Institute’s building will be 175,000-square-foot property when completed in 2009. Meanwhile, they occupy space at the Florida Blood Center. The College of Medicine will be located on the UCF Health Sciences Campus in a 173,000-square-foot building along with the Burnett Biomedical Sciences Building, a 195,000-square-foot building. Also scheduled to be built at Lake Nona is the UCF College of Nursing, the MD Anderson Research Facility, and the Veteran’s Administration Hospital. The Nemours Children’s Hospital and Research Facility recently purchased property near by while the University of Florida Research Center plans to locate in the area as well. The Nicholson Center for Surgical Advancement is scheduled to be built in Celebration and the Emergency Medical Center for Training and Advancement is raising money for a new facility. Existing companies, such as CuraScript, Axium and Advanced Care Scripts, and others like them are already based in Central Florida. This specialty pharmaceutical distribution is a multi-billion-dollar business by itself. And there are others on their way here.
Biotech and medical device companies in the U.S. raised a record $9.1 billion last year, 20 percent more than the year before, according to a new report from PriceWaterhouseCoopers and the National Venture Capital Association. Entrepreneurs in high-tech fields now have access to more help from the recently passed Florida Capital Formation Program. This fund will provide seed and early stage venture capital to high-tech companies
When such serious money is generated by these life science companies, you can be assured that they will attract the critical mass of venture capitalists and companies supporting their research efforts. And it won’t take long.
Ernst & Young: Beyond Borders Global Biotechnology Report
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