BioCrossroads and Commercialization and Health Care & Life Sciences and Life Science & Biotech

Life sciences initiative seeks to increase California ties

June 11, 2007

BioCrossroads is exploring an unusual new strategy to boost the development of Indiana's life sciences industry: Team up with San Diego.

"We're in the same business. We're looking at it from different assets and strengths," BioCrossroads CEO David Johnson said. "But it's a complementary relationship in every sense of the word, so we think we could form an interesting interregional collaboration."

Advocates say it's a novel approach with enormous potential for Indiana, which could leverage its strengths in the latter stages of drug and medical-device commercialization and manufacturing to gain access to San Diego's treasure trove of promising new life sciences discoveries.

But it's also a plan that risks marginalizing Indiana's home-grown research. University academics in particular might feel threatened.

"Bench scientists could look askance," said Charles Buck, director of Purdue University's Bindley Bioscience Center. "It would suggest that we were not a good discovery organization, or we didn't have good discovery infrastructure."

Added Walt Plosila, a Columbus, Ohio, consultant who has done research on Indiana's life sciences industry: "You don't want this to put a damper on the strong efforts you've been building to create an entrepreneurial culture."

BioCrossroads already has taken its first steps toward sunny Southern California. On May 30, it co-hosted an invitation-only conference outside San Diego along with that region's most prominent life sciences economic development organizations: Connect, BioCom and the University of California San Diego Extension. It was called "Transforming Pharma/Bio: Discovery, Definition, Development, Delivery."

San Diego is a life sciences research and development juggernaut. Its $815 million in annual funding from the National Institutes of Health nearly quadruples Indiana's. And venture capitalists annually invest more than $900 million to commercialize the area's life sciences innovations--more than nine times as much as they speculate here.

A conference underwriter, San Francisco-based Burrill & Co., already has a foothold in Indiana, overseeing some of the cash from BioCrossroads' $73 million Indiana Future Fund.

BioCrossroads brought along an all-star team of Hoosier life sciences talent to join the panel discussions on the future of academic research, venture funding and life sciences globalization. They included Darren Carroll, senior managing director of Lilly Ventures; and Dan Peterson, vice president of industry and government affairs for Cook Group Inc.

The traditional "go-it-alone model" of life sciences development is waning, said Duane Roth, CEO of Connect. The sheer complexity of taking research from the lab all the way to market is daunting even for San Diego, perhaps the largest life sciences hub in the world.

Instead, Roth said, life sciences commercialization today is increasingly a relay of discovery, development and delivery, in which different academic institutions and businesses each carry the baton for a while.

Indiana is positioned to contribute, particularly near the end of the marathon, Roth said, when new products or services are being prepared for the market.

Although San Diego is rich with researchers, it lacks Indiana's concentration of executives from the pharmaceutical and medical-device sectors. Their experience is critical in launching commercial life sciences businesses.

Indiana has know-how with complicated global life sciences concepts like clinical validation, marketing and distribution. It has experts in scientific trials, sample formulation and toxicity studies. It also has people who know how patent protections differ in various countries, Roth said. They understand how nations each have their own health care systems, with unique liability issues, advertising channels and regulatory requirements.

What's more, the chance of failure at every stage of a new life sciences product's development is enormous. No individual business or university--even in San Diego--wants to bear the risk alone anymore.

"For all those reasons, we're exploring a new model where everybody takes proportionate risks," Roth said. "The home-run mentality is what got the biotech industry into a lot of trouble. We're all trained to take it as far as we can go, but inevitably, you hit a wall."

Building on strengths

BioCrossroads formed five years ago with the goal of building on the state's life sciences strengths. Johnson said the San Diego partnership is an evolution of that strategy.

He noted that there aren't many regions of the United States with an abundance of people boasting corporate life sciences experience. And most of Indiana's competitors--such as the East Coast hub of New York, New Jersey and Philadelphia--not only aren't organized, but often compete against one another. Indiana's life sciences industry, rallied with the help of BioCrossroads, is pushing in unison.

"From a competitive-advantage standpoint, it's why we're well-positioned to take advantage of the whole shooting match," Johnson said.

The next step, he said, is for BioCrossroads to hire someone to serve as Indiana's on-the-ground liaison to San Diego, extolling the capacity of Hoosier university labs and firms while securing contracts for a piece of San Diego's research projects.

BioCrossroads also is working with Uniiversity of California San Diego on a white paper, due later this year, on the opportunity for collaboration between San Diego and Indiana.

The push to build ties with San Diego doesn't signal a retreat from early-stage Hoosier research, said Todd Pedersen, IEDC's director of life sciences initiatives. He said Indiana can continue its efforts to cultivate commercialization of its most promising university discoveries. And, if it's lucky, the state eventually will land promising startups--both those developed here as well as some of San Diego's spillover.

"We're very excited," Pedersen said. "We've been able to keep peeling away at what we're really good at. Now we're narrowing down how to differentiate Indiana from the rest of the Midwest and the country."

Threat or opportunity?

Dr. Craig Brater, dean of the Indiana University School of Medicine, said that, rather than feeling threatened, academics here should embrace the opportunity. With life research expertise spread across the globe, he said, it's no longer realistic for one organization to dominate an innovation's development from start to finish.

"If you're a small biotech organization, there's a lot of stuff you're going to need to buy instead of make," Brater said. "We could do a number of things biotech companies need, do it just as well at a fraction of the cost. It's like a match made in heaven."

Among the Hoosier firms that stand to benefit from BioCrossroads' San Diego strategy is Anaclim LLC, a locally based contract-research firm with about a dozen employees.

CEO Alfonso Alanis said many promising life sciences companies like his have plenty of capacity to take on San Diego's work, but lack the resources to build connections.

"The fact of the matter is that I have one business development person for the entire country," he said. "My business development person is trying to attract work from many areas, not only the West Coast, but the East Coast and all over the place. Having someone down there educating people and establishing those connections will be extremely useful."

Plosila, vice president of the technology partnership practice at Columbus, Ohio-based Battelle, sees potential upside in the San Diego partnership. But he's skeptical San Diego will devote substantial resources to the idea, or that many of its best prospects ultimately will move here.

Another risk, he said, is that the partnership might stifle Indiana's nascent attempts to cultivate its own life sciences startups.

And because San Diego investors likely would continue to provide the bulk of startups' capital, Indiana might miss out on much of the payday when new drugs or medical devices become blockbusters.

Perhaps most important, Plosila wondered whether San Diego is going to court similar alliances elsewhere. Even if not, he said, it won't be long before others attempt to copy Indiana's strategy.

"If this is successful, others will duplicate it," he said. "There's nothing in this world that gives you a competitive advantage forever."

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