Pennsylvania Economy League
Greater Philadelphia’s Knowledge Industry: Part I
It’s very clear that this [genomics and related fields in the biological sciences] is the most dynamic area of science that’s emerging. It’s somewhat similar to the role that physics played in the middle of the last century in redefining so many areas of science. Genetics, genomics and the life sciences in general are very clearly going to play that same kind of catalytic role in the first 20 to 30 years of this century.”7 Of the ten “most strategic technological trends that will shape business and our world over the next 20 years,” as issued by Battelle Memorial Institute, a science & technology think tank, four are life-sciences based: 1) geneticbased medical and health care; 2) nanomachines (microscopic size machines for localized drug delivery, for example); 3) designer food crops; and, 4) super senses (i.e., enhanced reality, as opposed to virtual reality). 8 Biology-based innovation not only promises to fundamentally alter existing life sciences industries, but also is expected to usher in entirely new industries. Many of these industries are still nascent fields of study that top university researchers and entrepreneurial R&D firms have undertaken. Emerging industries include bioinformatics, combinatorial chemistry, genetic engineering, and pharmacogenomics.9
Biology-Based Innovation and Regional Economic Competitiveness As the race gets underway, many experts believe that much of biology-based innovation and subsequent economic growth will take place within regions. According to Collaborative Economics, life sciences are inherently innovative, knowledge-based industries, and as such are tied to social and placed-based settings. Regions by definition offer this type of setting.10 Regions with the ability to “absorb” biology-based innovation are likely to see it to commercial fruition, regardless of where this innovation originally emerged. Not surprisingly, however, not all regions are equipped or positioned to be successful in the biology-based new economy. According to Peter M. Pell, a consultant on bio-tech centers based out of Chapel Hill, NC: “…building a high-technology industry requires so much money and intellectual capital that there are only so many sites that can successfully put all of the pieces together.”11 Research evidence is beginning to bear this out – a case study completed by Case Western University, for example, found that intellectual property generated by university researchers in Detroit and Cleveland flowed out from these metro areas into high-tech regions such as Boston, San Francisco, and New York City, in spite of public and private investment.12 Which regions will be successful in the biology-based new economy? Collaborative Economics believes successful regions in the biology-based new economy will have five key ingredients: research excellence; a shared talent pool; access to capital; shared, specialized infrastructure; and, business & support services. What follows is an informal review of the ingredients present in the Greater Philadelphia region.
Large Pharmaceutical Companies Perhaps Greater Philadelphia’s greatest existing strength is the strong presence of pharmaceutical companies located in the region. According to the Philadelphia Daily News, 80 percent of the world’s largest pharmaceutical companies have a presence in the area (headquarters, administrative offices, R&D facilities, and/or manufacturing operations).13 As reported by Regional Financial Associates (RFA), the Philadelphia region has the 2nd highest level of regional employment in drug manufacturing in the country, with more than 22,000 employees.14 Moreover, it is located in very close proximity to the Newark, NJ region, which has the highest drug manufacturing employment level in the country. The region’s large pharmaceutical companies are complemented by a host of smaller firms that increasingly are taking on R&D functions. The Philadelphia region has the 8th highest employment level for R&D activity, according to RFA. (See Figure 24) The presence of large pharmaceutical companies is an important regional ingredient for absorbing biology-based innovation. These companies are a primary source of talent for fledgling life-sciences firms that are seeking commercial applications for new discoveries. Often, employees from large pharmaceutical companies are the founders of small R&D firms themselves, and in some cases they are seeking to commercialize technology that failed to take hold in the bureaucratic setting of a large company. According to the head of one local biotech company, the ability to pick off talent from the large pharmaceuticals in the region was his primary reason for keeping his company local. 15
The Knowledge Industry in Action
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