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Building the New Economy
As biotechnology industry grows, Kentucky is poised to achieve success

Kentucky’s biotechnology industry is fast becoming one of the driving forces in the state’s economy. The industry has more than doubled in less than a decade, from $8 billion in 1993 to $22.3 billion in 2000. As more biotechnology companies develop, the state is working to support the industry.

Kentucky has established the Office for the New Economy, dedicated to the growth of a technology-centered economy and with the goal of building current business and recruiting new businesses by putting an infrastructure in place. A strategic plan was developed to focus on priority research areas in which Kentucky already has developed a national or international reputation.

Biotechnology has the potential to “become one of Kentucky’s niches in the new economy,” said Dr. Bill Brundage, commissioner of the Office for the New Economy.

Brundage explained that the state is building companies that are already here as well as attracting new companies, and both will be based on research at the University of Louisville and University of Kentucky. And, he added, there are enough scientists doing this that “it could become a significant industry for the state.”

Government, academia and business are forming partnerships that will ultimately result in taking technology from the lab to the marketplace.

According to the Office of the New Economy, Kentucky is uniquely positioned to make major scientific advancements in areas such as pharmaceuticals, crop enhancement and fertilization, veterinary diagnostics and animal feed formulation, medical devices, alternative fuels and biomaterials production.

Kentucky has much to offer the pharmaceutical and biotechnology industries in terms of research and education. UK has one of the top pharmacy schools in the nation and offers master of science degrees and doctorates in the life sciences. UK and U of L train graduates in chemical engineering and biomedical engineering fields. Western Kentucky University’s Center for Biotechnology also trains undergraduates and graduates in biotechnology.

Kentucky also has the infrastructure in place to lead in drug discovery and design research. Investments have been made at UK and U of L in core facilities, specialized equipment and supercomputing capabilities.

The Office of the New Economy’s statewide strategic plan identified three major goals: to build and sustain a strong research and development capacity at Kentucky’s research universities, in the private sector and with a federal presence; to create and maintain a thriving entrepreneurial climate; and to foster and retain a highly motivated, well-educated workforce.

Currently, the state ranks 47th in per capita research and development spending, and there is no significant corporate research and development presence or federal research laboratory. The strategic plan will address these deficiencies by advancing the development of a globally competitive research and development infrastructure at UK and U of L. The state’s resources will also be deployed to bolster targeted research areas where Kentucky stands to gain national prominence.

Brundage said the relationship between the state economy and the biotech industry is symbiotic. It will diversify the economy with high-paying jobs, and it could be significant in agriculture by creating new crops for farmers.

“We’re not in it just for the research. We want to see that research end up in the marketplace,” Brundage said.

Success stories
Several companies have either started up or located successful offices in Kentucky. Two of those are ALT Inc. and Gibson Laboratories.

ALT Inc. is a biotechnology company located in Lexington. Their main product lines are biochemical research products invented by Dr. Boyd Haley. They are certified to analyze samples and have a patent with UK to analyze diagnostic tests for Alzheimer’s disease. They also manufacture office kits for physicians and dentists to test for halitosis and localized infections in the mouth. They have distributors in the U.S. and other countries.

Company President Curt Pendergrass said he and Haley have kept the company in Kentucky because they like the area and like having university resources close by. They can rent time on equipment, and top-notch scientists and researchers are at their disposal.

Still, said Pendergrass, it would help small companies like ALT to know of any incentives or benefits in terms of sales and marketing. Most biotech companies are small and tax incentives are tailored to large companies. “There are resources we have been fortunate to find, but you have to look for them,” he said.

Gibson Laboratories, also located in Lexington, manufactures in vitro diagnostic products for clinics, hospitals and testing labs. Their target field is microbiology products. They also have a full line of preserved, quality-controlled microorganisms. The company recently signed a contract to provide proficiency tests for microbiology specimens.

Doris Swarthout, director of research and development for Gibson, said that for biotechnology companies and employees in Kentucky, the cost of living is an advantage over other locations. She also cited Lexington’s small-town atmosphere, but with enough culture to make it attractive.

Swarthout said one reason it is very important for the state to attract more biotech businesses is for networking. When there are several of the same businesses in the same area, they can learn from each other and gain a synergistic influence, she said.

The funding opportunities the state provides to small companies are a start, continued Swarthout, but some of the stipulations are restrictive to development. She cited the Kentucky Science and Engineering Foundation, headquartered in Lexington, that provides money for projects that require up-front costs.

“Up front, it looks like they will help science and biotech companies, but they also want to tap into the profits,” she said, referring to clauses that give the foundation royalties if they fund the company’s project.

Another company that has been successful in Kentucky has been Alltech, with their world headquarters located in Nicholasville. Since it was founded in 1980, Alltech has provided natural solutions for the animal feed and food industries. Now it is one of the largest animal health companies in the world, with four bioscience centers, 13 manufacturing facilities, over 1,200 employees, and distribution in over 65 countries.

In May 2002, Alltech opened a production and research facility in Springfield, Ky. Plans for the center include a research and development center and a biorefinery, which is new for the company and the state.

“Implementing the biorefinery concept would put Kentucky at the forefront of a new era of agriculture-based technology and ensure a future for many in the agriculture industry,” said Alltech President Dr. Pearse Lyons. “We are committed to bringing this concept to reality for the benefit of the state’s farmers and economy.”

For companies like ALT Inc., Gibson Laboratories and Alltech, there are a number of ways to benefit from the state’s business development opportunities. Funding is available through the Kentucky Science and Engineering Foundation, the Kentucky Agricultural Development Fund, The Innovation Group, the Vogt Fund, and Commonwealth Seed Capital.

There are three research parks in the state to help businesses: Coldstream Research Park at UK and MedCenter One and MedCenter Two, both located at the Louisville Medical Center. Incubators and accelerators are also available at Innovation and Commercialization Centers, ASTECC, Biomedical / IT Innovation Center, MetaCyte Business Lab, and the Information Technology Resource Center. Entrepreneurial resources are available through the Enterprise Corporation, the UK Entrepreneurial Club, and the U of L School of Business / Entrepreneurism Award.

The state focuses on regional economic development through the Kentucky Cabinet for Economic Development, the Louisville Medical Center Development Corporation, Greater Louisville, Inc., the Greater Louisville Health Enterprises Network, Lexington United, and bCatalyst.

Regional technology organizations include NETT, Lexington Information Technology, TEN, and CincyTechUSA.

With all of these resources in place for the biotechnology industry, Kentucky is poised to support businesses and build a significant technology-based economy.

“Kentucky is the right place for those who are energetic, enterprising, and who want to get in on the ground floor of what will be one of the fastest-growing and most progressive economies in the country,” said Governor Paul E. Patton. “The tools are in place because of the foundation we have built into the education, business and government partnerships.”

Jennifer E. Kustes is a staff writer for The Lane Report.
editorial@lanereport.com

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