Minnesota is a dominant player in medical devices — ranking near the top in the United States. The state’s $1 billion ethanol industry ranks second only to Iowa in production — “an area where the world is watching Minnesota,” says a BioBusiness Alliance study released in August.

“Biobusiness: Minnesota’s Present Position and Future Prospects,” the first comprehensive review of Minnesota bioindustry, highlights the state’s achievements in medical, agricultural and other biosciences. Overall, the biobusiness sector is growing. An estimated 7,000 biobusiness jobs have been created in the state since 2002, and every bio-job results in 5.7 additional jobs.

However, “Minnesota’s competitive position is under threat as other states invest heavily, aggressively and creatively in developing their own biobusiness industries,” states the report, authored by University of Minnesota Professor Kelvin Willoughby.

Key states are outpacing Minnesota in biobusiness start-ups, expansion and employment.

“Our state needs to act strategically and decisively to maintain a competitive position in biobusiness in future years.”

Jeremy Lenz, BioBusiness Alliance project executive, says past newspaper headlines exemplify the contradictions in Minnesota’s bioindustry. “One newspaper headline read, ‘The train is leaving the station and Minnesota is not on it.’ Another said, ‘Minnesota: world leader in medical devices.’ ”

Minnesota is indeed a leader in biotechnology research and development. “We’re just not a strong competitor in commercialization; we need to turn that around,” says Amy Johnson, project manager. “We have a troubling lack of turning an invention into a new enterprise.

“The train has not left the station, however. We just need to focus on our infrastructure. Other states are laying the tracks; we need to work on that too — factories and places where biobusiness can function,” Johnson says.

A new alliance

In 2003, Governor Tim Pawlenty established the Governor’s Bioscience Council to address bioindustry growth concerns. After the blue-ribbon panel completed its 18-month investigation, Pawlenty asked Dale Wahlstrom, a Medtronic executive, to design an industry led biobusiness nonprofit with board members representing industry, academia and public entities. “Dale jumped all over this … he’s given an amazing commitment of time,” Lenz says.

Wahlstrom met Teresa Spaeth, AURI’s executive director, at a Bemidji State University dinner last February and AURI and the alliance were sponsors of a biobusiness conference in Bemidji in April. They agreed their organizations should work together on accelerating biotechnology commercialization.

“There is a lot of research going on and a lot of opportunity, but who is making sure it actually is commercialized?” Spaeth says. AURI’s mission parallels the alliance’s goals because the institute “is not just doing research for the sake of research, but research that will be applied to business.”

“We’re bringing agriculture to the biotechnology community … To us, the BioBusiness Alliance brings a wealth of resources and information.”

The alliance’s statewide assessment of Minnesota’s knowledge and business generation capability was just a first step. The next, Destination 2025, will look at short to long term growth strategies for the biobusiness industry. Finally, the alliance will create the BioBusiness Resource Network to help startup and existing companies expand or move to Minnesota.

“When Destination 2025 is completed, not only will we have a focus on goals but a service model so we can link our resources to specific business needs,” Spaeth says.

“AURI will be the agricultural portal …getting the research — the latest and greatest— into the hands of small and medium scale processors, which they don’t have the capacity or funding to get on their own.”

The state of biotechnology

The most recent U.S. Economic Census data shows that in 2002 the biobusiness technology sector had 55,000 establishments, 1.2 million paid employees, a $60 billion-plus annual payroll, and annual revenues exceeding $330 billion. Average wages in the bioscience sector — almost $66,000 — were $26,000 above the average private-sector wage.

“Minnesota’s economy is more heavily oriented toward biobusiness technology employment than is the economy of the country as a whole, with 1.33 percent of our workforce employed in biobusiness technology, compared to 1.07 percent for the nation as a whole,” the report says.

“Our state’s future employment prospects are, therefore, more dependent than other states on what happens to its biobusiness sector.” For example, the state employs 24 percent more workers in the medical devices industry than the national average, and is second only to Massachusetts in production.

The report found “we lost ground from 1997 to 2002 in total biobusiness technology employment and in key sectors … where we historically have had clear dominance. We turned the trend around between 2002 and 2005, but we know that our competition is also improving.”

Overall, about 93 percent of Minnesota’s biotechnology enterprises are involved with health care. Medical devices and life sciences research and development, are prime focus areas of the study, as they are well defined in U.S. Economic Census data.

Minnesota particularly lags in the commercialization of life sciences, which includes developmental research in medicine, biology and agriculture. Commercialization involves getting research off the shelf and into the hands of industry where it can generate products, services and economic activity.

“We have the brain power and the research capability,” Johnson says. But the study shows commercialization is growing faster in other states with similar biotechnology infrastructures, such as Iowa and Utah. “We don’t know why, but we’re going to find out.”

The agri-bio and bio-industrial sectors — generally defined as technology directed to biological systems outside the human body — were the most difficult to measure because there is no standard industrial classification for this area. The study, rather, looked at industry segments, including ethyl alcohol and cellulose organic fiber manufacturing, wet corn milling, soybean and other oilseed processing, breweries and wineries.

“Renewable energy is going crazy, but there are also coproducts and bio-based industrial products” that will play an important role in Minnesota’s biotechnology growth, Spaeth says.

“We need more measurements and AURI is a good partner,” Johnson says. “AURI will be at the table as we begin to build the Destination 2025 visioning process.”

For the full report Biobusiness: Minnesota’s present position and future prospects, see www.biobusinessalliance.org

Jeremy Lenz and Amy Johnson of the BioBusiness Alliance