Donald Fry: New national report has familiar ring for Maryland bioscience advocates

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By Donald C. Fry

Leaders in the Baltimore region and Maryland are counting on bioscience and industry growth to be a major element of our future economy. That’s why we need to pay close attention to a recent report prepared by Battelle, the world’s largest independent research and development organization.

The report, compiled by Battelle for the Council of American Medical Innovation and released on June 10, issues a compelling warning: the U.S. is in danger of losing its global leadership in medical innovation and biomedical development. (Click here to read the report.)

The U.S. is still the world leader, but we are allowing our own support for medical innovation to decline while other nations are stepping up their investments in bioscience and medical innovation as an economic growth strategy, the report concludes.

To put this warning in perspective, keep in mind that health care currently accounts for about 17 percent of our nation’s Gross Domestic Product, and experts say the potential is there for it to grow to 25 percent of the national GDP.

Medical innovation remains the defining feature for the United States in the global economy. But “many believe that the U.S. leadership position is tenuous. While ‘here today,’ it could be ‘gone tomorrow,’” write the report’s authors, who interviewed 72 experts including industry representatives, research leaders, biomedical organization executives, and capital investment officials.

The report cites critical challenges to growth in medical innovation, including:

Lack of consistency and predictability in the federal regulatory process. We have allowed the U.S. Food and Drug Administration “to fall behind in its scientific skills and tools, and to instead become mired in processes,” the report concludes. This substantially heightens investment risk, increases the cost of development and makes it more difficult to raise capital. It also denies patients timely access to innovative treatments, the report adds.

Shortfalls in private investment for company formation. The U.S. is “falling behind” in research and development tax credits and other tax incentives to nurture emerging bioscience companies and help them through the early-stage fiscal “valley of death.” Formal venture capital is seeking later-stage investments to shore up prospects of financial returns, “leaving start-ups and emerging bioscience companies with diminished prospects of success,” according to the report.

Gaps in translating research into new treatments. While the quality and breadth of our nation’s research universities is a huge competitive advantage, proposals to restrict technology transfer at universities and legal challenges seeking to diminish intellectual property protections “pose fundamental threats” to traditional rules that have enabled the surge of medical innovation in the U.S., the report concludes.

Limitations in the U.S. bioscience talent pool. The current crisis in developing a U.S. workforce with the scientific talent needed in an innovation-driven economy is “perhaps the most serious long-term threat,” the Battelle report states. “Attention is needed at all educational levels to build both the interest and skill sets needed.”

If these challenges sound familiar, they should. They’re essentially what researchers and bioscience industry experts in Maryland have been telling us for several years.

The Battelle report proposes national policy solutions that include revamping and modernizing FDA review processes, strengthening the federal research and development tax credit, adopting tax and economic incentives for medical innovation, and strengthening National Institutes of Health emphasis on moving discoveries into the development stages.

Other recommendations include reforming the federal Small Business Innovation Research Program to better address challenges in commercializing medical advances. Battelle also recommends providing federal support for K-12 science, technology, engineering and math (STEM) efforts; funding programs at vocational schools and community colleges to retrain existing workforce for biomedical careers, and increasing the number of U.S. and foreign students who pursue graduate degrees in the biosciences.

While the Battelle proposals relate to national policy, they also have a decidedly local ring to them. Similar recommendations have also been made at the state level and are incorporated in bioscience strategies put forth by the governor in July 2008, the state’s Life Sciences Advisory Board in May 2009, and the Governor’s STEM Task Force in August 2009.

However, the recession and the state’s fiscal challenges have slowed implementation of many elements of these strategies.

For instance, a key action item of the governor’s 2008 bioscience plan was to dramatically increase Maryland’s bioscience investment tax credit, which industry experts and Maryland’s economic developers say is one of the state’s most effective business development incentives.

The governor’s plan would have made $12 million in tax credits available in fiscal 2010 for investors in Maryland bioscience companies, and would double the available tax credits to $24 million in FY 2013. But only $6 million was available in FY 2010. For FY 2011, state lawmakers did add $2 million, bringing available tax credits to $8 million. The increase, however, was a last-minute budget item inserted by a legislative conference committee in the waning days of the 2010 session.

While bioscience advocates are grateful, we also recognize that a successful strategy for growing this industry that is critical to our economic future cannot be dependent on last-minute legislative benevolence. It requires a strong, long-term commitment to a solid strategy.

Consider these facts. The medical services sector is already a major element of Maryland’s economy. Higher education institutions in Maryland are national leaders in attracting bioscience research funding. Education and health services account for more than 14 percent of Maryland’s private-sector employment.

In Maryland, the pieces are in place and the strategies are there. We need to ensure that our elected officials maintain a commitment to keep our bioscience industry development plans on track. That’s also what the Battelle report suggests to the nation’s policy makers.

On both the national level and in Maryland, we must make sure that we nourish, rather than starve, our vitally important and percolating bioscience sector.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Previous Center Maryland columns by Donald C. Fry:

New report underscores Maryland’s work force development challenges

State’s health initiative: a ‘win-win’ for employers and their workforces

As Baltimore hikes taxes, are state’s counties next?

After the ‘fiber from heaven’ scramble, what’s next?

BRAC growth no longer a future event – it’s happening now

Economic development is a contact sport

Despite the recession, bioscience growth still percolates in Baltimore

State stumbles in enacting new education collective bargaining process

Wind power has potential in Maryland, but solar emerges as early renewable option

It's not good to be clueless in cyberspace

Amid fiscal shuffle, Maryland lawmakers pass measures to spur business growth

Thankfully, Baltimore leads with substance over style in luring Google

Leave damaging transportation provisions out of the budget

Amended budget continues recession-induced fund shifts and stimulus rescue

General Assembly setting stage for combined reporting push in 2011

Wrong timing for proposal to change Baltimore City school board

Baltimore City isn’t alone in facing pension funding challenges

A government investment program that delivers

Proposed transportation fund raid -- a bad habit continues

Where's the outrage over crime?

Small business is where innovation lives
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Donald C. Fry has been the president and CEO of the Greater Baltimore Committee (GBC), the central Maryland region's most prominent organization of business and civic leaders, since November 2002.


Under Don’s leadership, the GBC is recognized as a knowledgeable and highly credible business voice in the Baltimore region, Annapolis and Washington, D.C. on policy issues and competitive challenges facing Maryland. Its mission is to apply private-sector leadership to strengthening the business climate and quality of life in the region and state.


Fry served as GBC executive vice president from 1999 to 2002. From 1980 to 1999 Fry was engaged in a private law practice in Harford County. During this time he also served in the Maryland General Assembly. He is one of only a handful of legislators to have served on each of the major budget committees of the General Assembly.


Serving in the Senate of Maryland from 1997 to 1998, Fry was a member of the Budget and Taxation Committee. As a member of the House of Delegates from 1991 to 1997 Fry served on the Ways and Means Committee and on the Appropriations Committee.


Fry is a 1979 graduate of the University of Baltimore School of Law. He earned a B.S. in political science from Frostburg State College.