Bottles of pills and prosthetic legs—it may not be the first thing that comes to mind when thinking about what is driving Michigan’s economy, but it should be.
While the manufacturing industry is slowly climbing the recession recovery ladder, the bioscience industry has sprung back to life.
In Michigan the bioscience industry saw an uptick of 1,760 companies in 2012 from 1,595 companies in 2007, according to a recently released report from Biotechnology Industry Organization (BIO). This contrasts with an overall 17.3 percent reduction in the number of businesses in Michigan that occurred during that same time span.
The Washington, D.C., trade organization reported that increase represented 2,610 new Michigan jobs in that two-year span.
“From 2007 to 2012 there was an uptick in the industry and that was a bad economic time in Michigan,” says Stephen Rapundalo, MichBio CEO. “Despite the lagging economy the industry was still clearly growing. The (BIO) report showed that while the pharmaceutical sector did have a small loss from 2003 to 2007 with lots of consolidation and closing facilities, it began to stabilize after that, which is an improvement.”
And over the past 10 years, 56 percent of the venture capital investments in Michigan have been in life science.
What are bio sciences?
Rapundalo said the bio science industry is broken up into five sectors – agriculture and industrial environment, medical devices and equipment, pharmaceuticals, research diagnostics and testing, and bio science distribution. “In Michigan the two largest bio science industries are the medical device sector and pharmaceuticals,” says Rapundalo.
Both are considered life science industries.
Michigan is now ranked number 10 in the country in the size of its medical device sector, says Rapundalo.
The sector is continuing to grow despite the new 2.3 percent Medical Device Excise Tax on the sale of certain medical devices.
“There are more than 600 life science companies in Michigan,” says Paula Sorrell, Michigan Economic Development Corporation vice president of entrepreneurship, innovation and venture capital.
Large company examples are Stryker and Pioneer Surgical, she said. Early stage company examples include ProNai, Vesteron, RetroSense, Algal Scientific, Delphius, DeNovo, and Tissue Regeneration Systems.
Jobs produced by the industry
Rapundalo says the average pay for bioscience jobs is near $81,000 a year.
“Jobs produced are very high paying ones for the entire industry,” says Rapundalo. “Pay can be higher depending on what sector you are in. Some jobs can pay as high as $95,000. These are the kind of knowledge-based jobs that you want to have in your economy with very productive folks.”
In comparison, manufacturing jobs pay less on average. Bioscience jobs can create workers whose salaries are large enough to allow them to buy more than just the basics—a factor that is seen as essential to economic growth.
“Jobs span from entry level positions that just require an Associate’s Degree up to PhD level positions,” he says. “There are quite a range of jobs as well from the very technical side to the non-technical side which includes business development, marketing and product development.”
Rapundalo says it is important that universities understand the sector’s needs so they can produce graduates that meet those needs.
“This industry is also a way to retain talent,” says Rapundalo. “Instead of having talented graduates leave, the bioscience industry can present reasons and opportunities for them to stay.”
Why is Michigan seeing growth?
Michigan is a hotbed of growth for bioscience companies for many reasons; one of those is localized talent.
Michigan has a clear strength in advance manufacturing. Many of the manufacturing workers experienced job losses during the recession, resulting in available skilled workers who could transition into the bioscience industry. “In Michigan we already had the technology and capabilities to advance manufacture medical devices,” Rapundalo says. “In a time when the economy was shaky, it was safe for investors to focus more on medical devices than pharmaceuticals because medical devices were faster to market and produced a quicker return.”
Rapundalo says as the population of Michigan is aging, it is producing a greater need for medical devices such as prosthetic knees and hips.
Steve Haakenson, executive director for Biosciences Research and Commercialization Center, within Western Michigan University’s Research Foundation, says the financially able baby boomers can be thanked in part for the growth.
“There is an aging population who are adding to the need and desire for further resources spent on their personal health and life longevity,” Haakenson says. “They are also willing and financially capable to spend a great deal on their personal health and life longevity.”
Research testing has also been a growth area with a 35 percent increase in growth of companies, he says.
Rapundalo says the slew of Michigan talent also resulted from workers who came out of the pharmaceutical consolidation without a job.
When companies like Pfizer consolidated it produced much out-of-work talent with transferable skills who decided to just do something a little bit different within the same industry.
“A few years ago Pfizer had numerous facilities in the state which they closed and moved operations elsewhere,” Sorrell says.
Source: Corp! Magazine