Growing bioscience sector powers state’s economy
Twenty years ago, Wisconsin’s bioscience industry barely registered on anyone’s radar. Today it’s a completely different story: the sector now accounts for $27 billion in total economic output, according to a recent BioForward-commissioned whitepaper. Expect to hear even more about the industry as current initiatives strive to strengthen and grow bioscience companies across the state.
“The bioscience industry is all about high-tech health care solutions, bringing together not just life sciences, but also medical technology and health technology,” said Lisa Johnson, CEO of BioForward, an organization that advocates for Wisconsin’s bioscience industry through legislative advocacy, STEM education and promoting the industry’s positive impact on the state. “There are so many segments, from therapeutics and diagnostics to engineering and the manufacturing of active pharmaceutical ingredients.”
The afore-mentioned BioForward whitepaper, executed by Ernst & Young and completed in 2015, states that bioscience jobs are high-paying and have a 2:1 multiplier, which means that for every industry job created, two more are added in other sectors, such as construction or retail. More than 1,600 bioscience companies employ about 36,000 people statewide.
“These jobs have an average salary of $73,241,” Johnson said. “Behind energy, it’s the second-highest-paying sector in Wisconsin.”
Investors are taking note of the state’s bioscience industry, with companies receiving nearly $1 billion from the National Institutes of Health and other capital sources. Healthfinch of Madison is a recent example. The Madison-based software developer received $7.5 million in late 2015 from investors led by Adams Street Partners of Chicago.
Healthfinch, which employs 29 but hopes to hit the 50-employee mark by the end of 2016, creates software to handle mundane tasks so health care workers can focus on other duties. Co-founder and CEO Jonathan Baran said its first app – called Swoop – automatically routes routine prescription refill requests to medical office staff instead of physicians if patients meet certain criteria. That simple change can free up 15 to 30 minutes each day for doctors.
“There are 2,000 physicians using the app and the new funds will allow us to ramp up even more,” Baran said. “The rapid adoption and demand from health systems for Swoop is a clear indication that automating routine and repeatable tasks is the future of health care delivery.”
The company’s other two apps focus on patient communication. One reaches out automatically to patients overdue for a visit while the other helps automate what patients need to do before coming in for their appointment, such as bringing in a list of their medications. Baran said the new funds will help the company integrate the three apps into one platform.
“Every entrepreneur dreams of securing funding from those who believe in their vision and will help them succeed. I’m thrilled to be working with a group of investors who share our passion to transform health care,” he said.
When looking at the bioscience industry in Wisconsin, Johnson said the influence of the state’s universities and other organizations that conduct research can’t be ignored. She said academic institutions such as the University of Wisconsin (UW), Marshfield Clinic and the Medical College of Wisconsin create an environment where innovation thrives. It also attracts and retains researchers.
“The University of Wisconsin has more than $1 billion in annual research expenditures and is a major draw for potential investors,” Johnson said.
The federal government is another investor in state bioscience firms. Stratatech of Madison has received $47.2 million in the past year to support the preclinical, clinical, regulatory and technological development activities needed to gain FDA approval for StrataGraft, a synthetic skin tissue to treat thermal burn injuries. Stratatech was initially formed to commercialize a discovery made at the University of Wisconsin.
“These investments show there are opportunities for Wisconsin companies to secure funding for their ideas, but they can’t do it on grants alone,” Johnson said. “The University of Wisconsin as well as the Medical College of Wisconsin are looking at being more entrepreneurial in their thinking around their discoveries, but the industry definitely needs more investment.”
That’s seen in D2P (Discovery to Product), a joint program between the Wisconsin Alumni Research Foundation (WARF) and the UW to help campus staff members turn their ideas into companies and products. While WARF, which promotes technology transfer and research commercialization across the state, doesn’t focus solely on bioscience, that segment does make up a significant part of its portfolio.
Brainxell is one new company benefiting from D2P. Launched in 2015 by Dr. Su-Chun Zhang, a renowned UW neuroscientist who created a method of “editing” stem cell genes that could one day help clinicians delete disease-causing genes, Brainxell plans to take that research and turn it into real treatments for diseases such as Parkinson’s and spinal cord injuries.
Zhang said his company will focus on creating cell lines, reagents and screening methods to support new therapeutic options. He added that without D2P he wouldn’t have known where to start.
“It’s really eye-opening for faculty focused on discovery-based research” to take ideas and turn them into commercial offerings, Zhang said. “I learned it takes a lot of work to take technology from the lab to customers.”
While Wisconsin didn’t start out as a bioscience juggernaut, discoveries and research at the state’s universities and elsewhere during the past two decades, combined with the Badger State’s strong manufacturing tradition and know-how, turned it into one. The state has also benefited from the presence of giants such as GE Healthcare in Pewaukee, which makes medical equipment, and Epic Systems in Verona, which creates electronic records systems for health care providers.
Other companies started in Wisconsin were later acquired by larger entities looking to enter the state’s bioscience industry, Johnson said. For example, TomoTherapy was founded in 1997 in Madison and develops, manufactures and sells the Hi Art treatment system, a radiation therapy system for the treatment of various cancers. In 2011, it was acquired by California-based Accuray for $277 million. The company kept its core research, development and manufacturing bases in Wisconsin.
“We’ve seen several Wisconsin businesses purchased by outside companies, who then decide to strengthen and grow here,” Johnson said. “They recognize what we have.”
The key now is to continue spreading the word.
The 2015 Wisconsin Bioscience Economic Development Report: Energizing Wisconsin’s Economy hopes to do just that. The report provides an in-depth look at the state’s bioscience industry while also looking at ways to spur additional economic growth.
A vital component to the industry’s growth prospects lies in its workforce.
“We’re looking to play off a slogan of ‘We Make it Here,’ which we think will resonate well with millennials since they want to make things,” Johnson said. “Not all of the jobs are in development, but also in manufacturing. That manufacturing is very high-tech and advanced. It’s an exciting industry.”
Products made by Wisconsin’s bioscience companies are sought after in global markets, said Katy Sinnott, vice president of international business development for the Wisconsin Economic Development Corp. When it comes to exporting, medical and science equipment ranks third behind industrial manufacturing goods and agriculture.
“We have seen a big increase in medical and science equipment exporting,” Sinnott said. “Another area related to bioscience – organic chemical compounds – has grown 64 percent. There is demand out there in the world for the products.”
Those words are something Johnson and others involved in the industry like to hear.
“Getting investment in our bioscience companies is key to their future growth, and their growth means good economic news for Wisconsin,” she said.
