The Biotech Economic Development Bubble

In a recent biotechnology seminar I made the following case about overly enthusiastic biotechnology economic development initiatives, but it bears repeating. Officials insist on chasing madly after biotechnology companies, throwing money at the industry in hopes of getting companies and researchers to relocate there.

Why? They seemingly think that botech is the next information technology, an industry that can transform itself and the economy, while adding jobs left, right, and center.

Is it true? Well ….

That’s a “seductive analogy,” says Joseph Cortright, a Portland, Ore., economist who tracks the biotech industry. But it’s off the mark, he says.

Unlike information technology … biotech advances “are not systematically cheaper than the things they replace,” he says. New drugs, for example, tend to be expensive. Biotech also won’t produce economywide productivity improvements like computers have.

In addition, Cortright says, controversies over stem cell research, therapeutic cloning and bioengineered foods could hamper biotech just like environmental concerns stymied nuclear power.

… Biotech “brings more prestige than payroll,” [another analysts] says.

As of last year, there were only 1,444 biotech companies in the United States, according to Ernst & Young. These companies employed just 200,000 people.

The 330 publicly traded biotech companies in America lost a net $4.3 billion last year. The number of profitable biotech companies can be counted “on a partially severed hand,” …

Related posts:

  1. Biotech to be Profitable — Again
  2. Something Strange About Biotech Venture Investing
  3. Canadian Business Column: Biotech is Broken
  4. Boxers or Briefs: Biotech versus IT
  5. Biotech Flops & Gas Stations

Comments

  1. one way stox says:

    1-amgn 2-dna 3-gild 4-genz 5-biib 6-medi 7-celg 8-imcl 9-affx 10-vphm 11-kosp 12-matk 13-ivgn 14-iart 15-lifc 16-tech 17-sero 18-cers 19-embx…a few years ago, it was just 1-amgn & 2-dna

  2. An Economist’s Perspective on Biotechnology

    Covering the latest news and development in Biotechnoloy, I am inclined to believe that biotech really is what futurists would say “the next big thing”. And governments believe it, too, if my last recent posts were anything to base…

  3. Guy Luthere says:

    Certainly when one looks at the hard data (not the self-congratulatory agency reports), several states’ biotech industry initiatives are not translating (at least not with any speed) into job creation…Arizona certainly comes to mind here (see http://www.awarescience.com/tab_state_general.cfm?TAB=1&I=0&CC=&S=5&CF=100)