Twenty years ago, the Newark biotechnology firm SDIX began as a handful of former DuPont employees who decided to develop a technology that DuPont didn’t want to invest in.
After two decades of acquisitions and organic growth, SDIX now has a workforce of 155, $28 million in annual revenue and a client base that includes such prominent names as Siemens, Merck and Novartis.
The company, which develops antibodies for a range of industries including agriculture, petrochemicals and food safety, has benefited from Delaware’s high concentration of skilled bioscience workers; its easy access to research at the University of Delaware and leading hospitals, and a business-friendly state government.
“Everything that’s necessary for the biotech industry is here,” said SDIX President and CEO Fran DiNuzzo. “It’s a vibrant and tight biotech community.”
The SDIX story is one that Delaware officials are now aiming to replicate in the hope of building on a flourishing local industry that generates billions of dollars and thousands of jobs for the state’s economy.
At the BIO International Convention – the world’s biggest biotechnology trade show -- in Washington, DC from June 27-30, Delaware officials and industry leaders will be working to attract new business to the state and reinforce its reputation as a leading center for the industry.
“We are trying to create a big splash,” said Alan Levin, Secretary of the Delaware Economic Development Office. “We now have an opportunity to put ourselves in a bigger market for the next generation.”
At the convention, which is expected to attract close to 20,000 people, officials will interview potential partners for biotech companies already doing business in Delaware; work to recruit companies from around the world, and market the diversity of the state’s bioscience industry, which ranges from big pharmaceutical companies to small biotechs serving the medical, agricultural, environmental, and food industries.
Visitors to the Delaware Pavilion will be invited to take a cruise on the state’s tall ship, the Kalmar Nyckel. They will also be able to connect with several biotech companies through social media tools like LinkedIn and Twitter.
“With these new tools, we’ll be able to connect with even more people…encouraging collaboration and providing the space for innovation,” said Patty Cannon of the Delaware Economic Development Office, who has coordinated the Delaware presence at the convention for the past five years.
“It’s an opportunity to get people to come to Delaware,” said Bob Dayton, President of the Delaware BioScience Association referring to the convention. “They might stop off and visit before or after the show, especially international visitors.”
Dayton says the state’s participation in the DC show coincides with an increase in its ongoing efforts to boost the local life-sciences industry. The Delaware BioScience Association had 30 members at its inception five years ago. Today it has grown to a 100-member trade group that represents about 80 percent of the state’s biotech industry.
Levin says biotech offers Delaware a golden opportunity to diversify its economy from the traditional ‘four Cs’ of chemicals, chickens, cars and credit cards. He argues that the state has a highly educated workforce, access to leading research institutions including The Children’s Hospital of Philadelphia and Johns Hopkins University in Baltimore, and a state government that provides financial incentives for companies, including those in biotechnology, considering relocating to the state.
The incentives include customized loans and grants based on projected personal income tax generation, a project’s level of employment, and other factors. If a qualifying company falls short of agreed-upon benchmarks, the state applies a clawback provision on a pro rata basis to recoup its investment. Any money collected through the clawback program is returned to a state fund for investment in other projects.
The state will also help with capital spending but such projects must be linked to anticipated job creation. Building improvements costing $1 million, for example, would attract state support of 2-3 percent, Levin said.
According to Levin, such cash incentives are more suited to Delaware’s biotech industry than the tax credits offered by some other states because some companies are not yet profitable and so don’t pay corporate taxes.
Delaware also offers a business finder’s fee tax credit. A new company or a company that refers a new arrival to the state is eligible for a tax credit equal to $500 times the total number of full-time Delaware employees of the new company each tax year for 3 tax years.
Levin says the high salaries of biotech workers show their inherent economic value. Most biotech workers make $85,000-$100,000, salaries often commanded by scientists with advanced degrees.
Estimates of the number of jobs supported by the industry have varied from about 12,000 direct jobs, according to a 2009 study by the University of Delaware that is seen as the most inclusive of recent surveys, to some 7,400 now, according to Delaware Economic Development Office.
The department estimates that the industry, together with its Delaware-based suppliers, contributed $2.5 billion to the state’s economy in 2010.
Delaware’s smaller biotech companies have benefited from downsizing by some major pharmaceutical firms which have contracted out their research functions.
“Pharma companies can outsource many services and not compromise their brand,” said Dayton.
One contract research organization, Wilmington-based Incyte Corp., has developed ruxolitinib, a drug that would be the first FDA-approved treatment of myelofibrosis, a disorder of the bone marrow.
Such discoveries are more likely to be made by outsourcing companies than by big pharma, said Incyte President Dr. Paul Friedman.
“I expect that a lot of the smaller companies are discovering the more interesting treatments in the biopharmaceutical space,” Friedman said.
If the FDA approves ruxolitinib, Incyte expects in the next three years to double its current workforce to about 500, about three-quarters of who would be based in Delaware, Friedman said.
For Paul Beard, a business development associate at the New Castle-based contract research organization Adesis Inc., Delaware is a “hub of innovation” in the biotech industry.
“It’s a leader in life sciences, the talent is available, and the legal system has a strong precedent for how they are going to rule on business,” said Beard, whose privately held company has grown from three employees when it started in 1991 to about 50 now.
It’s a pattern that state officials hope will be repeated industry-wide in coming years, said Nikki Lavoie, a spokeswoman for the Delaware Economic Development Office.
“The prospects for growth are good as the economic recovery continues to gather strength,” she said.