• In a recent study entitled Prospects for a Bioeconomy: The Biomedical Industry and Regional Economic Development, Dr. Cinda-Herndon King and Richard Seline discuss the tremendous impact of the biotechnology industry on regional and national economy. Several of their key findings are listed below.
  • 30 to 40 new biotechnology companies form each year
  • The US constitutes 50 percent of the world biotech industry
  • One-third of all biotech companies are small (less that 50 employees) and two-thirds employ fewer than 135
  • A typical biotech company employs 31 and has annual sales and funded research revenues of $4.5 million
  • Biotech product sales are increasing 20 percent a year
  • In 1998 25 percent of all drugs approved by the FDA were from biotech firms.
    
• Among their primary activities, the Association of University Technology Managers (AUTM) tracks the direct impact of university-related technology and technology transfer. Several examples of the benefits of university-related biomedical research are:
  
  • In 1999 universities received more than 3,600 patents, earned $850 million in license fees and formed over 300 start-up companies.
  • Dr. Humes of the University of Michigan, who patented a process for growing stem cells taken from human kidneys, says “…this research would have been too risky for “Big Pharma,” the only way to move it forward was to spin off a company.”
    
• A study by Ernst & Young on the Economic Contributions of the Biotech Industry to the U.S. Economy further highlights the impact of the biotech industry.
  • In 1999, 150,800 jobs were generated in the biotech industry with 286,600 in complementary jobs
  • $47 billion in additional revenues, $20 billion from biotech companies, $27 billion from complementary companies
  • $11 billion in research and development spending
  • $10 billion in tax revenues
    

Experience at other major health sciences centers
There are a number of major health science centers that are not only world-renown for their medical schools, research and important advances in diagnosis and treatment capabilities, but are also recognized for their roles in regional and statewide economic development. Among those centers are the Texas Medical Center, Johns Hopkins University and affiliated institutions and Emory University. Each is known for its private and publicly funded medical research, important advances in diagnosis and treatment and the economic impacts they spawn in their regional and state economies. For example, a recent study of the Texas Medical Center reported more than 22 million square feet of space and an overall impact of more than 142,000 jobs. Because of these factors, each is also able to recruit top-quality students, faculty and staff, as well as attracting patients from throughout the world. However, the image, prestige and stature enjoyed by these facilities developed over time, much as the vision of the Fitzsimons “life sciences city” recognizes the evolutionary relationship between the various types of activities to achieve the overall goals.

A perspective about the future Fitzsimons is provided by comparing the projected economic impacts for Fitzsimons with those reported for these other institutions. In doing so, it must be recognized that economic impact studies vary in methodological approach, the geographic area of consideration, and the scope of the impacts being addressed. An “apples-to-apples” comparison is, therefore, difficult. These results of these studies and the comparisons for Fitzsimons underscore the fact that realizing the vision for the Fitzsimons “life sciences city” can gain it a place in the upper-strata of bioscience and health sciences centers in the country. With that honor come recognition and other tangible and intangible benefits beyond those measured in terms of jobs, income and other economic variables.

1. the potential for dramatic change in the economy of the state;
2. the substantial benefits of improved health; and
3. the very positive impact that excellence in health care has on the image of the state and its quality of life and economic competitive position.
   

The Research Triangle Park experience
With over 17.0 million square feet of built space and over 50,000 jobs on-site, the Research Triangle Park in North Carolina is now, after 42 years of development, larger but still generally comparable to what the Fitzsimons project will be at full development. One major difference is that the activity at Fitzsimons is on 578 acres, while the RTP is spread over 7,000 acres. The Research Triangle Park provides an example of the economic impact a project of such magnitude can have on its host region and state.

The RTP has been a root cause of the emergence of the Research Triangle region and the entire state as important sources of technology-based economic development. Forty years of building on and working with the universities of the region in the attraction and growth of large and small, private and public, research-related entities has made the park and the Triangle Region one of the most important technology centers in the nation. And national surveys show that the results on local quality of life rank equally as high. Hammer, Siler, George Associates recently studied the impact of RTP at its fortieth anniversary based on extensive interviews with park officials, tenants, university administrators and economic development leaders throughout the state. The most relevant findings are summarized below.

Throughout our leadership interviews there was unanimous endorsement of the importance of the Research Triangle Park to the economy of the state. Dr. William Friday, who served as President of the University of North Carolina during much of the history of the park, expresses the leadership views well:

“The accelerated economy of the state is directly attributable to the Research Triangle Park. Many large businesses and small, both in the park and elsewhere, are in the state because of the Research Triangle Park and the impact it has had. The impact on the state economy has been enormous and is a continuing force.”

The Research Triangle Park with over 17 million square feet of occupied space, 110 companies, governmental labs, and other entities and over 40,000 permanent and 10,000 contract employees, is one of the largest technology centers in the world. Other firms, housed in building space located in other business and technology parks in the immediate vicinity of the RTP, are estimated to employ another 25,000. The result is that the Research Triangle region ranks with the Silicon Valley and Metropolitan Boston as among the top science and technology centers in the country. As noted, the Fitzsimons project will be nearly as large in terms of total floor space and about 65 percent as many employees.


A personal contact survey of firms representing 84 percent of the employees in the Research Triangle Park revealed that firms representing 97 percent of these employees considered it “unlikely” they would be in the Research Triangle Region if it were not for the park. Expanding this finding for across the entire park, suggests that there would be 48,460 fewer direct employees in the region without the presence and influence of the park. Broker interviews confirmed that many of the tenants in parks adjacent to the RTP are also there because of proximity to RTP. Furthermore, the larger size of the Aurora/Denver metropolitan area compared to the Research Triangle region at the time when the RTP was started makes it even more likely that related businesses would be attracted to the area.

The evolution of North Carolina from old-line furniture, forestry, textiles and agricultural industries to new, technology-producing industries over the 40 years of the RTP is very impressive. Employment in new line, technology-related industry in the region has increased from 15 percent of all jobs when the park began to just under half of all jobs in 1995. From a new line share just over half that of the nation, the Triangle Region has now achieved a new line share substantially above that of the nation. The state as a whole has increased its new line employment share from 12 percent when the park began to almost 33 percent by 1995. While the economy of the nation was evolving at the same time and the economy of the Aurora/Denver area is certainly not dominated by old-line industries, the fact that North Carolina increased its relative share of new-line industries indicates the synergies of technology-driven economic development.

Throughout the interview and survey efforts, there was clear consensus among park entities and other economic development leaders, that the single greatest strength the Research Triangle Park brought to the competitive position of the region and the state was to serve as a catalyst to bring together the universities and the technology businesses in the region to jointly pursue their individual objectives.

The average payroll per employee among the RTP companies was $54,145. This is substantially above the regional average, providing a strong market for higher priced housing, retail goods, restaurants and cultural and educational attractions. Per capita income in the state as a whole has increased from among the lowest in the nation when the park began to 31st today.

Another major achievement is the strong support and partnering achievements of the RTP with the universities and colleges in the region. In depth interviews were carried out with senior administrators, including the chancellors and presidents, of the major Triangle universities. All of those interviewed judged that their institutions had been greatly strengthened by interaction of many kinds with RTP entities, including: direct research contract support; direct endowment contributions; joint research funding; part-time, intern and permanent student employment opportunities; faculty consulting opportunities; joint use of specialized equipment; availability of senior staff as adjunct and visiting faculty; joint support of professional development activities; important senior faculty recruitment; access to university libraries and resources; and other related support.

The positive impact of the Research Triangle Park in the state outside the local region has also been very important. Substantial directly related manufacturing facility development has occurred in the remainder of the state. It is estimated that well over $300 million of private investment has been generated in plants in the 10 counties surrounding the Triangle region alone during the 1990’s. IBM in Charlotte, Siemens Medical Systems in Greensboro and Merck Manufacturing in Wilson are examples of RTP-related investments around the state. These locations are not necessarily predicted by any economic model, as they are based on image, workforce and education considerations, not a direct linkage as supplier or customer to RTP firms.

A review of “best places” magazine articles confirms that the Research Triangle region’s ranking at the top in many of these is much influenced by the presence, high-income household amenity offering and futures image of the park.

A recent survey identified 226 specific technology firms started in the Research Triangle region since 1970. This is impressive formation of new technology businesses represents over 13,900 jobs. Fewer than 30 percent of these companies are in the Research Triangle Park and another 17 percent are in peripheral parks. Again these firms would not be in the region or perhaps not exist at all if it were not for the RTP. In the case of Fitzsimons, no model can predict the growth and relocation within Colorado of firms developed and nurtured in the Bioscience Park.

Interviews with over 20 economic development officials confirmed that the image of the state and the outreach marketing efforts of the state and local marketing entities have been substantially improved based on lessons from RTP experience.

Foreign corporations entering the U.S. market typically seek the strongest locations. There are 16 international companies, headquartered in nine different countries, with facilities located within the park.

RTP entities have been responsible for many invention and patented products, which have had great commercial success and made real progress towards solving some of mankind’s most important challenges. Among the many important RTP entity inventions are: effective cancer, HIV and herpes drugs; important agricultural biotechnology achievements; air quality technology; and many networking and computer advances. Similar advances and research commercialization can be expected at Fitzsimons.


The dramatic economic and total benefits of good health
The Lasker Foundation has conducted comprehensive research into the benefits to the community and overall health of the country of biomedical and biotechnology research, much of which is carried out in university health science centers. The following facts were gathered through their research into the need for biomedical research:

• Investments in medical research have already had profound impacts:
  • The death rate from heart attacks dropped 30 percent in the last 3 decades
  • In the 1990s, there was a decline of 1-3 percent in the cancer death rate
    
• Direct and indirect costs of chronic diseases
  • Annual cost from cancer, diabetes, heart disease and Alzheimer’s disease reached $450 billion
  • Of the $450 billion, $203 billion is in medical costs and $245 billion in lost wages
  • In 1997 1.3 million new cancers diagnosed and 560,000 cancer deaths
    
• Research Lowers Health Care Costs
  • A 17-year, $56 million investment in testicular cancer has lead to a 91 percent cure rate and a savings of $166 million
  • Research in high blood pressure therapeutics have resulted in estimated savings of $3 billion in medication costs
  • Estrogen therapy research has resulted in an estimated savings of $333 million in patient-care costs.
• Medical Research is the Pillar of the American Economy
  • In 1997, over 1,300 U.S. biotech firms employed nearly 110,000 people.
  • In the same year, the pharmaceutical industry employed 260,000 and generated sales of over $87 billion
    

It is clear from their findings that not only is biomedical and biotechnology research critical to extending human life and the quality of that life, but that much of this research must be accomplished outside of the private sector. University health science centers contain the top researchers in the country and provide the best environments in which key research and related development of pharmaceuticals and other advancements takes place.


Image of the state and city and its quality of life
A recent survey by Hammer, Siler, George Associates clearly demonstrates the sentiment of key officials and university heads on the importance of biomedical research. The survey included 27 university, economic development, technology and political officials in St. Louis, Richmond, Philadelphia, Chicago, Madison, Birmingham, Augusta and Louisville—all communities with strong academic health science centers. There was substantial consensus and the results are briefly summarized below.

• Important Source of Jobs and Businesses. All of the leaders interviewed felt that the health sciences are an important direct and indirect source of jobs for the community.
  
• Faculty Recruiting and Retention. Faculty with strong research funding are most in demand and the college presidents and other administrators interviewed are learning that many of the faculty members they recruit need space for their start-up companies as well.
  
• Building University/Community Linkages. Mayors, college presidents and business leaders agree that an effective wet-lab incubator program and overall academic health science center brings the leadership together; and causes each to develop a greater appreciation of the other’s strengths.
  
• Important Business Attraction Image. An effective wet-lab sciences incubator and total development program is judged by the senior economic development officials in the communities to have been very important to their success in recruiting new firms to their communities.
  
• Catalyst for Area-wide Life Sciences, Food and Environmental Technology Action Effort. Leaders interviewed feel that the incubator and staff serves an important additional role in their communities as the coordinator and convener of the total group of institutions, businesses, service providers, technology companies and venture capitalists who need to come together to make a region fully competitive by pooling their resources and efforts.
  
• Student and Faculty Business Participation Opportunities. The work and problem solving opportunities provided by the incubator and its companies, and the employment and consulting opportunities associated, were judged by the university administrators as very important to students and faculty.
  

Impact on the neighborhood and nearby properties
Major economic activity centers such as Fitzsimons often serve as catalysts to economic development outside their immediate boundaries. The more than 32,000 jobs, millions in personal income and billions in economic activity supported on-site, will give rise to higher demand for new and renovated commercial and residential development. Retail and business sales for businesses in the area will increase, leading to an increase in the type and selection of goods and services. These factors, will in turn, result in above average appreciation in values for existing development, with the strongest boost coming for properties located nearer to Fitzsimons. Data compiled by the city of Aurora identified nearly 7,500 single family residences and 885 other properties located in the city and within two miles of Fitzsimons. These properties had a combined market value in excess of $1.7 billion in 2000. Thus, even a modest rise would translate into additional wealth for property owners and tax revenues for the city, county and school district.

With Fitzsimons, the number of job opportunities and the access for residents of the area to those jobs will improve. Access to health care will also improve due to the proximity to two hospitals and many specialized clinics and health care practices. The benefits of such impacts are not easily measured or quantified, but they will undoubtedly be significant.

Health care access and availability
Yet another dimension of the new and expanded health-care facilities being developed at Fitzsimons will to expand local access to specialized or a higher quality health care than may otherwise be available locally. Local providers who offer treatment that otherwise could only be obtained out-of-state help stem potential leakage of spending from the state’s economy and generate imports from non-residents who obtain such services at the hospital complex as opposed to other locations. This is called import substitution in the economic development literature, and is a means to bolster local economies. The expanded cancer treatment care afforded residents through the Anschutz Centers for Advanced Medicine is an example of such import substitution, treating many patients who might otherwise have sought treatment at locations such as the Texas Medical Center or the Mayo Clinic.

For another group of patients, the issue may be one of access, rather than availability in the metropolitan area. The University of Colorado Hospital and The Children’s Hospital together provide approximately $47 million in indigent care annually. Recipients of this care have few other alternatives for receiving quality health care and benefit immeasurably from the care provided. Although that total represents nearly nine percent of the combined annual operating budgets of the two facilities, other studies have shown that the community as a whole benefits by avoiding higher future expenditures when illnesses are more severe, from reduced illness and absenteeism in schools, and increased work force productivity due to reduced tardiness, absenteeism and increased focus on jobs. Moreover, recipients of this care for indigent patients would not likely have access to comparable services at other area hospitals. Similarly, veterans living in the metropolitan area will enjoy more convenient and lower-cost access to health care services at the Colorado State Veterans Nursing Home, avoiding the need to travel to alternative facilities.

UCHSC enrollment
The University of Colorado Health Sciences Center offers a wide variety of degree programs including medicine, dentistry, nursing and pharmacy. UCHSC enrollment was 2,428 in the fall of 2001, with an additional 793 physician residents. Approximately 36 percent of Health Sciences Center students in fall 2001 were enrolled in the School of Medicine. The next largest number was enrolled in Nursing (713 students), followed by Pharmacy (374) and Dentistry (183).