The state bets $92 million on bioindustry leadership while the UA takes a $28 million hit and its new biotech institute is overshadowed.

Arizona took its first step towards a hopeful bioindustry future last month as the state announced that it landed the International Genomics Consortium (IGC) headquarters for Phoenix. The state had competed with Georgia and Maryland for the highly coveted biotech research group, and won by offering $33 million and plenty of perks through the Translational Genomics Research Institute (TGRI) task force--formerly called the Arizona Bioscience and Biomedical Institute.

Research conducted by IGC will center on translating the genome to practical applications for human health and agriculture. Its relocation to Arizona will be used in the future as a major economic development marketing tool for the state.

Though the long-term economic benefit to Tucson and its bioindustry cluster development could be huge, there are already grumblings about how the whole process went down and how the University of Arizona's year-old Institute for Biomedical Sciences and Biotechnology could be undermined. With so much at stake, UA faculty and researchers--with a vested interest--just want it done right.

"From a public relations stand point, it's been good and bad," says Mick Jensen, director of communications for the UA's Institute for Biomedical Sciences and Biotechnology, who notes that bringing IGC to Arizona has really boosted awareness of the bioindustry's economic impact. "The downside of that is the (UA) Institute has been a bit lost in the larger picture."

"Whether there are opportunities to partner with some of the companies that result out of Phoenix or TRGI itself, we don't know yet," says UA's Dr. Michael Cusanovich, director of the Arizona Research Laboratories (ARL) and president of the BioIndustry Organization of Southern Arizona. "But not having defined cleanly what it is they're going to be doing up there, it's hard to say. But it's certainly possible."

And that's the rub: UA and Tucson's bioindustry cluster have never seen a formal business plan for IGC. Ironically, Arizona's three public universities took a huge funding hit from the state while their research support were key to attracting IGC.

While the Arizona Legislature was cutting spending to the UA by $28 million for fiscal year 2003 in an effort to balance a $1 billion budget shortfall, Gov. Jane Hull formally submitted Arizona's $33 million proposal to the IGC in April 2002 which included land, office and research space and $10 million in operating funds for five years, even though there is no guarantee of a payoff for 10 years.

To date, the state has secured $92 million for the Phoenix headquarters, including help from the city of Phoenix, which has contributed more than $20 million in land and the buildings, and several Arizona Indian tribes who contributed $5 million on condition the scientists research diabetes. The Phoenix-based Flinn Foundation also donated $15 million. The labs are expected to be built by October 2004.

The University of Arizona accounts for the lion's share of the state's bioresearch and about 100 biotech companies call Tucson home. Half of them are UA spin-offs--companies owned by faculty members or ones that have professors as scientific advisers. At the UA's Science and Technology Park, about 55 percent of the prospective clients for the Tucson Technology Incubator are related to bioindustry. Unfortunately, Tucson was never in the running for IGC's headquarters, though it would have made sense.

"Tucson has a much healthier and larger biotech industry, so for a lot of reasons you would think it would make sense for IGC to want to locate its facilities down here, but the fact is the city of Phoenix, the governor's office and Department of Commerce were very aggressive in getting IGC to locate there," says Jenson. "They had money to spend and land to offer, and I don't think anyone in Southern Arizona were able or ready to compete with that."

UA's Institute for Biomedical Sciences and Biotechnology will house an estimated 500 researchers in an 180,000-square-foot building but the project is still in the capital campaign mode, with the building in the planning stage. The price tag for the first phase of the construction is $60 million, and UA still needs at least $17 million in donations toward the project. The institute is still at least three years away from having a building to call home.

Still, the state's push to land IGC prompted faculty and researchers to complain that the process should have been halted until specific details were revealed. To date, the 2002 budget cut resulted in 383 layoffs, including the entire Research Support Office that was responsible for identifying outside grants for faculty and researchers. Last year, those fired staff members brought in some $180 million in outside funding for the university.

While UA is contributing $7.9 million worth of in-kind lab support over five years to IGC, the University is not considered a "donor," so officials were not involved in the process. That irked Cusanovich, who, along with over 40 other faculty members, wanted to see a business plan and work out details of resources and liabilities in advance.

The faculty members from 15 departments signed a joint e-mail to UA President Peter Likins asking that agreements "be held in abeyance until the key details of such agreements are vetted by the faculty." What they wanted was a solid scientific plan and an independent scientific board of advisers.

Hull and other supporters of the project said answers to concerns will be forthcoming and as the plans are formalized, the faculty will accept the consortium.

Cusanovich says the faculty concerns have not been addressed. "But in principle, they will be addressed in the next three months," he says.

Nationwide, there's been a biotech boom, with industry jobs increasing by 8 percent a year. A recent study by the research group Battelle concluded that every $1 invested in developing biotechnology reaps $18 in revenues long-term. The Battele report says biomedical research spending doubled to $47 billion from 1993 to 1999. Arizona is banking on the idea that billions in federal dollars and high-paying jobs will follow IGC to Arizona.

Another report issued in June from Washington, D.C.-based Worldwatch Institute states: "The U.S. biotechnology industry--which dominates the global industry--has become an increasingly powerful economic and political force, with revenues growing fivefold between 1989 ($5 billion) and 2000 ($25 billion)."

But competition is fierce.

Critics point to a Brookings Institution study, also released in June, that looked at how 51 metropolitan areas stacked up in biotechnology infrastructure, venture capital funding and biomedical research funding. Phoenix--the new headquarters for IGC--ranked close to the lowest because it is the largest city in the United States without a medical college, one of the criteria of the study.

Backers don't see the report as an accurate predictor of what could happen in Arizona.

"There are so many developments coming in bioindustry in the next 25 years, that to say we're coming into the game late--that might be true," says Jenson. "But there's still a lot of game to be played."

As president of the local bioindustry cluster organization, Cusanovich isn't concerned either. "Although Phoenix has the size, it doesn't have the biomedical research fire-power, so combining the two (cities) may provide a means to create a biotech corridor that is competitive with the Bay area or San Diego."

As the Brookings report notes, "Biotechnology is a risky business. Improved understanding of genetics has led to some novel and successful therapies, but relatively few research projects lead directly to new products."

"It helps to put us on the map and it's going to make everyone look our way," says Jenson, who concedes it's a long-term vision. "It's an investment in research infrastructure more than anything else, and that's money well spent."

Still, there may be another problem. Human genetic engineering could be "the next major battleground for the global conservation movement," according to Worldwatch Institute, which reports: "While previous struggles have involved protecting ecosystems and human societies from the unpredicted consequences of new technologies, this fight over high-risk applications of human genetic engineering is a struggle over who will decide what it means to be human."

"I wouldn't be surprised," say Jenson. "There's a lot of misunderstanding about the kind of research work that's going on."

"I don't think anyone in the bioindustry is worried about it ultimately being dealt with in a reasonable way because the fact remains this kind of technology is going to improve the quality of life," says Cusanovich. "But it's going to be a bumpy road. There's no question about it."

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