Arizona bio: part II

A rendering of the University of Arizona Cancer Center, set to break ground on the Phoenix Biomedical Campus.

A decade after Arizona, and especially Phoenix, embarked on an effort to build a biosciences cluster, this is how things stand. According to a report from the Battelle Institute, "Arizona’s bioscience industry continues to grow at a rapid rate. Industry firms have increased employment by 30 percent overall since 2001 and have even added jobs since 2007, a period which includes the deep national recession."

That said, total Arizona bioscience employment in 2010 was 21,084 vs. 62,386 in North Carolina. The state is a pygmy in research dollars and has birthed no significant bio company. Phoenix is nowhere near being one of the nation's top biotech/biosciences centers. [Updated] A 2012 Jones Lang LaSalle report ranks Boston, San Diego, the Bay Area, Raleigh-Durham, Philadelphia, Washington, D.C., New York, Los Angeles and Seattle the top "established" clusters in the Americas. The "emerging" clusters are Westchester/New Haven, Conn., Chicago, Denver, Cleveland-Columbus-Cincinnati, Salt Lake City, Dallas, southern Wisconsin, Florida,  Indianapolis, southern Michigan and Atlanta. The top players are not much changed, aside from relative ranking, from a much-discussed 2004 assessment by the Milken Institute, with one exception. Minneapolis has moved into the "established" ranks. Most of the up-and-comers are new. Arizona and Phoenix are not mentioned.

A glimpse of the competition can be found by the jaw-dropping build-out of the University of California-San Francisco's Mission Bay campus, which is dedicated to bio and went from nothing to a major contender over the same decade. And this was achieved despite California's state budget crisis. It represents one path the Phoenix Biomedical Campus could have taken but didn't. Another is Houston's amazing Texas Medical Center. This is where I center my recollections of the bio effort and what succeeded and failed.

As I wrote in the previous post, Phoenix's leap into bio was driven by Mayor Skip Rimsza (right) and Deputy City Manager Sheryl Sculley. Having lost the Cardinals' stadium to exurban Glendale, Rimsza wanted to use downtown land assembled for the venue as a biomedical campus. Behind the scenes was rainmaker lawyer Dick Mallery, the last of the breed, doing what old-school Phoenix stewards always did: Know the pressure points, work the players, make the deal happen. World-famous genomics researcher Jeffrey Trent came home to set up the Translational Genomics Research Institute, or T-Gen, along with the International Genomics Consortium.

Critical backing also came from Gov. Janet Napolitano. ASU President Michael Crow set up the Biodesign Institute in Tempe and, among other things, went after Defense Department money to develop responses to biological attacks by terrorists. He also moved the College of Nursing to the new downtown ASU campus. The University of Arizona established its own bio program in Tucson and agreed to start a medical school on the biosciences campus in Phoenix. With important support from the Flinn Foundation, this became a statewide effort. But the vision was always to center the effort in downtown Phoenix. Trent hoped it could use Houston's world-class Texas Medical Center as a model, melding research, education and clinical work, while providing a platform to attract major private-sector investment.

Things went off the rails for a variety of reasons:

• The Real Estate Industrial Complex was never on board; its mandarins never understood something that didn't provide a quick payoff from a speculative sprawl hustle on the fringes. They have no interest in downtown.
• The impulse to make it a statewide endeavor quickly degenerated into the usual Balkanized battle. Every suburb wanted its piece of a pie that hadn't even been baked. For example, Chandler snagged a promising private testing company that should have been located downtown (it didn't last).
• The University of Arizona couldn't overcome the entrenched Tucson faculty opposition to doing anything in Phoenix. Thus, the medical school got a slow start, and plans to relocate the school of pharmacy and other programs to the Phoenix campus were stillborn. Changes in the university's presidency further diluted support for what should have been a no-brainer, for the UofA to create a major presence in the state's population center.
• Phil Gordon became mayor with much promise, but was unable, for a variety of reasons, to keep focus on the downtown campus (and Sculley, facing opposition from the old boys at city hall, went to San Antonio to become city manager). The campus lost momentum.
• The established healthcare giants, especially Banner (whose CEO Peter Fine served on the original task force), were ambivalent about the initiative, particularly the plan to locate a hospital on the downtown campus. Thus, Banner quietly torpedoed an effort to build a new Maricopa Medical Center on the downtown campus to replace its aging and poorly located county hospital at 24th Street and Roosevelt. Both Banner and St. Joe's worried about competition if a clinical element — essential to the "bench to bedside" promise of the campus — came about. Banner's Good Samaritan is located a mile away from the bio campus.
• No coherent economic development strategy was enacted to lure biomedical-related industries from Southern California and elsewhere or aid in startups. Efforts to speed technology transfer, with San Diego as a model, were hamstrung. Science Foundation Arizona similarly was held back for lack of legislative support.
• Finally, the political complexion of the state shifted from Napolitano's "new Arizona" to Crazy Arizona. Legislative support for the biosciences, never strong, evaporated. St. Janet decamped for D.C. The remaining leadership, already ideologically predisposed against both science and Phoenix, could never understand as sophisticated an enterprise as the bio roadmap laid out in 2002.

The result, a decade later, is very different from what I and many others had hoped. The downtown Biomedical Campus has progressed very slowly. Work is finally starting on the UofA cancer treatment center. It will operate in partnership with St. Joe's, although in-patient treatments will take place at its hospital two miles away. The medical school is now a full-scale affair in a $135-million Health Sciences Education Building, not the tiny satellite of a few years ago. ASU has moved nutrition research into new lab facilities. St. Joes also has a modest research operation working with T-Gen which, importantly, is still there. Still, the site is not built out and what's there looks oddly suburban. No energy has spread across Seventh Street.

"Has it caught fire? No, it hasn’t caught fire," Mayor Greg Stanton told me. "The quality is there. The importance of keeping investment there will be a priority during my time as mayor. But this is a long-term play, not a short-term play."

The play will also migrate more than 20 miles away, to far north Phoenix, where it's likely ASU will establish a full school of medicine adjacent to the Mayo Clinic. The ground for this is being prepared with some Mayo research partnerships. This, rather than downtown, is where Stanton sees the big play. "ASU-Mayo over time will be even more important than what we’re doing downtown," he said, pointing out the availability of  600-plus acres (and the need to work with the state land department to acquire parcels) compared with about 30 acres downtown. "It will be a much larger employment center... We can quibble about enough density on the downtown campus. It's a legitimate debate. We did the best we could with the resources we had and the programs coming in." Now, he sees it as a priority to gain land adjacent to Mayo before it's auctioned off for strip malls and subdivisions.

"Great cities have to multi-task and multi-task effectively," he said. "We will take our place among the great cities. But an MD Anderson (the renowned Houston cancer center, part of the Texas Medical Center) is only going to happen in north Phoenix."

This no doubt seems a pragmatic answer. City Council is different from the one that supported the original vision and anti-downtown sentiment is percolating. Meanwhile, the suburbs are rushing to build their own cancer centers (MD Anderson is partnering with Banner in Gilbert). With this trend abetted by the Real Estate Industrial Complex, I can already smell a cancer-center bubble, however many Midwesterners develop melanomas from spending too much time in the sun.

Earlier this month, I made the long drive to survey this future. Once again, I asked myself, "Why is this hospital out here in the middle of nowhere?" But it was rhetorical. Mayo built there to be close to north Scottsdale, apparently got a good deal on empty desert land near where the 101 would run, and any sense of rational city planning was lost to the larger real-estate hustle. As is always the case here. Mayo and north Phoenix have the added benefit of being far from "the Mexican Detroit" of central Phoenix. This locale is only accessible by personal car. It will never see meaningful transit. This is only one aspect of the radical decentralization of assets and incoherent sprawl that are costly, inefficient and unsustainable. It's so very...1985 in an era where central cities are showing the most promise.

At one time, a "meds and eds" strategy centered on the Downtown Biomedical Campus held the promise of being a genuine game-changer. A dense node of research, education, clinical treatment and private-sector operations would hold the critical mass the region lacks. It would provide the "creative friction" of scientists, health-care professionals, students and entrepreneurs working closely together. It would be linked to the Biodesign Institutite and other research operations in Tempe by light rail. Abundant empty land in what Gordon absent-mindedly called "the Opportunity Corridor" — much of it also on light rail, all close to freeways — would be available for private enterprise (for example, biomedical manufacturing). Yes, this would help the state leapfrog beyond its unhealthy dependence on real estate. But it would save the central core from being the donut hole of the sprawl machine. This could have been the Texas Medical Center, where competing hospitals and medical schools make each other better. It could have been similar to South Lake Union, an urban technology campus that is influencing the world. It could have led the building of a more diverse economy in spheres far beyond bio. As importantly, it could have shown the robust potential for land-use methods other than sprawl. It was the metropolitan area's best chance to attract the most sought-after assets of the world economy: Talent and capital.

It didn't happen. It never will. If the crack-of-the-two-by-four-across-the-forehead of the Great Recession didn't get Arizona's attention about sustainability, scalability and the need for a diverse, quality economy, nothing will. As for the "long play," I'm not sure Phoenix has one aside from attempting to build more sprawl. All the other "just wait...it will eventually happen" schemes have come to tears. The play continues to be the same one used for more than half a century: Add more people, build more houses, shopping strips, malls and freeways, push farther out, the rest will follow. Yet with the exception of pro sports and the rise of ASU under Michael Crow, that hasn't happened.

Now any long play faces disruption from climate change, water challenges, bad air, a high-cost energy future, a huge underclass and the possibility of being distracted yet again from making serious responses to all this by another real-estate boomlet. It confronts the drag of putting a metropolitan area of 4.5 million people in the worst possible built configuration, in a hostile desert. Any long play will be even more unlikely to "just happen" in a world far more competitive and unstable than at any time in modern Phoenix's history.

With slow growth and a paralyzed federal government, the winners and losers are frozen nationally. Other countries are seeking to erode and take away our assets, not just on the cheap side but in research and advanced manufacturing. Given all this, it will be interesting to see where Arizona's bio effort sits a decade hence, especially if the cancer-treatment bubble bursts under the unsustainable costs of America's for-profit medical system.

[For further reading, here's urban scholar Richard Florida on why meds and eds alone can't revitalize cities.]

 

 

 

Comments

[cal Lash]

"Phoenix is nowhere near being one of the nation's top biotech/biosciences centers. A 2011 Jones Lang LaSalle report ranks the Bay Area, Boston, Los Angeles, New York, Philadelphia, Raleigh-Durham, San Diego, Seattle and Washington, D.C. as the top "established" clusters in the Americas. The "emerging" clusters include Atlanta, Chicago, Denver, Florida, Houston, Indianapolis and Minneapolis. The top players are not much changed"

Phoenix should not be in the above group. 200,000 folks living in one story adobe homes is a a better dream.
And the rest of the state a National Wilderness charging 10 bucks a head to drive into, around and out.
Back to Iowa.

[headless lucy]

re Cal Lash -- Brings to mind the bumper sticker I used to see when I was an Arizonan that said: "You've seen Arizona. Now go home."

I lived in AZ from the summer of 1957 to the winter of 1997. I spent many years in Phoenix, Flagstaff, Chinle, Tucson, Tempe, and Sierra Vista.

I visited Tucson last Fall when my son attended the 100th anniversary of ASDB, and I can no longer see why I used to love the state and thought that despite its problems, it would one day, somehow, recover the promise that it had in the 50's, sixties, and early seventies.

I don't see that ever happening. I also now live in the western greenbelt of WA state. I've given up on AZ for good. If I want a reminder of the political provincialism that is now AZ, I just have to take a trip over the mountains to Eastern WA, and I'm in dumbville once again -- sans Saguaro cacti (or, cactuses, as they say in AZ).

[Emil Pulsifer]

Healthcare is about the only sector that added jobs during the recession, but pretty much everywhere, not just Phoenix, because the national population is aging as the baby boomers retire, so that is nothing to brag about.

Note also that Phoenix's Medicaid rolls expanded during the recession MORE than many places because it suffered deeper than average job losses and consequently the poverty rates rose more than average. All of those newly qualified recipients of federal health insurance helped local medical practices and hospitals, a lot.

As for comparisons of the number of Arizona and North Carolina bioscience jobs in 2010, one needs to adjust for population differences. North Carolina is about 50 percent more populous than Arizona; but (using the figures you cited) the difference in bioscience jobs between the two (about 41,000) is about 200 percent higher than Arizona's number.

The Battelle report actually measures growth in bioscience jobs from 2002 through 2011, by which metric Arizona's grew by 45 percent, or nearly four times the national rate.

That's a lot less impressive, however, when you realize that Arizona was number one or number two in population growth for the period from 2002 through the start of the recession in late 2007. Its job growth rate in most job categories was higher than most states during that period, not just in bioscience jobs. And as mentioned above, during and following the recession, its Medicaid rolls were growing and bringing in federal health insurance funding for many that, previously, could not afford private insurance (either conveniently or at all).

The big question is, how is Arizona doing now that the recession is over and its Medicaid programs have been gutted? Not very well, if funding is any measure:

"The report also showed that Arizona’s bioscience industry faces funding challenges with decline last year in NIH and venture capital finding

"Arizona startups and firms secured $22 million in venture-capital funding in 2012, a 68 percent drop from 2011 and the state’s lowest level since 2009. NIH funding, considered a standard measure of how well researchers are faring compared with those in other states, also dropped last year.

"Arizona’s share of these federal grants grew 19 percent from 2002 through 2012, slightly ahead of the national average but lagging the 31 percent growth of the top 10 states with the largest NIH grant awards over that period."

http://www.azcentral.com/business/arizonaeconomy/articles/20130205arizona-bioscience-jobs-grew-45-percent.html

[Emil Pulsifer]

P.S. That should read "...decline last year in NIH and venture capital funding." The error is in the original Arizona Republic article.

[Emil Pulsifer]

It's worth looking at the specific criteria that the Jones Lang LaSalle report uses to identify and rank bioscience "clusters", both established (e.g., Seattle) and emerging (e.g., Indianapolis).

The most obvious criterion is "high tech research & hospital/medical employment (as percent of total employment)". However, that is a result, not a cause, of bioscience job development.

The second criterion is "science & engineering graduate students (per 1,000 individuals aged 25-34)". That's causative.

The third is NIH funding. As shown above, Arizona is falling way behind, there. Ditto the fourth criterion, venture capital funding.

The fifth criterion is "research and development spending as a percentage of state GDP". It would be interesting to discover where Arizona ranks, here.

The sixth criterion is the number of "academic and research institute facilities".

Other important considerations include "industry friendly political structures" and "target economic development incentives". How well does the Arizona legislature fare in these regards?

[Rogue Columnist]

Great deep dig, Emil.

[morecleanair]

To me, the current Time feature certainly raises questions about needed re engineering in the whole medical cost/delivery system. How might this affect "meds and eds"?

[koreyel]

Emil writes:

The third is NIH funding. As shown above, Arizona is falling way behind...

And given the sequester, the embrace of small empire, small government, and austerity, AZ won't ever catch it up.

From the NYT:

Throughout the government, the cuts would hit certain programs particularly hard without touching others. The National Institutes of Health, for instance, would need to cut about 5 percent of its annual budget in just seven months, meaning hundreds fewer research grants, said Kathleen Sebelius, the health secretary.

So what has AZ to look forward too? Nothing. Perhaps Brewer should fly again to Germany, show off that winning personality, and bring back more industry. After all, that first trip was so successful. [insert snickers/chortles/guffaws here]

[cal Lash]

Stanton the mayor fell off the rails of a vibrant downtown. He is now in his car followed by the cops driving crazily around the valley of the dust in pursuit of higher office.

[morecleanair]

A day of reckoning is coming for the excessive profits in cancer drugs and testing. This shameless hustle has been going on for a long time but the cancer industry has boomed and some drug companies are feasting at the trough!

[cal lash]

The Time article dosent tell us what we didnt already know, it just lays it out in detail.

[Emil Pulsifer]

Thanks, Mr. Talton. Perusing the state profiles in the Battelle report, I can narrow down Arizona's bioscience position (in the national context) still further. Battelle gives state performance in three industry related metrics, by quintile as of 2010. (For those unfamiliar with the term, quintiles are fifths; the first quintile is the highest, the third is average, and the fifth is the lowest. In the grammar school grade scale, Quintile I is an A, Quintile III is a C, and Quintile V is an F.)

Total AZ bioscience industry employment: 3rd quintile (grade C or mediocre)

AZ bioscience industry location quotient (measuring the degree of job concentration in the state relative to the national average): 4th quintile (grade D or poor)

AZ number of bioscience industry establishments: 3rd quintile (grade C)

[Emil Pulsifer]

There's an additional question here: to what degree can, and should, Arizona compete in the biosciences field; and if the answer is negative, in what field(s) should it compete, regionally or nationally?

Is this a zero-sum game? The number of bioscience establishments supportable by the economy may change over time, but for demographic reasons; if every state increases its incentives (in the broad sense of this term) for bioscience job development equally, aren't they left in identical positions? True, they're all spending more money (on education, tax incentives, etc.) but their relative positions remain the same, by definition.

But can all states increase their incentives equally? Incentives depend on revenues, and revenues depend (among other things, such as tax laws) on population.

According to 2010 Census data, Arizona ranks 16th in population, behind such states as California, Texas, Florida, New York, and a dozen or so others:

http://www.ipl.org/div/stateknow/popchart.html

Certainly, by means of perceptive and diligent strategy and tactics (which are probably not forthcoming, considering the state of Arizona's political environment), with increased (and targeted) university funding, tax incentives, and so forth, the state could move up in the biosciences rankings from its current poor-to-mediocre position to a position matching its population ranking, 16th of 50. And that would be an improvement.

But how much of an improvement? Even if Arizona somehow managed to increase the number of bioscience jobs by 200 percent, so that it matched North Carolina's 62,000 (as cited by Mr. Talton), Arizona has roughly 2.5 million non-farm jobs; 62,000 would be only 2.5 percent.

Such an improvement would mean a slight increase in the state's middle-class, but would scarcely represent an improvement for the population at large, even with spill-over effects from additional spending by the additional 40,000 bioscience jobs holders.

The simple fact of the matter is that, for the average citizen, nothing short of legally mandated wage increases is going to improve their lot. This would entail (for example) taxing the top fifth additionally and redistributing the income directly to the bottom third via the the earned income tax credit or some similar mechanism.

Incidentally, this would solve the nation's economic problems, moving us out of the doldrums of a slow recovery by increasing private demand for the goods and services of private businesses, by increasing disposable income. (This is NOT a zero-sum game because the top fifth of the population uses a good deal of their disposable income for financial speculation, not consumption, whereas the bottom third receiving the redistributed income would use it largely for consumption.)

Growing a few tens of thousands of bioscience jobs is great news for the comparative handful of bourgeosie who happen to benefit. For most, it's just another newspaper metric that has little personal impact.

[Emil Pulsifer]

P.S. The argument that taxing the well-off and redistributing the income to the less well-off decreases available capital funding (e.g., for job creation) is all wet.

Money saved or invested by the upper class is ultimately housed in the nation's banks, where it can be loaned to businesses (existing or new), or invested directly by banks themselves, because banks operate under a fractional reserve system.

That money, moved into the checking accounts of the lower class, remains housed in the nation's banks, where it can be loaned to businesses (existing or new), or invested directly by banks themselves, because banks operate under a fractional reserve system.

The total amount of funds available through the banking system remains the same. The only change is in the circulation of funds: when money is concentrated in the upper class, a greater percentage of it is devoted to financial speculation; but when money is less concentrated, the lower classes tend to spend it on consumption, which means that the same money circulates faster through the economy (including businesses receiving those spent funds, and their owners, and the banks used by those businesses and owners).

[cal Lash]

The Good News is that Sixto Rodriquez won an Oscar

[Emil Pulsifer]

P.P.S. Even if, initially, the lower class used some of this redistributed income to pay off debt, the fact that their debt burdens would decrease, would increase their consumption levels, since a smaller percentage of their income would be used to service debt; and once that debt was paid down, their income would be nearly fully devoted to consumption.

[[email protected]]

As Krugman points out, 70% of our jobs are service-related. So whenever demand is depressed intentionally(see Ryan plan) it mostly impacts a large majority of us. Now I understand why the top 1% would favor this, but what about the other 29%? Either the talking heads don't understand this Econ 101 concept or their jobs depend on them not understanding. Every sector of the economy (Defense,Banks,Meds,Energy) have their foot on the public's neck,while the same public refuses to not only deny reality,but they actually believe 2+2=5.

[eclecticdog]

Can't wait to hear the doctors scream when their corporate masters, which they sold themselves out to, begin slashing their salaries.

I will make the prediction here that the labor movement will be revived by these same doctors and teachers that have been outsourced to for-profit charter schools. It will start to burn that their managers, with less education and brains, are living much better than they and working less hard (round of golf anyone?).

[Suzanne]

I did not watch the Academy Awards.
Curious about Sixto, I looked him up.
Then I turned on my speakers, washed my dishes, and listened to this: http://youtu.be/4EPf7_MhvLM
Very cool.

Economically speaking, the Front Page article titled ‘Is America’s Future Southern?’ is also informative here, IMO.
All in all, I am in agreement with Mr. Pulsifer, “Growing a few tens of thousands of bioscience jobs is great news for the comparative handful of bourgeosie[sic] who happen to benefit. For most, it's just another newspaper metric that has little personal impact.”
I believe the future for Phoenix is in the energy of the sun.

[headless lucy]

It is not unknown in WA state for the big drug companies to buy up successful biomedical starts. We have a newly minted congressperson who made her fortune in this fashion.

I guess that's how the free market works: Things that could actually improve the human condition but would negatively impact corporate profits are bought up by the big players and squelched -- until they can figure a way to soak people for it.

[Emil Pulsifer]

Sorry, the correct spelling is "bourgeoisie". Also, I shouldn't have used that word to refer to members of the middle class when it actually refers to members of the owner class (of income producing property/businesses). I'm afraid that in a moment of haste I employed a common but slangy and incorrect usage.

[Suzanne]

Mr. Pulsifer you are too hard on yourself. I like the word bourgeoisie. I like the way it sounds, and I understand it to mean anyone who is or pretends to be ‘of the owner class’. It’s just that my spell checker told me it was misspelled and I had a compulsion to correct it. Met with that torturous conflict I decided ‘thus was it written’ instead.

[Petro]

anyone who is or pretends to be ‘of the owner class’.

I second this... pretenders and defenders.

[Petro]

...I always have to look up the spelling of that word, and am a world-class speller.

Boy, those French! They have a different word for everything!
- Steve Martin.

[Oregon Fishing Guide]

I have also read that the biosciences offer great promise in meeting this need and helping to diversify Arizona’s future economy. Arizona must really prioritize efforts to build knowledge-based industries, including the biosciences, in order to compete in the global economy.

[AZRebel]

Can knowledge-based industries be built in an ignorance-based state?

You say biomedical center, I say legislators who keep trying to get the public to pay for Russel Pearce's recall expenses. (they won't give up till they get it done)

You say biomedical center, I say "GUNS FOR TEACHERS !!"

You say biomedical center, I say wreckless driver, "ladies man" Horne for Governor.

You say biomedical center, I say Sheriff Joe until 2030 or beyond.

I'm sorry but just like matter and anti-matter, in this state knowledge and ignorance will just eliminate each other and we will be left with "The Same".

[Rogue Columnist]

This is what it takes to maintain a world-class bio cluster:

http://seattletimes.com/html/localnews/2020449487_allengrantsxml.html