As construction got underway three years ago on a new biotechnology factory in Rockville, Maryland Gov. Parris N. Glendening emphasized the state’s role in supporting the development, saying the company in question would preserve existing jobs, create "75 new jobs at this plant" and be poised "for additional growth here in Maryland."
How right he was.
In the three years since Glendening made his comment, Human Genome Sciences Inc. has far exceeded his forecasts, doubling in size to more than 600 employees. Its payroll is set to jump another 50 percent in the coming year. It has become one of the best-capitalized biotechnology companies in the world, with a $1.8 billion cash horde, and is driving toward commercialization of a slew of new medicines.
The company’s rapid growth is an apt symbol for a Maryland biotechnology industry that is finally coming of age. After years of hope and hype and state nurturing, some of the largest companies are showing rapid job growth as they launch, or prepare to launch, commercial products.
New figures compiled by MdBio, a not-for-profit organization that supports the Maryland bioscience industry, show that employment at all bioscience companies grew to 15,995 this year. That was a mere 4 percent gain over the previous year, but the growth was disproportionately concentrated in the 25 largest firms. Their payrolls grew 16 percent in a single year, a sign that some of these companies are reaching the critical mass that state leaders have been counting on.
The numbers are a drop in the bucket of overall employment in Maryland, but the jobs in question typically pay double the state average, and the growth rate at the bigger biotech companies far exceeds that for the state as whole.
The new year is likely to see a series of announcements that further consolidate Maryland’s role as a leader of the biotech era.
"We’re really in the middle of a very upbeat and very expanding industry sector," said Henry Bernstein, assistant planning director for Montgomery County, the epicenter of the regional biotech industry. His boss, County Executive Douglas M. Duncan, has been a strong backer of the industry’s growth.
Human Genome Sciences is already outgrowing the factory that Glendening praised in 1997, and is expected to break ground this year on an even bigger one that could manufacture several of its drugs for cancer, skin wounds and other ills. The company also hopes to get started on a big new corporate campus that would triple its office and laboratory space and replace the cramped warren of offices it now inhabits off Shady Grove Road.
Celera Genomics Corp., the Rockville company that drew considerable attention in 2000 by tying publicly funded researchers in a race to unravel the human gene map, keeps adding employees and adding paying subscribers for its genetic databases. It’s sitting on $1 billion in cash, which it plans to use for expansion in the coming year, and is posting impressive revenue gains.
Celera could well end its current budget year, which began July 1, with more than $80 million in revenue, striking growth for a company that did not exist three years ago. It is still losing money as it invests heavily to build its capabilities, but if the revenue gains continue at such a torrid pace that may not be true for long.
At the head of the biotech pack, perhaps, is MedImmune Inc., a Gaithersburg company that has successfully commercialized an important product that prevents certain respiratory infections in premature babies. The company has built a factory in Frederick and put it into full production in 2000. MedImmune employs about 790 people, up 15 percent since the end of 1999.
MedImmune’s revenues have grown rapidly and it has crossed the threshold into profitability, prompting analysts at Morgan Stanley Dean Witter to comment that "the company has exceeded even the most optimistic projections." Meanwhile, MedImmune is working on a bevy of new drugs that could mean still bigger gains in revenue, profits and employment.
The biggest question hanging over the biotech industry, both locally and nationally, is the direction of the capital markets in 2001. Biotech financing held up relatively well in 2000, despite a topsy-turvy market in other technology stocks. But there’s no guarantee that will continue, and a sustained downturn in the public markets might also serve to spook the venture capitalists that fund companies in their early stages. That could dry up financing for the many 20- to 50-employee companies in the Washington region - the potential stars of the future.
A notable concern among investment analysts centers on the very success of the industry in raising money in 2000. A remarkable 22 biotech companies, none of them local, went public between July 17 and Aug. 14. That means the six-month freezes, or "lock ups," on stock sales by insiders that made money in those 22 offerings will all expire early in the new year.
The fear is that a flood of new shares reaching the market when those insiders are free to sell shares might well depress prices and set off a chain reaction that drags down the whole biotech sector. Lehman Brothers said in a recent report it was "concerned about the broad pressure created by the lock-up expirations."
Despite this fear, though, many local people involved in biotech financing are optimistic. They note that the mid-2000 publicity from completion of the draft human gene map—a feat that could speed the search for medicines—has sparked a new level of interest in the sector.
"It caught the attention of mainstream investors in a very deep or fundamental way," said Kasra Ghanbari, chief operating officer of Panacea Pharmaceuticals Inc. of Rockville. "They have finally made a commitment to take the time needed to learn the industry."
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