Scan last week's headlines in Southeast Michigan and it might be hard to see any hope for life sciences or biotech here. But Stephen Rapundalo says that in five years the decision by Pfizer Inc. to close its Ann Arbor campus may be the best thing to happen for the state.
New York-based Pfizer (NYSE: PFE) said it plans to close shop in Ann Arbor, resulting in about 2,100 jobs lost or being transferred to other states.
Rapundalo, a 20-year veteran of the pharmaceutical industry laid off by Pfizer in 2005 and now executive director of MichBio, a nonprofit dedicated to growing the life-sciences industry in Michigan, said the decision no doubt hurts.
But Pfizer's move will help speed up programs that were slowly gaining steam before the company made its plans public last week.
Rapundalo and others said they expect the result to be a more diverse life-sciences industry, built on medical devices, embryonic stem cell research and development, human tissue and other strengths the area has in automotive or manufacturing that can be applied to drug discovery and development, such as supply chain management.
``It's a significant jolt to the system, but what's been done is done and we can't wallow in those feelings for too long or others will come in and take advantage of that talent pool,'' Rapundalo said. ``We need everyone from the governor on down to get together and mobilize with a bold action plan so we can make up for the impending loss.''
Tony Grover, managing director of RPM Ventures L.L.C. in Ann Arbor, said he thought the Pfizer layoffs would be a boon over the next few years for Michigan's venture-capital activity.
``That can be turned into a huge opportunity. We have seen a number of successful companies the last few years that were started by former Pfizer people,'' he said. ``There are more people at Pfizer capable of jumping into the biotech world, and there is a lot of money in that space looking to invest. You have a lot of money in life sciences looking for deals.
``The pieces are all in place. You'll see a number of start-ups growing out of this in the next year. In the next five years, this will really have an impact. That 22nd ranking can really take a big jump in the next five years,'' he said, referring to statistics released last week by the National Venture Capital Association that showed Michigan ranking No. 22 among states in the amount of venture-capital money invested in 2006. (See Rumblings, Page 42.)
MichBio, the Michigan trade association for the biotech industry, published a directory in early 2006 that listed 580 life-sciences companies in Michigan.
Randal Charlton, chair of MichBio, said those companies and any other organizations with an interest in life sciences need to work together now more than ever.
``The single most-important thing for the state is that academic institutions and what remains of the life-sciences industry coalesce around three or four key objectives,'' Charlton said.
That means fostering growth of companies such as Wixom-based Rockwell Medical Technologies Inc. (Nasdaq: RMTI), which makes dialysis equipment, and Troy-based Somentics Corp. (Nasdaq: SMTS), which makes devices that monitor blood oxygen levels.
It also means applying technologies developed by the auto industry to life sciences, as does Troy-based Delphi Medical Systems Corp., which has applied automotive technology to wheelchair controls, infusion pumps and remote vital-sign monitoring.
A whole new industry could sprout up if the state were to allow embryonic stem cell research, Charlton said. Michigan and South Dakota are the only two states that ban it.
``When we start focusing on these things we're going to discover all kinds of peripherals that hadn't even been thought about,'' he said.
In addition to fostering growth of new businesses, a push is on to retain as many of the Pfizer employees as possible in Michigan.
MichBio said Wednesday that it plans to serve as a ``clearinghouse'' for Pfizer employees seeking employment or to start new ventures.
The organization will accept resumes from job seekers and try to match them to open positions. Resumes and job openings can be sent to [email protected]
Companies such as Ann Arbor-based Velcura Therapeutics Inc., which is working to develop therapies that stimulate bone formation, could hire some of the former Pfizer employees.
``We're looking to hire up to eight people by the end of the year,'' said Michael Long, CEO of Velcura. ``We may be able to hire candidates now that had been happily employed at Pfizer.''
Michigan State University, the University of Michigan, Wayne State University, the Van Andel Research Institute, Western Michigan University and Kalamazoo Community College have formed an organization called the Core Technology Alliance.
The network is designed to allow scientists to exchange information in the areas of genomics, proteomics, structural biology, animal models, bioinformatics, bioimaging and antibody technology, among other areas.
Companies such as Ann Arbor-based VetGen L.L.C., a company founded by a University of Michigan professor that provides DNA analysis of animals, could spin out and thrive. The company conducts up to 500 tests a month.
Government officials have a huge role in retention and attraction, Rapundalo said.
For example, the state has 12 Smart Zones. Companies that move into such zones from out of state or in state are eligible for tax breaks, among other things. Rapundalo said legislatives initiatives like the Michigan business tax - the plan in the works to replace the single-business tax - need to be enacted to visibly demonstrate a life sciences-friendly business environment.
Michigan needs as many positives as it can get.
When California-based think tank Milken Institute studied major areas of biotech and life sciences in the U.S. last year, no Michigan areas made the cut. Western Michigan University and Lansing-based Epic-MRA released a study last March that found only 28 percent of state respondents were confident Michigan can become a leader in life sciences.
And a study commissioned by the MEDC in 2003 found that 14 so-called anchor companies with more than 100 employees founded before 1990 accounted for 87 percent of sales in the state and employed more than 59 percent of the life science workforce in 2002.
State financial assistance is limited, too.
The MEDC received 505 proposals for the first round of its 10-year, $2 billion 21st Century Jobs Fund totaling $1.1 billion in 2006. Only $100 million was awarded meaning that $9 of every $10 requested was rejected.
Bernie Steele, director of administration and management at Lansing-based MBI International, which helps biotech startups grow, said there are few opportunities for scientists in Michigan.
``If you lose your job in Michigan there are very few opportunities and you have to very strongly look at relocating to another state,'' Steele said. ``It's always been an issue here, even when big pharma was here. I can't imagine what it's going to be like now that they're going away.''
Rapundalo, however, said he isn't ready to throw in the towel.
