It’s a familiar promise: if lawmakers do something to bring a new business to Florida, the new enterprise will generate thousands of jobs, and boost Florida’s reputation as business-friendly.
Eight years ago, lawmakers were considering whether to spend money to lure Scripps Research Institute into opening a Florida campus, hoping to mimic the biotechnology success that Scripps brought to San Diego.
During a special October 2003 session, lawmakers gave approval for the state to spend $310 million to permit Scripps Research Institute, a non-profit biomedical research operation focused on drug discovery, to build a Florida campus. At the time, some lawmakers were swayed by an economic study that predicted Scripps itself would have over 2,000 employees and bring 44,000 direct and indirect jobs to the South Florida region over 15 years.
The deal that brought Scripps to Palm Beach County eventually totaled over $550 million and resulted in a guarantee that the research outfit would eventually hire 545 people by March 2014. Scripps Florida is on track to meet that goal, with 410 hires made as of June, and plans to level out at about 600 employees.
But documents from the Scripps Florida Funding Corp., an entity that oversees the state’s payments to Scripps, show that Scripps Florida has fallen short of the larger economic impact promised in early studies.
So far, according to economic impact studies contained in the Scripps Florida Funding Corp. annual report, Scripps has generated 11,274 direct, indirect and induced jobs since 2003. While no doubt delivering an economic boost to the region, it seems unlikely Scripps Florida will generate anywhere near 44,000 jobs by 2018.
Supporters say Scripps has bolstered the South Florida region’s reputation as a biotechnology hub. Scripps is responsible for over a dozen start-up companies and company relocations to the area, including the decision by German-based biotechnology research institute to build a facility called The Max Planck Florida Institute a stone’s throw from the Scripps campus. There’s now a cluster of biotechnology research outfits in nearby Port St. Lucie, that has also brought millions of dollars in grant money to the state that otherwise would have gone elsewhere.
Economic impact studies show that Scripps has added $2 billion to the region’s economic engine in eight years.
Any potential failure to live up to the lofty jobs expectations, Scripps officials say, stems from a combination of the recession, economic headwinds in the pharmaceutical industry, the lack of venture capital focused on investing in biotechnology in Florida and little understanding of the lengthy and expensive process of drug development. Scripps officials say it takes at least 10 years to turn a discovery into a marketable drug.
“Start-up money is hard to come by, venture money is hard to come by,” said Harry Orf, the vice president of scientific operations for Scripps, who is leaving his post in February for a new job. “It is a testament that we have been here seven years and there are four (start-up) companies” spawned from Scripps discoveries, he said.
SCIENTIFIC BREAKTHROUGHS
The two-year-old Scripps Florida campus adjacent to a Florida Atlantic University campus in the North Palm Beach County city of Jupiter sits among new home developments and a bustling shopping center.
Freshly landscaped, the complex, which is largely paid for by taxpayer dollars, even offers the perk of a cafeteria for workers in the mode of Silicon Valley tech giants Google and Facebook.
Scripps focuses on making scientific discoveries that could yield new, effective treatments to combat diseases such as Alzheimer’s, cancer, diabetes, and even addictions, such as drugs, alcohol and cigarettes.
Scripps does the research at the very beginning stages of a drug’s life cycle, trying to determine what molecules could make good potential drugs or develop technology to help in drug discovery. It also has a graduate school and hopes to open a research hospital across the street.
A non-profit, Scripps relies heavily on grant money from the National Institutes of Health to operate. The money from the state and county were used to pay for the Scripps building, salaries of workers, and other operational costs, Orf said.
Patrick Griffin, the Director of the Translation Research Institute at Scripps, is an example of the type of superstar scientist Scripps hoped to recruit to Florida. Recruited from New Jersey in 2004, Griffin arrived in Jupiter when there was no campus built yet and only a small handful of employees.
His specialty involves examining proteins that control transcription of genes involved in disorders such as diabetes and cancer. He studies how to manipulate these proteins. Proof positive of his effectiveness as a researcher, Griffin has published three scientific papers in the highly-respected Nature journal in the last 15 months.
Scripps serves an important role in drug discovery, Griffin said. Pharmaceutical companies like to outsource this early-stage discovery work to research outfits like Scripps, and then take over when it gets to clinical trials, he said.
Griffin said Scripps is particularly good at understanding how drugs work in the body and making discoveries that could lead to major breakthroughs in drug development. “Not everybody is going to be good at it and not everybody is going to have the resources to be good at it,” he said. Scripps does have those resources.
He said Scripps didn’t have enough employees or facility space to generate substantial research until five years ago, so to judge Scripps’ drug discovery success on the roughly eight years it has been in Florida is not fair. In the world of drug development, five years is about half the time it takes a drug to go from idea to the marketplace.
Scripps Florida has filed for 107 patents since inception and its technology has yielded 47 license agreements, though none of these licenses have generated revenue, according to Scripps Florida Funding Corp.
Though Florida has concentrated its efforts on bringing new biotechnology employers to the state, such as Scripps and Max Planck, it hasn’t solved the problem of lack of venture capital investment in biotechnology.
Biotechnology-oriented venture capital firms are still heavily concentrated in areas like Boston and California, where the biotechnology industry is well-established. Even if Scripps makes a potential groundbreaking discovery, a company in San Diego may license it. “To think that technology would be here and only spun out here is a bit naïve, because there is a reason why companies want to be in Boston,” Griffin said. “They are going to tend to want to invest in their backyard. If they are interested in the technology, they can bring it there.”
Joseph Cortright, who studies industry clusters at his Oregon-based consulting firm called Impresa, said it would be nearly impossible for any city or region to mimic the biotechnology successes in areas like San Diego and Boston.
“The die is already cast on this,” Cortright said. “This industry is very concentrated and there huge economic advantages to investors and workers to being in places like Boston or San Diego or San Francisco.”
He said in the eight years that Florida has been pursuing the biotechnology industry, the miniscule amount of venture capital investments into biotech start-ups in the state has not grown. “Florida’s spending on (Scripps) has done very little to change the role it plays in incubating this industry,” Cortright said.
Still, there are four biotechnology start-ups in the Palm Beach County area that were spawned directly from research completed at Scripps Florida. Jupiter-based Envoy Therapeutics was formed in 2010 to collaborate with Scripps in identifying new drugs for Parkinson’s disease. And Miami-based Opko Health bought another Scripps-based spinoff company called CURNA Inc. earlier this year. CURNA, established in Jupiter in 2008, is focused developing treatments for diseases such as diabetes and Alzheimer’s.
THE PROMISE OF JOBS
Even with these economic bragging rights, it appears the research institute will fall short of the ambitious estimates that Miami-based Washington Economics Group made in 2003.
At the urging of then-Gov. Jeb Bush, Washington Economics Group had predicted the “clustering” effect of bringing Scripps to Florida would yield 44,000 jobs and nearly 500 biotechnology companies over 15 years.
The theory was that Scripps would act like a magnet in luring more biotech businesses to Florida and the money these businesses spend and the employees they hire would have a multiplier effect on the region.
State officials – including Bush – quoted this 44,000 job promise in newspaper reports extensively during the time Scripps incentive funding was being debated in the Legislature.
A report by the Office of Program Policy Analysis and Government Accountability in 2010 shows that before 2003, Palm Beach County had 46 biotechnology-related businesses.
By December 2008, that number had risen by eight companies.
Overall, there were 37 more biotechnology businesses in Florida, the report says. But in that same time the state had spent $759 million trying to lure biotechnology companies to Florida.
The report concluded that “biotechnology clusters have yet to grow substantially in the six counties where (incentive programs) have established facilities,” placing the blame largely on lack of venture capital investment.
Former state lawmaker Dan Gelber, a Miami-based attorney, said he voted against giving money to Scripps in 2003 because the process was rushed and there wasn’t time to study the economic projections.
He paid for his own study that showed Scripps likely wouldn’t bring more than 16,000 jobs to the region in 15 years. “I commissioned the study because I felt the projections were inflated and could use independent review,” Gelber said in an email Thursday. “I didn’t oppose the idea of bringing Scripps to Florida – I objected to the deal. We basically offered to build their buildings, pay their employees and give them naming rights.”
Gelber said lawmakers were so afraid of appearing like they were against creating jobs that they did not closely scrutinize the deal to establish a Scripps campus in Florida.
He sees parallels with the current debate over destination resorts – at least one casino operator is promising 100,000 direct and indirect jobs and annual gambling revenue of up to $6 billion.
“They are promising absurd revenue and job projections (and) believe we are desperate enough to make a fool’s gamble,” he said. But, he added that Scripps had the potential to be much more beneficial to the state than a proposed expansion of gambling.
Officials at Scripps say they weren’t the ones pushing those pie-in-the-sky economic development numbers and that they will deliver the jobs promised. Orf urged patience in scrutinizing the economic impact of Scripps because drug development is a misunderstood and lengthy process.
“We have been here six-and-a-half years and we already have got 30 products through development and two in clinical trials,” Orf said. He said there is “plenty of evidence” to show Scripps has already bolstered Florida’s biotechnology industry. “Since we’ve been here we brought the state of Florida $223 million in federal money that would not have come into the economy of Florida and you can’t discount that,” he said. “It is very real.”
By Lilly Rockwell
