ABOUT VMF

LIFE SCIENCES

Michigan has a long history in the life sciences industry dating back to the 1950's, when it was home to the largest pharmaceutical company in the U.S., Parke Pharmaceutical. Though it does not currently possess the critical mass of entrepreneurial biotechnology firms found in leading centers such as Boston, San Francisco, San Diego, Maryland and Raleigh's Research Triangle Park, Michigan is home to a small, but growing, base of established pharmaceutical and medical instruments firms and recently formed life sciences companies. The composition of Michigan's drugs and pharmaceuticals sector is primarily composed of the R&D and manufacturing arms of non-Michigan headquartered Pfizer (formerly Parke-Davis in Ann Arbor and Pharmacia in Kalamazoo).

Michigan's relative position in life sciences is strong and ranks near the top of the nation in terms of the size of its life sciences workforce. According to the MEDC, Michigan's life sciences industry employs approximately 31,777, generates annual sales of $4.8 billion and comprises more than 542 companies. Growth of Michigan's life sciences industry has exceeded growth of the U.S average, growing 27% in employment, 32% in number of companies and 165% in sales. Michigan has invested $178 million over the past four years to foster growth in the state's life sciences sector. It continues to grow rapidly and in the past three years, 70 new life sciences companies have been formed in the State.

Michigan's current employment in the life sciences industry is concentrated in large drug and pharmaceuticals firms and underrepresented in medical instruments and biotechnology and life sciences R&D firms. Medical instruments and supplies comprised the bulk of the State's life sciences industry sales for 1999.

The State's life sciences industry is home to some of the leading medical instruments and supplies companies in the world like Stryker Industries, Neogen, Assay Designs and Ash Stevens. It also has a small but growing presence of newly formed life sciences companies like Esperion Therapeutics (acquired by Pfizer in December 2003), Genomic Solutions, Auxein and Biotherapies, all of whom are developing leading-edge drug therapies and biologics for the marketplace.

ADVANCED MANUFACTURING

Advanced manufacturing involves the application of knowledge-based information technologies to traditional manufacturing. Advanced manufacturing is a $109 billion industry in Michigan and employs over 900,000 people, according to the MEDC. The State was ranks near the top of the nation in terms of research and development expenditures by the National Science Foundation and is home to 17,000 manufacturing companies, among which are industry leaders like GM, DaimlerChrysler, Ford, Delphi, Visteon, The POM Group, Siemens, Steelcase, Herman Miller, Haworth and Johnson Controls. Michigan was recently rated the #1 state in industrial R&D intensity by the National Science Foundation. Automobile manufacturing occupies pride of place in Michigan's advanced manufacturing industrial base - there are nearly 700 Michigan-based auto suppliers including 80 of the top 150 suppliers in North America. Over 85% of the nation's Automotive R&D, $13.5 billion annually, occurs in Michigan.

The State's Advanced Manufacturing industry is classified into three broad segments:

• Automotive: Advanced design and manufacturing technologies include computer aided design/ manufacturing (CAD/CAM), robotics, rapid prototyping, laser processing, precision stamping and molding and automated assembly
• Chemicals & Plastics: Michigan had the third largest plastics industry in the nation in terms of employment (95,300 workers) and ships over $20 billion in plastics annually. This sector is anchored by Dow Chemical (in Midland) and also includes companies like Collins & Aikman, Rhodia Engineering Plastics, Precision Industries and Fabri-Kal, among others
• Alternative Energy: This sector includes fuel cell technology which uses an electrochemical energy conversion device to convert hydrogen and oxygen into electricity and heat. The technology competes with the gas turbine, gas engine and battery. Companies involved in this sector in Michigan include ECD Ovonics (solar, fuel cell, hydrogen and battery energy solutions) and T/J Technologies (rechargeable batteries, fuel cells and ultracapacitors). Moreover, the Big Three auto manufacturers have between them already committed $4 billion to the development of alternative energy technology

INFORMATION TECHNOLOGY

Michigan is steadily developing a vibrant network of economic development groups, entrepreneurs, research institutions, technology parks and other enterprises that are involved in various IT-related services. It is worth noting that it is not the individual businesses but the networking capability of the whole group that is creating a new base for technology growth in Michigan.

IT in Michigan is a $9.1 billion industry and comprises more than 7,000 companies, as per figures from the MEDC. It serves the needs of advanced manufacturing, life sciences, telecommunications and software/ hardware product companies in the State. Michigan is ranked fourth in the country for high tech employment. The Michigan Economic Development Corporation has many incentives and programs like SmartZones, Renaissance Zones, property tax abatements, job creation tax credits, angel networks and workforce training funds to make Michigan an attractive place to relocate, start or expand business. Its Emerging Technology Challenge Fund provides $1 million in grants every year to help commercialize opportunities that arise from the R&D developed at Michigan universities. There were 231 venture capital funding deals in the IT sector during the last decade amounting to more than $920 million, according to Venture Economics.

HOMELAND SECURITY

Over $36 billion in federal funding is being made available to assist with the four main planks of effective preparedness for national threats, i.e.:

• Prevention - biometrics, vaccines, intelligent systems, cargo screening systems
• Detection - bio and radiation sensors, training
• Reaction - EMS equipment, communications, computer modeling
• Recovery - bioremediation, decontamination

The State has been awarded $62.4 million under the federal Department of Homeland Security (DHS) FY 2004 Homeland Security Grant Program. This grant integrates three programs, i.e. the State Homeland Security Program (SHSP), Law Enforcement Terrorism Prevention Program (LETPP), and Citizen Corps Program (CCP):

• State Homeland Security Program: $47.4 million is being provided for homeland security and emergency operations planning; the purchase of specialized equipment to enhance the capability of State and local agencies to prevent, respond to, and mitigate incidents of terrorism involving the use of chemical, biological, radiological, nuclear, and explosive (CBRNE) weapons and cyber attacks; for State CBRNE and cyber security training programs and cyber security exercises; and for costs associated with implementing the State Homeland Security Strategy.
• Law Enforcement Terrorism Prevention Program: The Law Enforcement Terrorism Prevention Program will provide $14.1 million to law enforcement to support the following prevention activities: information sharing to preempt terrorist attacks; target hardening; recognition of potential or developing threats; interoperable communications; and intervention of terrorists before they can execute a threat.
• Citizen Corps Program: FY 2004 Citizen Corps Program funds will be used to support Citizen Corps Councils with planning, outreach, and management of Citizen Corps programs and activities. A total of $984,000 has been allocated for this program.

The amount of capital available in the space has already attracted a number of entrepreneurs to the industry. With Michigan's leadership in research, the state is well-positioned to take advantage of the opportunities in this space.