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Growth of contract organizations, startups helping Ohio’s national profile as a bioscience innovator

Two trends helped give Ohio a seat at the bioscience leaders table last year: Big drug companies farmed out more of their research and manufacturing work — to contract research and manufacturing organizations in the state. And a record number of biomedical companies started up or moved to the state, primarily in Northeast Ohio.

Two trends helped give Ohio a seat at the bioscience leaders table last year, according to Tony Dennis, president and chief executive of BioOhio, the state’s bioscience company developer.

Big drug companies farmed out more of their research and manufacturing work — to contract research and manufacturing organizations in the state. A record number of  biomedical companies started up or moved to the state, primarily in Northeast Ohio.

“And as a result of that, that entire industry segment is growing at a very significant pace,” Dennis said. “All those organizations have had an absolutely banner year in 2008.” Dennis said.

The outsourced work added up to more revenues, jobs and growth at contract research organizations like Ricerca Biosciences in Concord Township and contract manufacturing organizations like Ben Venue Laboratoriesin Bedford. 

Ricerca, which helps clients discover, develop and commercialize drugs, has added about 100 scientists and technicians to its workforce in the last 18 months, said Ian Lennox, the company’s chief executive. Those workers “probably added $6 or $7 million to our payroll,” Lennox said. The company employs 331.

Ben Venue Laboratories, a subsidiary of Germany’s Boehringer Ingelheim group of companies, employs more than 1,100 people at its Bedford complex, which has expanded several times in recent years. The company and its division, Bedford Laboratories, develop and make more than 800 generic, injectable drugs.

One of the attractions of contract organizations for Ohio is they import most of their customers and export most of their products.

“I have one, two maybe three clients in Ohio,” Ricerca’s Lennox said. “I have about 350 clients,” mostly from Europe or from American pharmaceutical powerhouses like Boston, the San Francisco-San Diego area and the Research Triangle in North Carolina.

Contract organizations also attract a lot of investor money to Ohio “because of the relationships we have with clients on a service basis,” Lennox said.

The other big part of the bioscience growth story in Ohio came in the form of new or transplanted medical device, drug or therapy companies. Northeast Ohio has been the state’s leading region for young biomedical companies for several years.

Last year, the region set a record — 10 companies started in, moved to or decided to stay last year, according to an analysis by BioEnterprise and Team NEO.

Two health-care investing firms also opened in the region in 2008, said the economic development organizations. In all, Ohio bioscience companies attracted $189 million from investors in 2008 (pdf), according to BioEnterprise. Eighty-six percent of that money went to Northeast Ohio companies.

“It’s certainly a record,” said Baiju Shah, president and chief executive of BioEnterprise, the health care development organization in Northeast Ohio. “We’ve never seen this before.”

One reason for the boom: Economic development organizations in the region and state are working together like never before to help biomedical companies start or move here.

“When one [opportunity] emerges, it’s a team effort to bring what each group offers to bear on that opportunity,” he said. “Through several opportunities, you get the pitch down. Now, everybody knows their role in the pitch.”

Bioscience companies sometimes leave Ohio for nearby states that offer better tax incentives, Dennis said. However, bioscience companies also are increasingly choosing Ohio as a destination in which to start or grow.

For instance, to win $25 million investment from out-of-town investors a year ago, ViewRay was required to move from Gainesville, Fla., to a region of bioscience innovation.

Did the company that’s developing a novel way to image and treat cancerous tumors choose Boston? San Francisco? Research Triangle? Atlanta?

No. ViewRay chose Oakwood Village in Greater Cleveland.

That investment firms in New York, Boston and San Francisco included Greater Cleveland on their list of innovative cities was “a very tangible indication of the regard with which our region is held in the minds of venture investors,” Shah said.