Bio-business is big business — and becoming more important — in the state’s economy, according to a new study (PDF) released by the BioBusiness Alliance of Minnesota, a nonprofit advocacy group for the sector.
Nationwide, the sector covers 36,500 companies with annual revenues of more than $450 billion employed almost 1.2 million people with an average $64,116 in wages per person — about 55 percent greater than average private sector wages — for an aggregate annual payroll of over $74 billion.
In Minnesota, 670 bio-business companies recorded nearly $11 billion in revenue and $2.1 billion in payroll for 34,500 employees statewide in 2007, an increase of 20 percent from 2002. Employment in the sector overall was 43 percent greater in proportion to total employment in Minnesota than in the nation as a whole.
Bio-business covers a broad spectrum of activity from medical devices to ethanol production and includes any business based on biological sciences.
“Not only is bio-business more important for Minnesota,” it’s a more vigorous part of the state’s economy than elsewhere, observed the study’s author, Dr. Kelvin Willoughby, who heads a consulting firm in Minneapolis named after him.
“The message we take from this is what happens in this industry has implications here,” he told reporters in a conference call Monday releasing the study.
The new study uses data from the U.S. Economic Census survey of businesses conducted in 2007 to provide a snapshot of the industry just before the economy slid into the recession.
The most recent study showed an improved competitive position for Minnesota, compared with an earlier study that looked at 1997 to 2002.
Willoughby cautioned that data since the recession began are “softer and less reliable.”
Nonetheless, he said that, when the recession hit in 2008, employment growth in the sector “flattened” across the United States, and Minnesota was affected more than the nation as a whole. “Our dependence makes us more vulnerable,” he observed.
By 2009, Willoughby said Minnesota’s bio-business employment again grew faster, rising 10 percent, compared with 4 percent across the nation.
“I’m more convinced than ever that Minnesota has the potential to expand its position as one of top bio-business states in the nation … if we do the right things,” said U.S. Sen. Al Franken, who participated in the conference call.
When asked what those right moves are, Franken cited several factors, including support for ethanol and biodiesel production, workforce training and education, and the availability of National Institute of Health grants that fund medical research at the University of Minnesota and the Mayo Clinic.
His assignment to the Energy and Natural Resources Committee and the Health, Education, Labor and Pensions Committee will position him to support the industry, the senator said.
Here are summaries of the study findings in each sector:
Medical devices: This is the big dog in Minnesota’s bio-business landscape, contributing 77 percent of the 2007 employment across the sector. Minnesota ranks No. 1 in its ability to generate employment in the sector, relative to the size of its economy, and is second only to California in the number of medical devices jobs. While most other states (including California) lost medical devices jobs during the second half of the decade, Minnesota added more than 4,500 from 2002 to 2007.
R&D in the life sciences: The good news is that it’s not as bad here as elsewhere. Employment in Minnesota had been growing more slowly than the nation in this sector from 1997 to 2002 — 52 percent, compared with 149 percent. Since 2002, life sciences R&D employment dropped about 19 percent in the nation but only 8 percent in Minnesota.
Agri-bio and bio-industrial technology: Ethanol production dominates this sector, where employment in the state has increased by more than 44 percent from 2002 to 2007. “The modest absolute scale of growth compared with other states suggests that Minnesota may need to redouble its efforts,” the study said. It suggests that Minnesota identify a niche (such as emerging technologies in ethanol production) “where the state may have a chance to set the agenda in the nation.”
Pharmaceuticals: Minnesota is a relatively minor player in this U.S. industry, but total pharmaceuticals employment grew by 76 percent, compared with less than 1 percent nationwide from 2002 to 2007. The state was able to generate more new companies in this sector, demonstrating that “Minnesota’s performance in pharmaceutical entrepreneurship was greater than what one would expect, all other things being equal,” the study concluded.