History of Biotechnology in North Carolina

The handwriting was on the wall in the early 1980s.

Three of North Carolina’s largest traditional industries – tobacco, textiles and furniture – were declining as they were offshored to countries with cheaper labor. The state needed a new industry to help replace those lost jobs.

North Carolina’s leaders realized that genetic engineering and other new technologies coming out of bioscience research labs had enormous potential. They also knew that North Carolina’s largest industries – especially agriculture and medicine – were the very ones that the technology could transform.

Milton Prince

A New Industry for North Carolina

North Carolina also had the necessary resources to develop biotechnology, including leading research universities, four medical schools, a large research park, a progressive business climate and a capable workforce. The state needed a spark to ignite that potential.

That ignition came in 1984 when the legislative and executive branches, with encouragement from academic and business leaders, established the North Carolina Biotechnology Center in Research Triangle Park. The independent, non-profit corporation became the nation's first state-sponsored initiative in biotechnology development.

The goal:

As the Biotech Center found its footing, it selected a new president and CEO in late 1987 to succeed the first president, Richard Patterson, and interim president Roy Morse. Charles E. Hamner Jr., Ph.D., D.V.M., brought a mix of scientific, academic and business experience to the job in February 1988. He had been associate vice president for health affairs and professor of obstetrics and gynecology at the University of Virginia Medical Center, and was previously head of R&D at A.H. Robins Co., a pharmaceutical company in Richmond, Va.

Richard Patterson, Mark Dibner
Richard Patterson, former president (left), Mark
Dibner, former Vice President of Information (right)

 

“Biotechnology is a very young industry with potential for explosive growth in the coming decade and into the next century,” Hamner said at the time. “Molecular biology and genetics offer enormously improved productivity and protection for plants, animals and people. The Biotechnology Center offers a direct way to foster these improvements by continuing to enhance the state’s outstanding research universities and strongly developing biotechnology industry.”

The same year he took office, the Center published its first directory of biotechnology-related companies, listing 83 company sites in the state that collectively employed about 1,300 people. The numbers were a start, but they would pale in comparison to what would come in the Hamner era.

In the early 1990s about 70 companies in North Carolina were involved in the life sciences and another 100 supporting companies provided goods and services to them. In all, these companies employed about 17,500 people in the state.

Importantly, the industry was growing at a 10% annual clip.

Many of the companies were large, multinational corporations with research or production operations in the state, and they began to expand as they employed the new tools and techniques of biotechnology. Other companies began relocating to the state, citing a variety of reasons: proximity to universities, access to talent, lower operational costs, a supportive business environment, a low cost of living, and a high quality of life.

In the mid-1990s the slow, difficult and expensive work of biotech research and development had begun to pay off with commercial products. By 1998 at least 54 biological therapeutics and vaccines were on the market, and more than 150 more were in late-stage clinical trials.

“After years of research and development, the biopharmaceutical industry is maturing into the manufacturing stage,” said Charles Hamner, D.V.M., then president and CEO of the Biotech Center. “And that’s where we’re going to see phenomenal growth in terms of jobs, revenues and capital investments.”

Charles Hamner, NCBiotech
Hamner Era Ends but Life Sciences Continue to Deliver for North Carolina

Charles Hamner, the Center’s longest-serving president (1988-2002), was fond of saying that biotech was an overnight success in North Carolina, followed by the kicker, “20 years in the making.”
There was truth in both of those contradictory statements.
It did appear as if the state’s life science base had blossomed spontaneously, but decades of intentional, strategic work and state investments accelerated its growth.

From the North Carolina Biotechnology Center’s earliest years onward, educating the next generation of citizens about the technology and preparing them for jobs in in the field was a constant priority.

Since 1987 the Biotech Center’s Education and Training Program had offered summer biotech workshops to more than 1,700 middle and high school teachers in all of North Carolina’s 100 counties, preparing them to teach about biotech. It supported those teachers in the classroom with biotech lesson plans, videos, supplies and loaned equipment for lab activities.

In turn, those teachers reached about 100,000 students a year with lessons about the science, applications and issues of biotechnology, along with career information.  Many of those students went on to study biotech-related fields at the state’s community colleges and universities and then pursue jobs and careers in the industry.

The program also awarded hundreds of grants totaling $7 million to promote biotech teaching and training at schools, community colleges and universities.

With its experience and expertise, the program was well suited to address a growing need for specialized workers in the early 2000s.

As more biotech products gained regulatory approval and came to market, companies began building and expanding production capacity at a feverish pace to manufacture those products. The industry needed an ever-larger supply of workers skilled in biomanufacturing, the production of proteins and other biological molecules using living cells.

Not having enough trained workers would be a rate-limiting factor in the industry’s growth, said Sam Taylor, head of NCBIO, the state’s industry association. “We believe that the biomanufacturing industry has enormous potential to bring jobs to all regions of North Carolina as biotechnology moves from a research base to a manufacturing base.”

At the industry’s request, the Education and Training Program surveyed the state’s biotech companies to determine how many biomanufacturing workers they would need and the skillsets those employees should have. The results were published in a seminal report, “Window on the Workplace,” which projected the industry would need 2,000 to 3,000 new employees every year for the foreseeable future.

Not even the largest economic recession since the Great Depression of the 1930s could shut down North Carolina’s life science juggernaut.

When the U.S. housing bubble burst and the global financial crisis flared, spurring a major economic downturn from 2007 to 2009, the life sciences emerged as one of the few bright spots in North Carolina’s economy.

As unemployment in the state reached record high levels, biotech employment grew.

The sector remained a large generator of income and taxes statewide, according to a study by the Battelle Technology Partnership Practice. The report showed North Carolina's life science jobs grew by 30.9% between 2000 and 2012, compared with a mere 1% overall private sector growth in the state during the same time span. And those jobs paid an average $81,000 a year.

According to the Battelle study, life science companies and institutions generated $73 billion in economic activity for the state, a jump of 60% since the recession hit in 2008, and accounted for 228,259 direct and indirect jobs – 5% of all employment in the state.

North Carolina’s life science future “has never been brighter,” Battelle said in the report. “North Carolina has a realistic ‘line of sight’ to specific growth opportunities that build upon its industry strengths and research assets and allow North Carolina to differentiate itself and compete on a national and global scale.”

The Battelle analysts cited six areas of technology strength in the state:
  1. Crop genetic engineering
  2. Outsourced drug development
  3. Advanced wound healing, surgical devices and regenerative medicine
  4. Personalized medicine and diagnostics
  5. Contract manufacturing 
  6. Health informatics 

“The reason we are ahead of the curve is because . . . we’ve invested in the biotech industry and it’s paying dividends,” Norris Tolson, the Biotech Center’s president and CEO, said in a 2010 interview with Business Leader magazine.

That same year, Art Pappas, founder and managing partner of Pappas Ventures, a Durham-based venture capital firm, explained to the News and Observer of Raleigh why biotech was critical to the state’s economy during the recession:

“The life sciences are an engine of job creation with a high ‘multiplier’ rate – they create a lot of jobs indirectly. In addition to elite, Ph.D.-level positions, the life sciences create a range of jobs, including support and manufacturing roles ideal for workers transitioning from declining industries such as furniture or textiles. If North Carolina is to climb out of the recession permanently, it will do so on the shoulders of good-paying, sustainable jobs like these.”

In 2011 the state took steps to ensure it seized the full economic opportunities of biotechnology. At the request of the General Assembly, the Biotechnology Center prepared a strategic plan to accelerate the industry’s growth at a time of stiffening competition from other states.

The Center consulted with more than 50 of the state’s life science executives and identified a lack of early stage and late-stage funding for companies, and a shortage of experienced executives to manage those companies. Its report recommended seven strategies to address these gaps.

North Carolina’s life science sector has delivered the goods.

What began as a handful of life science companies in 1984 has grown to more than 735 today, 35 years later. Those companies, ranging from entrepreneurial startups to multi-national conglomerates, employ more than 66,000 North Carolinians in high-paying jobs, and another 240,000 people work at related companies.

The industry generates more than $83.3 billion in annual economic impact and nearly $2.2 billion in state and local government tax revenues.

North Carolina has developed the nation’s third-largest bioscience community, trailing only California and Massachusetts. And the Research Triangle region is also the third-largest metro area for the life sciences.

The state is a leader in several sectors of the biosciences, according to a 2018 report by TEConomy Partners.

 

  • North Carolina is No. 3 in the nation in drugs and pharmaceuticals. The sector generates $56.4 billion in annual economic activity and provides 132,500 jobs.

  • The state is No. 5 in research, testing and medical labs, a sector that generates $13.7 billion in economic activity and supports more than 75,000 jobs.

  • North Carolina’s agricultural feedstock and industrial biosciences sector generates $7.3 billion in economic activity and supports 14,000 jobs. More than 170 ag tech companies operate across the state including international giants BASF, Eurofins, Novozymes, Syngenta and Zoetis. 

  • North Carolina has a booming biomanufacturing industry that doubled in size from 2003 to 2018. About 85 companies in the state are involved in biomanufacturing, and they employ more than 9,000 people who make a wide range of high-value products including biopharmaceuticals, animal health products, food ingredients and industrial products such as enzymes.

The state also has the world’s greatest concentration of contract research organizations (CROs), which help biopharmaceutical and pharmaceutical companies test and develop drugs. More than 150 CROs have headquarters or operations in the state, employing over 24,000 people, in addition to tens of thousands around the world.  They include global leaders Covance, IQVIA, PPD, Parexel, Chiltern, PRA Health Sciences and Icon Clinical Research.

Recently, North Carolina has gained prominence in another promising sector: gene therapy for treating rare diseases. More than 10% of National Institutes of Health funding for rare-disease research flows through North Carolina, and several companies are making commercial progress in gene therapy development and manufacturing in the state, and are expanding.