What would it take to achieve the $1.7 billion target of economic impact from the life sciences that we have heard so much about? Three things: Commitment, collaboration, and capital.
Can we, as a community, do it? I would answer yes, but only if we have a community-wide focus on this endeavor and move quickly and in a deliberate and coordinated fashion.
As a relative newcomer, I have been impressed with the commitment from the community, the support of the business sector, and the engagement of the elected officials in areas of commonality of purpose. Key to the goal of pursuing growth in the life sciences sector that would translate into an economic engine for the region have been the investments in STEM, the Riverpoint campus, the University District, and the efforts in medical education that yielded the expanded WWAMI program and the Elson S. Floyd College of Medicine. These are the result of years of work by many and an unwavering commitment to achieving this goal.
The growth in science and technology is evident as our school-aged children learn to perform genomic tests or design robots in our schools. Further evidence is the plethora of opportunities not only in the sciences but also in information technology and other areas at our community colleges, which are an example for others to follow. And last but not least, the geographical collaboration by our universities that has brought together not only medical education but also all of the allied sciences in an area that will provide a key factor to the success in the life sciences: critical mass.
All of these steps are crucial to the desired outcome, but won’t yield the expected quantitative results unless we remain committed to the efforts, reach unprecedented levels of cooperation, and start to generate a lot more revenue and attract capital investments to the region.
Starting with the commitment; what does it mean? We can certainly argue that without it we wouldn’t be where we are now. No question about it, but where we are and where we need to be are two different steps in the continuum that is economic development. As previously outlined, we have all the building blocks but not the end result.
To get there, we need products, services, and companies in the life sciences generating revenue, hiring people, and promoting an ecosystem that results in longitudinal innovation and breakthrough inventions. Thus, the focus right now needs to be on identifying the areas or sectors of opportunity, and determining which specific areas we have expertise and potential in, then pursuing those relentlessly.
Specificity is critical and also potentially controversial. If we talk about the sciences, which one and in what area? At this point, we aren’t big enough or have enough resources to pursue a multitude of opportunities, thus the potential for friction. Whatever we choose as our options must be pursued and supported by all regardless of our own individual, institutional, or collective preferences. This is where the unprecedented collaboration comes in.
I would argue that although the ideal for sustainable growth will come from innovation and invention, the reality is that the timetable for these types of developments to reach commercial potential or to have a market-ready product is typically seven to 10 years. No question these need to be promoted, but within the context of a longitudinal queue. Short term, it may very well be that our focus should be products and services as these tend to generate market gains in one to three years.
Perhaps you are asking, “Why the hurry?” The reality of the matter is that we have momentum right now, and this won’t last forever. Also, other communities are pursuing similar goals; some are closer than others. From my vantage point, I would say we have three to five years to deliver. When time is of the essence, value proposition and critical adjacencies are important.
What is Spokane’s value proposition? In my opinion, we have the key elements for a compelling value proposition, albeit one that needs to be cohesively articulated. As an example, we have a density of educational opportunities at all levels, which is fairly unique for a city our size—the product being a highly educated work force, capable of participating in multiple segments of the economy.
We also have a competitive cost of living, abundant natural resources and beauty, four well-balanced seasons, high density of health care and people services, and great cultural opportunities including a symphony that much larger cities covet. Add to that a civic-minded business community, engaged elected officials, and people with the type of collaborative spirit that made this country great, and you have a value proposition that resonates in any market.
What are we missing? I have asked that same question to my friends and colleagues in industry, venture capital, and private equity. The answer: critical mass. It is very difficult to promote innovation when we lack number and size in market segments. This by no means is meant to minimize the successful companies that have grown in the area.
On the contrary, this is critical “proof of concept” that we can deliver. The issue is not generating “a” company, business, product or service, but can we generate many? That is critical mass, and for that, uniqueness is not only important but as important are critical adjacencies. Meaning: Do we have expertise in areas not specifically related to the life sciences, that can be transferred to the life sciences? Again my answer would be yes.
As an example, we as consumers of health care know that technology is enabling us to have a greater participation as well as have more control over our own health. Many of the advances that allow for that came from applications not meant for health care but for the retail or service industries.
Think smartphone and the over 7000 health apps. Smart refrigerators and their ability to track food supplies and diet, environmental sensors being applied to allergen detection in your cars, ceramic composites, and other industrial materials with biological applications, and of course 3-D printing now generating artificial prostheses.
Now think about the many consumer, business, or specific industry technology companies in the area. Many of these have a skill set that is transferable to the life sciences. These are applications and innovations waiting to happen, all part of the process of identifying opportunities in a broader market and then narrowing the synergy with a great degree of specificity to the life sciences.
Which brings me to capital. To succeed, resources will be needed. The question is: Where are the resources coming from? That is a question with multiple answers, as there are several ways to fund research, innovation, and product or service development.
Typically, academic institutions rely on extramural or agency funding and endowments. The former requires support from elected officials, as well as active advocacy from all of us. The latter relies on private resources and the philanthropic heart of community members. Startups, depending on their stage and business models, can be self-funded, or they can secure resources from agencies like the Department of Defense, or companies, and at some stages venture capital or private equity, which as the name implies require a stake in the company, are used.
Some communities have foundations or locally allocated funding agencies, of which Spokane is one of the few that can make that claim. One example is the Health Sciences and Services Authority of Spokane County, funded through a sales tax allocation which has proven a model of quantitative success for others to follow. This agency generates a return of hundreds of dollars for every dollar spent.
Last but not least, local support by businesses and companies in the region, which is independent of government approval cycles, may prove to be in the long run one of the most effective funding sources. Every dollar we generate in the community returns in either employment, investments, or purchases and acquisitions that in turn multiply the initial investment.
We are at a unique inflection point in our community. The question becomes: Are we ready and willing to move these efforts forward and deliver the full potential of the time, effort and resources already spent to bring us closer to our goal? My hope is that answer is a resounding YES.
Dr. Francisco Velazquez is the president and CEO of Spokane-based Pathology Associates Medical Laboratories and PAML Ventures.
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