Strib Story About Tripp Umbach Claim of 4,000

Job Economic Impact of State

Investment in Genomic Partnership

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February 18, 2004

Minnesota stands to gain 4,000 jobs by 2010 if the Legislature commits $70 million to fostering the biotechnology industry, according to a report prepared on behalf of two of the institutions that likely would receive some of that money.

The report, released Tuesday, was greeted with questions about the reliability of its conclusions.

Tripp Umbach Healthcare Consulting, a Pittsburgh-based firm specializing in economic impact studies for health care providers, prepared the report for the University of Minnesota and the Mayo Clinic.

In addition to 4,000 jobs, created either directly in the biotech industry or at companies doing business with the industry, Minnesota could add $290 million in annual economic activity by 2010, the report said.

By 2020, the report added, the numbers could grow to 12,400 Minnesota biotech jobs and $934 million in annual economic activity.

Minnesota currently has 200,000 people working in the health care sector.

``As home to the University of Minnesota and Mayo Clinic, the state of Minnesota has the potential to become one of the fastest-growing and most dynamic biomedical economies of the 21st century,'' Paul Umbach, principal author of the study, said in a prepared statement.

In an interview Tuesday, Umbach said his firm had no incentive to skew the report in any way.

``We have hundreds of clients we work for every year,'' Umbach said. ``The Mayo Clinic is one of our smallest clients in terms of revenue.''

Umbach said most of his assumptions were ``conservative'' and included the possibility of 85 percent of biotech start-ups failing.

``Our purpose is to show the potential ranges,'' Umbach said. ``There are things that could happen in 10 or 15 years totally not thought of today.''

Andrea Lubov, senior economist at Anton, Lubov & Associates, a Minneapolis consulting firm, said a number of conclusions in the study bear close review, including unstated assumptions about how state money would be used and how long taxpayers would be asked to contribute.

``One should always be leery of written-to-order studies,'' Lubov said.

Art Rolnick, director of research at the Federal Reserve Bank of Minneapolis, said he sees value in financing basic research and encouraging the university and Mayo to cooperate on biotech projects.

But ``there's also lots of competition,'' Rolnick said. ``We may come up with the idea and somebody else finds a way to market it better than we can.''

The biotech industry - which encompasses everything from the creation of new drugs to the raising of hardier crops and healthier livestock - has for years clustered on the coasts. Gov. Tim Pawlenty last year made the nurturing of biotech in Minnesota one of the main planks of his economic plans, but in doing so he joined a crowded race, since other states also have pinned their hopes on growing a biotech culture.

Lubov said some observers ``are saying the biotech boat already has left the harbor and the start-up time is too long to make a difference now.''

According to the Tripp Umbach report, Mayo and the university could complement one another in providing clinical and research skills required for biotech science.

The future of that industry's development, the report said, is dependent on three factors: The ability of the university and Mayo to ``successfully engage their respective strengths into a research partnership,'' state aid in constructing laboratory space and ``the state's ability to appropriate a stable and sustained source of research funding to leverage existing research investments and attract new grants from other sources.''

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Mike Meyers is at meyers@startribune.com.

Edition: METRO
Section: BUSINESS