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Pawlenty proposal leaves bioscience proponents disappointed
by Laura McCallum, Minnesota Public Radio
February 3, 2004

Sen. Steve Kelley, DFL-Hopkins, who served on the biosciences council, says if the governor can't take the lead on the matter, he will. (MPR file photo)

Governor Pawlenty has outlined a series of proposals to help Minnesota's emerging biotech industry. Pawlenty has made biotech a top priority of his administration. But the governor's recommendations don't go as far as the proposals from the biosciences council he created last year. Industry experts say even if Pawlenty's package passes in its entirety, Minnesota will have to do more down the road to be a major player in the biotech industry.

St. Paul, Minn. — Gov. Pawlenty is asking the Legislature to fund two bioscience projects in this year's bonding bill. The governor wants the state to borrow $20 million for a joint research facility for the University of Minnesota and the Mayo Clinic, and another $15 million for grants to be used in a new bioscience zone. Pawlenty says the U of M/Mayo research partnership created last year gives Minnesota a competitive advantage in the biosciences.

"The importance of it cannot be understated, these are two institutions that have historically have kind of bumped up against each other, I don't want to speak for them, but they haven't been models of cooperation," Pawlenty said.

	A partnership announced

Pawlenty was joined by top U of M and Mayo Clinic officials, who announced the partnership's first research grants. Three-million dollars will fund four projects focusing on heart disease, prostate cancer, obesity and Alzheimer's disease.

The governor is also proposing a handful of other initiatives recommended by his biosciences council. He's asking state agencies to review regulations affecting the biotech industry, and to study the development of an investment tax credit.

"Like many other states, we'd like to be offering tax credits, tax incentives for that kind of investing in strategic ways in the biosciences in Minnesota. Candidly, we're not going to be able to do that this year unless we get some unexpected good news in our budget forecast, but it's something I want to plan for and prepare for," he said.

Pawlenty's proposal is much more modest than the initiatives underway in biotech leaders like Montreal, where Pawlenty led his first trade mission last fall.

Quebec offers a five-year income tax break for scientists who relocate to the province. After his trip, Pawlenty suggested he'd propose tax incentives for research and development and investment in biotech. He says Minnesota's financial situation makes that impossible right now.

Pawlenty has also talked about using state pension funds for biotech start-ups, but says as a member of the state Board of Investment, he won't push the issue. The governor's bioscience council recommended that the investment board create a $200 million venture capital fund for biotech investments. Industry experts say the lack of venture capital is a critical issue for biotech start-ups.

Sen. Steve Kelley, DFL-Hopkins, who served on the biosciences council, says if the governor can't take the lead on the matter, he will.

"The bioscience council called for a guarantee that in effect there'd be a certain rate of return for those investments. And we have some more work to do on how you describe that guarantee, but that's the concept that I would be trying to talk about with the Legislature," according to Kelley.

Wisconsin has a similar program. The state's investment board has made a $150 million commitment to invest in Wisconsin-based biotech ventures. Wisconsin also has a more than $300 million research initiative.

Ray Frost, executive director of MnBIO, the biotech association, says says Minnesota isn't putting as much money into biotech as many other states, but says Gov. Pawlenty's proposals are a good first step.

"We may still be doing this long after this governor is gone. This is a commitment that if you look at the other states; North Carolina, for example, they've been doing this for 25 years. We're just starting to vamp up on stuff so this is a long-term commitment," according to Frost.

Pawlenty says building up Minnesota's biosciences industry will take years, even decades. He says the industry holds tremendous promise for the state's future, if the Legislature is willing to make some investments now.

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