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Originally published August 2, 2014 at 8:02 PM | Page modified August 4, 2014 at 11:30 AM

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Amgen’s exit a symbol of our biotech status

Washington is doing itself no favors by lawmakers seemingly content to let the research-and-development tax credit sunset at the end of this year. The highly successful Life Sciences Discovery Fund was saved by Gov. Jay Inslee.


Special to The Seattle Times

The pulse of life sciences

In Washington ...

• 10 percent job growth 2007-2012

• 34,000 direct employment

• $11.1 billion economic impact

• 191 biopharma companies

• 294 medical-device companies

• 78 nonprofit research institutions

Source: Washington Biotechnology and Biomedical Association

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Is it about them? Or is it about us?

These are the natural questions after a traumatic breakup, such as Amgen announcing it will vacate its entire Seattle-area operations, including the showpiece buildings that face Elliott Bay.

And traumatic it was. I am told employees were openly weeping. Rumors of layoffs had been around, but no one expected a total shutdown and the elimination of 660 well-paid jobs.

Amgen’s departure is freighted with historic disappointment and present questions. The Seattle and Bothell operations are what remain of Immunex, bought by Amgen in 2001. Immunex might have become our biotech version of Microsoft or Amazon.com.

Instead, we learn the bitter lesson of being a branch office rather than the headquarters. And what does it say about our biotech sector that Amgen kicks us to the curb while expanding elsewhere? More importantly, why did we never grow another Immunex?

Is it us or is it them?

As usual in such situations, it’s a little bit of both.

Amgen, headquartered in the Los Angeles suburb of Thousand Oaks, has been under tremendous pressure from investors to reduce costs, become as efficient as more nimble competitors and emphasize new drugs.

As Barrons put it: “Wall Street has grown bored with Amgen as rival drugmakers launch game-changing new drugs.”

After it announced the layoff of 2,900 employees from its worldwide workforce of 20,000, Amgen shares hit a record high.

Seattle was seen as a “legacy” operation, and thus expendable. The winners in the restructuring were Amgen’s locations in the Bay Area and Boston, with their world-class biotech strengths and multiple research universities. We have neither.

Still, when I talked to Chris Rivera, president of the Washington Biotechnology and Biomedical Association, he didn’t sound panicked.

“The Bay Area and Boston are by far the leaders,” he said. “But we’re in the next tier with San Diego, Research Triangle Park and New York and New Jersey.”

The association’s data show that life-science jobs grew 10 percent in Washington from 2007 to 2012, the latest year for which data are available, when most other sectors were losing workers or stagnant.

Rivera pointed to strong capital formation for bio companies, including 70 transactions last year, almost $770 million. This year, Immune Design of Seattle raised $60 million in an initial public offering. Celgene plans to establish a cancer immunotherapy center in the city.

The state benefits from strong research operations at the University of Washington, Washington State University, the Fred Hutchinson Cancer Research Center and the Allen Institute for Brain Science. The Bill & Melinda Gates Foundation is a major center for world health initiatives.

The Puget Sound region’s world-class software cluster is another strength that can be applied to the biosciences (“digital health”).

A wide-ranging national study by Battelle and the Biotechnology Industry Organization (BIO) doesn’t feature Seattle and Washington as prominently as one would hope. Part of the problem is defining bio — the report includes everything from bioscience applications to agriculture to sustainable industrial production.

Seattle-Tacoma-Bellevue ranks well in medical devices; and research, testing and medical labs; and boasts a large metro employment level in bio. Still, the competition is very tough.

Looking at state measures, the Battelle/BIO report generally supports Rivera’s assessment of our strong second-tier status. Where we perform in the top level is National Institutes of Health funding.

Another widely watched report comes from the investment-management company Jones Lang LaSalle. This year, Seattle ranked 10th among the top U.S. bio clusters, unchanged from 2013.

We have an excuse for not matching San Francisco or Boston. Worth reflection is the fact that San Diego, which arguably has less of a foundation than Seattle, is ranked No. 3. Minneapolis/St. Paul comes in at No. 9.

Washington is doing itself no favors by lawmakers seeming content to let the research-and-development tax credit sunset at the end of this year. The highly successful Life Sciences Discovery Fund was only saved by a line-item veto of Gov. Jay Inslee.

That’s not how top-tier regions operate, much less grow a new giant when the environment for doing so has become much more difficult.

The other Washington is also a danger. With austerity ruling Congress, funding has stagnated or fallen for most scientific research. This presents a huge danger to National Institutes of Health grants at the University of Washington.

Rivera put it this way: “We have the opportunity to become a top-tier cluster. But we’ve got to look at all the ingredients that go into making it happen.”

You may reach Jon Talton at jtalton@seattletimes.com



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About Jon Talton

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest
jtalton@seattletimes.com

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