YPSILANTI – Ed Pagani, president of MichBio, urged Michigan?s elected officials to use the 21st Century Jobs Fund wisely to invest in companies that could continue to build the Life Sciences Corridor. His full remarks follow:

Good evening, and welcome to the MichBio Annual Meeting. We have a very full program tonight, and in the interest of moving the program along I?ll take only a handful of minutes to make some comments about MichBio and also about the 21st Century Jobs Fund.

Soon you will hear from our Executive Director, Michael Witt, who will review some of the major accomplishments of MichBio since our last Annual Meeting. Most notably, we were successful in producing the two thousand and five MichBio Expo, which was held at the Cobo Convention Center, the first time the Expo was held outside of the greater Ann Arbor area.

We?ve also expanded the geographical reach of the MichBio Board, and voted in Board members that represent the medical device community. We are striving to reach across the state and to represent a broader sector of the life science industry. In our minds we?ve accomplished much against our annual goals and the 5 year plan, but the question I pose to you tonight is whether MichBio is meeting your expectations, our membership, and the needs of our State?

I?ll read a section from the MichBio mission statement:

?MichBio, acting as a focal point for the life sciences community in the State of Michigan, provides networking and educational events, offers a web portal to industry-specific state and national information, addresses public policy, and is focusing on the human resource, funding and infrastructure issues affecting Michigan?s biosciences industry.?

As you are listening to Michael Witt?s comments tonight, I would ask that you take inventory of our activities and accomplishments in 2005, and decide whether we are meeting the needs of our industry in Michigan, and your needs as a member of MichBio. Michael, the MichBio Staff and the Board of Directors want to hear from you. Contact us tell us what we?re doing right, where we should be applying our resources and areas where we need to make some improvements.

I also want to encourage you to think about joining a MichBio Committee, or forming a new MichBio Committee that advances the interest of life sciences in Michigan. Visit the MichBio website to review the current list of Committees and contact a Committee Chair for more information about the Committee that interest you. For MichBio to succeed, we all need to participate in growing our industry.

Now I?d like to make a few comments about the State of Michigan 21st Century Jobs Fund, and the plan to invest, over the next 10 yrs, 2 Billion dollars to stimulate the growth of high technology and jobs in our State. The first call from the Jobs Fund for Letters of Intent, resulted in 791 submissions, of which 313 (or 40 percent) fall within the Life Sciences categories of:

Pharmaceuticals

Medical devices

Instrumentation

Diagnostics, and

Biotechnology research and ancillary services

In my opinion, the commercial side of the life science industry in Michigan would not be nationally or internationally competitive without this funding, and we should applaud the commitment of our Governor, Jennifer Granholm, and the House and Senate Democratic and Republican leaders in Lansing for voting in this bill. This evening we have one of the principal architects of this legislation, the Senator Valde Garcia.

The time for funding is very welcome, but overdue. There has been a very significant effort by many States, which include California, Florida, Massachusetts, North Carolina, Pennsylvania, to highlight a few, to support life sciences. Many States across the country have already made major financial and resource commitments to its biotechnology industry.

Outside of the United States, Singapore, China, South Korea and India have begun or are beginning to stake out territories in life sciences to compete with the United States and the rest of the world. It is projected that in a few years, India will generate nearly 2 billion dollars annually for conducting clinical studies commissioned by the pharmaceutical industry.

The United States was once the undisputed leader in the area of issue patents claiming inventions in life sciences. The number of patents issued outside of the United States that claim inventions in the life sciences sector is growing exponentially, and the margin between these countries and the US is narrowing. Michigan has no choice but to fund its life science industry to stay on par with others, and remain competitive. Without this funding, our industry does not have a chance to be competitive in the US and around the world.

I also believe that unless funding is applied carefully, thoughtfully, and with a little luck, the impact on the Life Science Industry in Michigan will be minimal. That may sound pretty obvious, but to make smart investments that have commercial impact and create jobs is not easy, and if you factor in other pressures that may influence what regions of Michigan should receive funding, the task of making smart investments becomes even more challenging.

Now in the coming years, we have a wonderful opportunity in the State of Michigan to make significant advances in driving the life science industry. Let?s not loose sight of what we are attempting to do with these funds: grow the high technology industry, recruit and retain technology based companies and related service providers and create long term, well paying jobs in the state.

I do worry that Michigan, if not careful, could fall victim to making investments in ideas that are not commercially attractive and commercially sustainable. In the late nineteen eighties and through the mid nineteen nineties, billions of private and public dollars were poured into life science companies in the United States. Biotech was expanding rapidly.

During this time, I was in a very unique position, as part of Pfizer?s Strategic Alliances department. Our role within Pfizer was, and still is, to form research partnerships with biotechs and universities, in-license technologies, and acquire late stage compounds for clinical development. I had the opportunity to meet with hundreds of companies from across the United States and around the world, and every one of them thought they held the key to the next enabling technology or had in hand the next great medicine.

Not only did I have the chance to kick the tires, but also look under the hood and take the compound or technology for a test drive. Of the hundreds of companies we reviewed, surprisingly only a relatively small percentage had anything of commercial interest or value by any standard, not just Pfizer?s standard. Often there were small, insignificant differences among the companies? marginal technologies, as more and more companies vied for the same scientific space and quickly lined up for the next investment by the VC community or hastily position itself for an IPO.

A lot of money was poured into these biotechnology companies, which at the time was very surprising to me based on what our evaluations disclosed. Principal investors in these companies did well financially, as their strategy was based on multiple investments, with the expectation that many companies would fail and a few would succeed.

Commercialization of products and creation of long term jobs were often not part of the strategy for the investors. What was the consequence of over funding the industry? Dilution of scientific talent, and particularly dilution of business management, CEOs and CFOs, that was responsible for prosecuting the business plan. After the biotech bubble burst, the biotech industry was left in shambles for a number of years, licking its wounds, and the financial community?s appetite for early stage