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Full text of "Biotechnology : report to the 1983 General Assembly of North Carolina, 1984 session"

LEGISLATIVE 
RESEARCH COMMISSION 



BIOTECHNOLOGY 



MAY 01 1984 



I t 

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institute of government 

jjiiversity of north carolina 

Library 




REPORT TO THE 

1983 GENERAL ASSEMBLY 

OF NORTH CAROLINA 

1984 SESSION 



LEGISLATIVE 
RESEARCH COMMISSION 



BIOTECHNOLOGY 



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MAY 31 1984 



INSTITUTE OF GOVERNMENT 

JiliVERSIT^' CF NORTH CAROLINA 

L3RARY 




REPORT TO THE 

1983 GENERAL ASSEMBLY 

OF NORTH CAROLINA 

1984 SESSION 



A LIMITED NUMBER OF COPIES OF THIS REPORT IS AVAILABLE FOR 
DISTRIBUTION THROUGH THE LEGISLATIVE LIBRARY: 

ROOM 2126, 2226 
STATE LEGISLATIVE BUILDING 
RALEIGH, NORTH CAROLINA 27611 
TELEPHONE: (919) 733-7778 

OR 

ROOM 500 

LEGISLATIVE OFFICE BUILDING 
RALEIGH, NORTH CAROLINA 27611 
TELEPHONE: (919) 733-9390 



STATE OF NORTH CAROLINA 
LEGISLATIVE RESEARCH COMMISSION 

STATE LEGISLATIVE BUILDING 

RALEIGH 27611 




June 7, 198 4 



TO THE MEMBERS OF THE 1983 GENERAL ASSEMBLY: 

This is the Legislative Research Conunission' s report to 
the 1983 General Assembly, Second Regular Session 1984, on 
biotechnology development. This report is made pursuant to 
Section 12 of 1983 Session Laws Chapter 905 (HB 1142) , was 
prepared by the Legislative Research Commission's 
Biotechnology Study Committee, and is transmitted by the 
Legislative Research Commission for your consideration. 

Respectfully submitted. 




i-& 



W. Craig Law 
Senate Pres 



Cochairmen 
Legislative Research Commission 




ore 



TABLE OF CONTENTS 

Introduction 

Interim Findings of the Committee 1 

Interim Recommendations for the 1984 Session 4 

Summary of Interim Report and Recommendations 7 

Biotechnology: What Is It and Why Is It So 

Important? 11 

Proceedings of the Committee 17 

Future Activities of the Committee 31 

APPENDICES 

A. Membership: Legislative Research 

Commission; Biotechnology Study 
Committee 

B. Senate Joint Resolution 620 

C. House Joint Resolution 1282 

D. Chapter 899, 1983 Session Laws 

(House Bill 1122) 

E. Memorandum of Committee Counsel to Members 

of the Biotechnology Study Committee, 
January 27, 1984 

F. Memorandum of Steven Rose and Laura Meagher to 

Members of the Biotechnology Study Committee, 
February 17, 1984 

G. Tables Illustrating Estimated Annual Returns 

and Impacts of Research and Extension Investments 
In U.S. Agriculture 



INTRODUCTION 

The Legislative Research Commission, originally created 
in 1965 and authorized by Article 6B of Chapter 120 of the 
General Statutes is authorized, pursuant to the direction of 
the General Assembly, "to make or cause to be made such 
studies of and investigations into governmental agencies and 
institutions and matters of public policy as will aid the 
General Assembly in performing its duties in the most 
efficient and effective manner" and "to report to the 
General Assembly the result of the studies made," which 
reports "may be accompanied by the recommendations of the 
Commission and bills suggested to effectuate the recommenda- 
tions." G.S. 120-30.17. The Commission is chaired by the 
Speaker of the House and the President Pro Tempore of the 
Senate, and consists of five Representatives and five 
Senators who are appointed respectively by the Cochairmen. 
G.S. 120-130.10 (a) . 

Chapter 905 of the 1983 Session Laws (House Bill 1142) 
authorized the Legislative Research Commission to study, 
among other subjects, biotechnology development as outlined 
in Senate Joint Resolution 620 (Appendix B) and House Joint 
Resolution 1282 (Appendix C) , and as specified in Chapter 
899 of the 1983 Session Laws (House Bill 1122) , which 
created the New Technology Jobs Act (Appendix D) . Section 6 
of Chapter 905 authorizes a report to the 1984 or 1985 
Sessions of the General Assembly, or in the alternative 



permits an interim report to the 1984 Session and a final 
report to the 1985 Session. For the reasons stated further 
on in this report, the Biotechnology Study Committee has 
chosen to make this interim report, and will make its final 
report to the 1985 Session. 

The Joint Resolutions referred to above called for the 
study committee to review the projections that biotechnology 
will have a pervasive impact on various industries, as well 
as other areas; to review the steps being taken by other 
states to strengthen their positions in biotechnology; to 
review the present status of and further plans for 
biotechnology programs in the state's universities, the 
North Carolina Biotechnology Center, the Department of 
Commerce, the state's business community, and other organ- 
izations concerned with the development of biotechnology in 
the state; to review the development of the federal guide- 
lines for safe conduct of research and development in this 
area, as well as the experiences of other states that have 
addressed that issue; and, finally, to "determine the short 
term and long term needs for North Carolina to be at the 
forefront of the technological and economic developments in 
the rapidly advancing field of biotechnology." 

The study committee has spent some time looking at each 
of these issues, though it has by no means completed its 
work. The committee is making this interim report and set 
of recommendations in order to fulfill its mandate to 
determine the short term needs of the state to be "at the 



forefront of technological and economic developments" in the 
area of biotechnology. 



INTERIM FINDINGS OF THE COMMITTEE 
The Biotechnology Study Committee makes the following 
findings based upon the testimony of numerous witnesses that 
have appeared before it, and other information supplied to 
it by its staff: 

I. That the projections that biotechnology will have a 

pervasive impact on industries such as pharma- 
ceuticals, agriculture, forestry, chemicals, 
medical care, pollution control, and many other 
areas, are accurate. It is actually difficult to 
quantify the economic effect because biotechnology 
has the potential to affect so many areas. It 
will not only result in new products and process- 
es, but it will also change the way many existing 
products are made or grown. 

II. That many other states have undertaken programs to 

strengthen their position in biotechnology in the 
areas of education, research, and financial and 
institutional support for biotechnology related 
development. There is also substantial activity 
on an international level, with countries such as 
Japan, the Federal Republic of Germany, the United 
Kingdom, Switzerland, and France gearing up 
national efforts to compete with the United 
States, which is perceived to be the leader in the 
commercialization of biotechnology. Within the 

-1- 



United States, there are two existing premier 
centers of strength in biotechnology, these being 
in Massachusetts and California. Otherwise, the 
field appears open to any state seeking a competi- 
tive position and at this time North Carolina 
appears to be in one of the best positions to 
capitalize on existing strengths and become a 
leader in this field, if it desires to do so. 

III. That the universities of the state, public and 

private, are already involved in biotechnology 
related programs, with the emphasis varying from 
institution to institution, capitalizing on the 
existing strengths of each, with interaction and 
communication going on actively between them. The 
North Carolina Biotechnology Center is functioning 
actively and leveraging its funds effectively. 
The Department of Commerce has begun promoting the 
state as a biotechnology center along with its 
other economic promotion of the state. As a 
result of the activities of the Biotechnology 
Center and the Department of Commerce, there is 
already investment in the state by private compa- 
nies concerned with biotechnology related activi- 
ties . 

IV. That there are short term needs in order for the 

state to maintain its present competitive position 
as a perceived leader in the field of 



-2- 



biotechnology, and in order to assist the state's 

universities in maintaining their reputations as 

international leaders in research and education. 

It is anticipated that the final report of the 

Biotechnology Study Coimnittee will contain additional 

findings and expand upon the ones contained in this report. 



-3- 



INTERIM RECOMMENDATIONS FOR THE 1984 SHORT SESSION 

The Biotechnology Study Coiraiiittee recommends that the 

actions which follow be taken by the Legislature and the 

appropriate administrative departments: 

I. That $2,960,000 be appropriated to the Office of State 
Budget and Management from the General Fund for Fiscal Year 
1984-85 as a reserve. Upon the application of the Universi- 
ty of North Carolina Board of Governors, and with the advice 
of the Advisory Budget Commission, the Governor may allot 
moneys from that reserve to the Board of Governors to 
recruit and hire four world class scientists or engineers 
whose work is related to biotechnology, to the University of 
North Carolina constituent universities, including, in 
addition to competitive salaries, the other components 
necessary to attract researchers of this caliber, such as 
start-up research funds and laboratory setup costs. These 
funds shall also be allotted to recruit and hire four, and 
possibly more, excellent junior professors whose work is 
related to biotechnology, and for the support of eight to 
ten postdoctoral fellows and eight to ten graduate student 
fellows to support the research efforts of the recruited 
scientists and other scientists in the university system 
already doing biotechnology related work. 

II. That $4,500,000 be appropriated to the Office of State 
Budget and Management from the General Fund for Fiscal Year 
1984-85 as a reserve. Upon the application of the 



-4- 



University of North Carolina Board of Governors, and with 
the advice of the Advisory Budget Commission, the Governor 
may allot moneys from that reserve to the Board of Governors 
for capital improvements associated with the recruitment of 
these research scientists and for promoting interaction 
between university researchers, public and private, and 
industry. Such improvements could be in the form of labora- 
tory space, bioprocessing pilot plant facilities, and 
planning of future research facilities. 

III. That the appropriations recommended in paragraphs I. 
and II. not revert to the General Fund if unused at the end 
of the fiscal year, since recruitment of the people de- 
scribed and construction of the associated capital improve- 
ments may extend beyond that time. 

IV. That $1,965,000 be appropriated to the Department of 
Commerce for use by the North Carolina Biotechnology Center. 
These funds would be used for programs which facilitate 
university /industry interactions, thereby promoting technol- 
ogy transfer, and for substantial competitive grants or 
collaborative research programs which would be open to all 
rpBonrrh i nst j flit- i OOP , public and private. These funds 
would also be used to sponsor top quality conferences and 
workshops designed to enhance the perception of North 
Carolina as a leader in biotechnology, while at the same 
time adding to the expertise of university and industry 
researchers in this area. 



-5- 



V. That $575,000 be appropriated to the Technological 
Development Authority which would allow the Authority to 
help establish at least two additional imrubator facilities, 
which will provide support for beginning technology related 
businesses around the state, and to fund additional private 
business research support under its Innovation Research Fund 
program. The breakdown of these funds would be $400,000 for 
incubator facilities and $175,000 for the Innovation Re- 
search Fund. 



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SUMMARY OF INTERIM 
REPORT AND RECOMMENDATIONS 

The Biotechnology Study Committee has met five times 
and, while it will continue to meet with the aim of making a 
final report to the 1985 Legislative Session, it has become 
apparent that it is necessary to take some immediate action 
in order to preserve the state's position as a perceived 
leader in the field of biotechnology, and in order to assist 
the state's universities in maintaining their reputations as 
international leaders in research and education. 

Testimony before the committee has shown conclusively 
that the worldwide effects of the biotechnology revolution 
will be pervasive, so much so that they have proved 
unquantif iable. In addition to the direct impact in such 
areas of importance to North Carolina as agriculture, 
forestry, pharmaceutical research and production, marine 
biology, and food processing, biotechnology techniques will 
alter the methods with which research is carried on in our 
universities . 

The coiTJTiittee has heard reports of the actions being 
taken in other states to promote biotechnology, both in the 
areas of commerce and in university research and teaching, 
and feels that certain minimal actions are called for in the 
short term so as not to lose the momentum which has already 
been established by the work of the state's universities and 
the Biotechnology Center. The short term proposals 



-7- 



contained in this report do not commit the Legislature or 
any administrative department to any long range comprehen- 
sive program, although such a program has been proposed and 
is being considered by the committee. On the other hand, 
should the committee ultimately recommend a long range 
program and the Legislature agreed to adopt and fund such a 
program, the recommendations contained in this report will 
fit into that program, or any variation of it. 

It should be pointed out that the universities of the 
state, public and private, have already made a strong 
commitment in the area of biotechnology related research 
simply because it is necessary in their view to do so in 
order to maintain their competence as institutions of higher 
learning. 

The funds recommended for recruitment of world class 
and younger, but excellent professors and for post doctoral 
and graduate school fellows, as well as the recommendations 
for capital funding in support of biotechnology, are recom- 
mended to be appropriated to the Office of State Budget and 
Management as a non-reverting reserve fund so they will be 
available as needed, since it will take some time to actual- 
ly recruit the recommended people once that process is 
begun, and the capital items will no doubt be determined, at 
least in part, by the types of scientists recruited. On the 
other hand, it is imperative that these funds be actually 
appropriated and available since recruitment of these people 



-8- 



and planning of these facilities could not proceed without 
that assurance. 

With regard to the funds recommended for the North 
Carolina Biotechnology Center, it should be noted that based 
upon past performance the Center should easily generate 
additional funds from federal and private sources at least 
equivalent to the amount suggested for appropriation to it 
and, the Center would then be in a position to fulfil 
several important roles. It would help ensure that the 
university research which is already going on in the area of 
biotechnology, as well as the expanded research which would 
occur under this proposal, would result, where appropriate, 
in technology transfer to industry. The Center would also 
expand its role in sponsoring activities which would enhance 
the perception of North Carolina as a leader in 
biotechnology. This is a very important factor in bringing 
economic development to the state and was stressed by many 
speakers during the course of the committee's deliberations. 
Finally, the Center will be a vehicle for involving the 
private institutions in our state in the overall collabora- 
tive effort to develop in the area of biotechnology and to 
make certain that all of the state's institutions, private 
as well as public, will maintain and enhance their academic 
abilities and reputations. In the view of the study commit- 
tee, this funding is necessary if there is going to be a 
meaningful, functioning Biotechnology Center. On the other 
hand, should the committee ultimately recommend a long range 



-9- 



and comprehensive biotechnology development program, the 
Biotechnology Center will be in a position to aid and 
coordinate such a program. 

It should be stressed that these interim recommenda- 
tions are not tied to any long range program. The committee 
has not reached the point of making a decision on whether or 
not to recommend such a program. However, the committee 
feels that the recommendations contained in this interim 
report represent the minimum that should be done to ensure 
that the state does not take a step backward in this most 
important area. The committee has designed its recommenda- 
tions so that they can be part of a long range development 
program or they can stand alone. 

With regard to the recommended funding for the Technol- 
ogical Development Authority, the Authority was created 
during the 1983 Session of the Legislature and was given 
funds for an incubator facilities program in the amount of 
$200,000 for each year of the biennium, and for its Innova- 
tion Research Fund in the amount of $225,000 for each year 
of the biennium. The widespread response to the Authority's 
first call for proposals, as well as the quality of the 
proposals, indicates that additional funding would be well 
used to assist beginning and expanding businesses in commu- 
nities across the state. A significant portion of small 
business support requests received pertain to biotechnology. 
It should be pointed out that the Legislature would not be 
committing funds beyond fiscal year 1984-85. 



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BIOTECHNOLOGY: WHAT IS IT AND WHY IS IT SO IMPORTANT? 

The development of biotechnology^ the ability to 
manipulate components of a ceil and reproduce the results, 
is a revolution in scientific, agricultural, biomedical, and 
manufacturing processes and techniques. It is not a new or 
separate scientific discipline. One way of looking at 
biotechnology is that it is a collection of new techniques, 
centering on biology, which make possible novel extensions 
and combinations of existing scientific disciplines and new 
industrial applications. These new techniques came about 
with the understanding of the structure of deoxyribonucleic 
acid (DNA) , composing the genes of all organisms, combined 
with the ability to manipulate genes and reproduce the 
results of that manipulation. 

These new techniques are revolutionizing many sciences 
and manufacturing processes and will have a pervasive effect 
on everyone's life in the very near future. It is important 
to understand that these techniques are already in use 
today. For example, on April 26, 1984, the New York Times 
Service newswire reported that a major biotechnology compa- 
ny, Genentech, Inc., announced that it had created in the 
laboratory a complex protein vital to the normal clotting of 
blood. It is the protein that is missing or deficient in 
hemophiliacs. Previously, the substance had to be extracted 
from donated blood. By using gene splicing and cloning 
techniques, that substance can now be produced artificially 



■11- 



and, as a by product of that research, scientists will be 
better able to study the molecular basis of hemophilia and 
possibly develop techniques for prenatal diagnosis of this 
hereditary disease. Insulin is another pharmaceutical 
product that can already be produced using biotechnology 
techniques. Such a product is presently undergoing clinical 
trials. Interferon, which is important to the body's immune 
functions and is thought to inhibit viral infections, can 
also already be produced using biotechnology techniques and 
is thought to hold great promise for such diverse results as 
a cure for the common cold and for certain kinds of cancer. 

The importance of biotechnology in the areas of agri- 
culture and forestry is enormous. Hybridization has always 
been at the forefront of progress in these areas, with 
scientists developing various strains of plants and trees 
having desirable characteristics for particular applica- 
tions. These include faster growing varieties, disease, 
pest and drought resistance, and characteristics desirable 
for the ultimate use of the product, such as straight- 
growing knot-free trees. The problem has always been that 
the creation of these plants and trees through selective 
breeding has taken many, many years because of the need to 
go through the entire growing cycle for a number of plants 
(in trees this can be 20 years or more) and then attempting 
to select out the ones with the desirable traits and repro- 
duce them again, refining the end product each time. Using 



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cloning techniques, this whole process can be shortened 
dramatically. 

In the area of pharmaceuticals and medicine, the most 
intriguing idea which the committee heard is the so called 
"magic bullet" technique of disease treatment. This in- 
volves the possibility of producing drugs which will seek 
out only those cells within the body responsible for an 
illness and deliver medication to those cells without 
affecting the rest of the body. For example, in the treat- 
ment of cancer using chemotherapy, the present techniques 
involve the administration of drugs which are poisonous to 
the cancer cells. The problem is that once placed in the 
body the drugs also affect the other, noncancerous cells in 
the body. Hence, chemotherapy becomes a balancing act of 
administering enough of the treatment to kill the cancer 
causing cells without producing so much other damage in the 
patient's body that the patient is killed by the treatment. 
This is why success rates in chemotherapy treatment are 
erratic and why people experience such harsh side effects 
while undergoing treatment. Using biotechnology innova- 
tions, the desired treating agent could be attached to cells 
which would seek out only those cells in the body affected 
by the cancer, killing those cells but not the other healthy 
ones around them. This same technique would also lend 
itself to the production of all types of vaccines, some 
already produced by other means, others still in research 
stages . 



-13- 



In the areas of pollution control and waste management, 
biotechnology should lead to creation of substances which 
can break down pollutants or waste products into harmless 
products more easily disposed of. A so-called oil eating 
bacteria which can be used to clean up oil spills has 
already been produced and patented . 

The production of chemicals will probably undergo one 
of the most important changes, although this is probably one 
of the longer range results from biotechnology research. At 
the present time, virtually all chemicals are petroleum 
based. In the future, however, it seems very likely that a 
biological, and therefore renewable, basis for chemical 
production will be developed, thus vastly reducing this 
country's, and the world's, dependence on oil. 

The committee has heard that even .such things as mining 
may some day be done with biological substances produced by 
biotechnology research. These would seek out and remove 
ores from the earth, having been developed to seek out only 
a particular mineral and separate it from other substances 
which surround it. This technique will probably never 
change the way we mine iron ore or corl, but it may very 
well change the way we seek out rare elements and precious 
metals useful to industry and science. 

Research is presently going on to develop a biological 
basis of information storage for computers. Thus, the high 
technology field of computer development is already being 
viewed as capable of undergoing a further and more 



-14- 



revolutionary change than that which was brought about by 
the development of microelectronics. 

The economic potential of all of this is so enormous as 
to be incalculable. Estimates of the value of biotechnology 
produced products by the year 2000 have ranged from 40 
billion dollars to 100 billion dollars yearly. The point to 
be remembered is that not only will we have new products and 
processes, but that the greatest economic impact will come 
because of the development of new ways of making and growing 
existing products and performing existing processes. This 
means that there will be economic development not only 
because new businesses will be developed to produce new 
products, but also because existing businesses will be 
producing or processing their products by other than their 
traditional techniques. This will mean that they, too, must 
invest in new production and processing facilities. 

The economic benefits to be realized come in the form 
of new investments by businesses and the related jobs and 
economic ripple effect from such investments, and in the 
form of direct benefits from the creation of products 
important to the economy of a given state. In the case of 
North Carolina, these direct benefits would be in the areas 
of agriculture, forestry, and pharmaceuticals, areas upon 
which the state is already greatly dependent for its econom- 
ic well being. 

Finally, if academically strong universities, public 
and private, are important to the well being of the people 



■15- 



of the state, the ability of those universities to partici- 
pate in the biotechnology revolution is a necessity, because 
biotechnology related techniques will become part of basic 
research and teaching in many scientific disciplines. It is 
a necessity our universities have already recognized and 
begun to participate in to the extent that their resources 
allow. 



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PROCEEDINGS OF THE COMMITTEE 

The Biotechnology Study Conunittee met a total of five 
times between December 1983 and May 1984. Due to the 
complex nature of the subject, and the number of people on 
the committee who needed to travel from various parts of the 
state to attend, the meetings were lengthy and the agendas 
quite full. 

The first meeting of the committee covered a full one 
and one-half days on December 14 and 15, 1983. It was 
structured to educate the study committee on the subject of 
biotechnology, and to bring at least some information to the 
committee on most of the matters the committee was mandated 
to review. 

The committee heard from the state's Commissioner of 
Agriculture and Secretary of Commerce, from high ranking 
officials of North Carolina State University and the Univer- 
sity of North Carolina at Chapel Hill, as well as from 
persons associated with businesses having an interest in 
biotechnology. The program included a panel discussion by 
representatives of each institution of higher learning in 
North Carolina with a biotechnology program. The institu- 
tions represented were Duke University, North Carolina State 
University, University of North Carolina at Chapel Hill, 
East Carolina University, Bowman Gray Medical School/Wake 
Forest University, and the University of North Carolina at 
Wilminaton. The director of the North Carolina 



-17- 



Biotechnology Center addressed the committee to review the 
state government programs related to biotechnology. He told 
the conunittee that the North Carolina Biotechnology Center 
is functioning well and leveraging its funds, the Department 
of Commerce is already promoting the state as a 
biotechnology center along with its other economic promotion 
of the state, and there is already some investment by 
private companies in our state. 

The committee also heard from a member of the 
National Institute of Health's (NIH) Recombinant Advisory 
Committee (RAC) . This is the committee which supervises and 
approves experiments which require approval under the 
guidelines. He told the committee that while the NIH 
guidelines are only applicable to federally funded research, 
they have been widely adopted on a voluntary basis by 
private companies and, thus far, neither the Congress, nor 
any ot the states, have adopted legislation to regulate in 
this area. A few local governments have passed ordinances 
which adopt the NIH guidelines as their standard. 

During the 12 hours it took to complete the agenda, the 
committee received information on each item it was requested 
to study. However, the committee was by no means ready to 
make any decisions, rather it was able to identify those 
areas which needed further study and deliberation. (At a 
subsequent meeting of the committee, on January 27, 1984, 
counsel to the committee presented a detailed summary of the 



-18- 



proceedings at the first meeting, which is included in this 
report. See Appendix E.) 

It was obvious from the presentations at the first ineeting 
of the committee that the larger companies are very much 
aware of the future impact of biotechnology and that smaller 
companies are becoming increasingly involved as well. It 
was also obvious that the academic institutions of the state 
are equally aware of the impact and are already developing 
individual biotechnology programs related to their particu- 
lar strengths and institutional interests. There are also 
two functioning vehicles for interinstitutional communica- 
tion, the North Carolina Biotechnology Center and the 
University Biotechnology Council. 

An explanation of biotechnology and a brief review of 
its general, academic and economic importance, based on 
information received at the first meeting and supplemented 
by staff research, is set out in a separate section of this 
report. (See pages 11-16.) 

The second meeting of the committee was held at the 
world headquarters of R. J. Reynolds Industries, Inc. (RJR) 
in Winston Salem, North Carolina, at the invitation of Dr. 
Roy E. Morse, a member of the study committee and the senior 
vice president for research and development at RJR. Since 
the committee had been told of the universities' needs for 
sophisticated research facilities if the state was to be at 
the forefront of technological and economic developments in 
the field of biotechnology. Dr. Morse thought it would be 



-19- 



helpful for the members of the committee to tour the recent- 
ly completed research and development facilities at RJR. 

In addition to the members of the committee and other 
interested persons attending the meeting being able to tour 
this impressive facility, the committee met formally and, 
after reviewing the ideas and concerns expressed at its 
first meeting, heard a report on activities in biotechnology 
in other states, as well as a presentation from Dr. Morse 
and members of the RJR research and development staff on how 
a large company looks at biotechnology. 

In the report on efforts in other states, the committee 
heard that there is much activity around the country to 
promote biotechnology and capitalize on its economic ef- 
fects. The approaches vary, with some being merely acknowl- 
edgements of the desire to be a part of the biotechnology 
future, while others represent specific steps being taken to 
strengthen universities and promote economic development. 
Some of these efforts involve investment of considerable 
funds by government with extensive participation by private 
industry. Implicit in the review of activities in other 
states is the fact that many states are aware of the coming 
biotechnology future and want a piece of it, but some states 
are clearly ahead of others in their efforts to capitalize 
on it. During the research for that report, it also became 
apparent that North Carolina was perceived as one of the. 
states that had already taken positive steps to promote 



-20- 



biotechnology, and thus was considered to be a strongly 
positioned competitor. 

(Shortly after this meeting, the members of the commit- 
tee received copies of a summary of a recent report pub- 
lished by the Office of Technology Assessment of the Con- 
gress of the United States entitled Commercial 
Biotechnology: An International Analysis (January 1984) . 
This report showed that there is also intense competition in 
the commercialization of biotechnology on an international 
level and, while the United States was considered to be the 
current world leader in commercial biotechnological develop- 
ment, Japan, the Federal Republic of Germany, the United 
Kingdom, Switzerland, and France all had governmentally 
supported biotechnology development programs underway which 
could make tliom major competitors of the United States in 
this area. ) 

In the discussion which followed, the committee members 
indicated that it would be most helpful for them to have a 
document before them which would pull together the different 
proposals suggested to them at their first meeting, augment- 
ed by the information on activities in other states, as the 
means to make North Carolina a leader in biotechnology and a 
recipient of the potential economic benefits. It appeared 
to the committee that the suggestions made by the various 
speakers at the first meeting were not in conflict with each 
other, but rather could form the parts of a possible compre- 
hensive approach. The committee instructed the staff to 



-21- 



prepare such a document, in consultation with representa- 
tives of the state's universities, the Governor's Science 
and Public Policy Advisor, and other appropriate individu- 
als, in time for its next meeting on February 24, 1984. 

The thrust of testimony and other information presented 
to the committee through the time of its second meeting was 
that North Carolina was in a very competitive position to 
place itself among the leaders in biotechnology and, if this 
was done, the result would be investment in the state by 
biotechnology related businesses, as well as direct benefits 
to the state in the areas where it already has a strong 
proprietary interest, such as agriculture and forestry. The 
committee had been told that, in order to achieve these 
results, the state needed to make itself a center of excel- 
lence in biotechnology. This would require a multifaceted 
plan strengthening the programs of the universities, both 
public and private, and promoting interaction between the 
universities and industry. It v/ould also require making 
certain these efforts were known worldwide. 

The committee staff took the various suggestions of the 
witnesses who had appeared before the committee and put them 
into the form of a comprehensive plan which could be accom- 
plished over a period of five years. It was felt that if 
the effort were stretched out much longer our competitive 
edge would be lost to others. This plan was prepared in the 
form of a memorandum, dated February 17, 1984, which was 
formally presented to the committee at its meeting on 



-22- 



Fobrunry 24, 1984. A copy of that memorandum is a part of 
this report. See Appendix F. 

It must be stressed that the memorandum does not 
represent the recommendations of the committee . Rather, it 
is a discussion piece around which the committee can struc- 
ture its further deliberations. As will be seen further on 
in this report, there are many questions the committee must 
answer before it could recommend any long term development 
effort in the area of biotechnology. This is why the 
committee was particularly careful to structure its short 
term recommendations in such a way that they could both fit 
into a long range plan or stand alone if it were ultimately 
determined that the state should not undertake a comprehen- 
sive long range effort in biotechnology. 

The bulk of the committee's time at its February 24, 
1984 meeting was spent in receiving this discussion piece 
and having the committee staff review it with the committee. 
Representatives of the various state universities, public 
and private, made brief comments to the committee giving 
their initial reactions to the memorandum. Many of these 
representatives supplemented their comments with written 
statements which are a part of the committee's minutes. The 
university representatives were generally supportive of the 
proposals and felt that their input in the committee's 
proceedings had been fairly and accurately represented. 

The members of the committee now turned their attention 
to what the next steps should be now that a document had 



-23- 



been prepared embodying the various proposals and ideas that 
had been presented to them. They wanted to be sure that the 
dollar estimates for implementation were reasonably accu- 
rate, that such a set of proposals would indeed result in an 
economic benefit to the people of the state, and that the 
economic benefit could be spread across the state equitably. 
To the end of answering these questions, the committee asked 
its counsel to refer the memorandum to the Legislature's 
Fiscal Research Division for its scrutiny. The committee 
also asked its staff to seek out reaction to the proposals 
from the very industries and businesses, large and small, 
the state would seek to recruit, in order to find out if 
something like these proposals would be attractive to them. 

The next meeting of the committee, on April 19, 1984, 
wns strucLurt'd to respond primarily to the conmiittee's 
specific request for information on the attractiveness of 
the proposals which had been presented to it. This was 
another eight hour agenda during which the committee heard 
from a variety of corporate executives, including people 
associated with such major companies as Burroughs Wellcome 
and E.I. duPont de Nemours, the Director of Corporate 
Development of IGEN, Inc., a biotechnology venture company 
(who was formally Manager of Advanced Technology for 
CIBA-GEIGY with responsibility for planning and implementing 
its biotechnology related commitments in agriculture) , and 
executives of North Carolina corporations with a strong 
interest in biotechnology. The committee also heard from J. 



-24- 



Tomas Hexner, a businessman who specializes in working with 
scientists in the organization and operation of for profit 
corporations, with extensive experience in organizing 
biotechnology related companies. Finally, supplementing 
those speakers, the committee heard from Dr. Laura Meagher, 
Acting Administrator of the North Carolina Biotechnology 
Center, who had undertaken a telephone survey of executives 
of other companies which included venture companies involved 
exclusively in biotechnology, major pharmaceutical and 
chemical companies with a strong interest in biotechnology, 
forestry products companies, venture capitalists, the 
investment firm E.F. Hutton, and the Industrial 
Biotechnology Association. Since the specific comments and 
criticisms of the speakers before the committee and the 
additional persons contacted by Dr. Meagher will be taken up 
in the second phase of the committee's work, described 
further on in this report, they will not be reviewed in 
detail at this point. Hov/ever, it can be stated that their 
reactions to the proposals were overwhelmingly positive. Of 
course, most of the business people reacting to proposals 
stressed that there was competition for biotechnology 
related economic development and that there were no guaran- 
tees of success for anyone. In addition, many of them 
pointed out that there are other factors which are basic to 
attracting all types of economic development, such as the 
quality of life in the state, basic "hard" infrastructure 
(transportation and utilities), a favorable tax structure, a 



■25- 



willing work force and the ability to train those workers. 
Overall, the input was optimistic on the question of the 
hiyli economic potential of biotechnology and on the ability 
of an effort such as that proposed to attract a healthy 
share of the expected commercial development. 

The committee did not wish to lose sight of the fact 
that in addition to attracting new or expanded economic 
development related to biotechnology, it had also been told 
that there could be direct benefits to some very important 
areas of North Carolina's economic life, specifically, 
agriculture and forestry. To gain more insight into the 
extent of the economic return which could be expected in 
these areas from a major investment in biotechnology re- 
search, the committee heard from Dr. A. Frank Bordeaux, 
Chief Economist of the North Carolina Department of Agricul- 
ture, v/ho was able to speak to the question of whether or 
not there would be a greater return to the state's agricul- 
ture and forestry industries from investments in research in 
the state, as opposed to those agriculture and forestry 
interests merely taking advantage of research done in other 
states. His report showed that there is a greater return on 
investment in agricultural research to the agricultural 
interests in the state where the research is done, provided, 
of course, that the research relates to products which can 
be grown in that state. Dr. Bordeaux illustrated his talk 
with tables showing rates of return on agricultural research 



-26- 



for various time periods and in various areas of the coun- 
try. They are included in this report as Appendix G. 

The committee also heard from the Legislature's Fiscal 
Research Division. The Director of the Fiscal Research 
Division stressed that the Division stood ready to assist 
the committee as it delved further into the question of 
whether or not the economic benefits to the state were 
sufficient to justify the implementation of a long range 
biotechnology development program, and how the benefits of 
such a program might be spread across the state. Regarding 
the dollar estimates for implementing the proposals, the 
Division's research indicated that the figures appeared to 
be reasonable for the items proposed. They expressed some 
reservation as to whether all the items were needed. This 
aspect of the committee's deliberations will be taken up in 
the further proceedings of the committee. 

The committee recognized that it was faced with two 
substantial questions related to whether or not there should 
be a long range development plan for biotechnology in North 
Carolina. No one questioned the pervasive impact of 
biotechnology directly on the lives of the people of the 
state, and in agriculture, forestry, pharmaceuticals and 
other areas already important to the state's economic life, 
but there was a strong desire to pursue further the question 
of whether or not the expenditure of state funds for a long 
range development program focusing on biotechnology would 
result in a sufficient economic return to justify the 



-27- 



expenditure, and whether or not that economic development 
could be spread across the entire state in a balanced way. 
The question of how to explore these factors had come up in 
previous discussions of the committee and Dr. Quentin 
Lindsay, the Governor's Science and Public Policy Advisor, 
had prepared a set of suggestions which he presented to the 
rciininittec. Basic£\lly, those suggestions embodied the 
formation ot an advisory committee to the Biotechnology 
Study Committee, composed of executives of in-state banking 
corporations and investment houses, members of the faculties 
of the business schools of some of the state's universities, 
public and private, and corporate executives of 
biotechnology companies. Their task would be to advise the 
committee on the economic value to the state of a long range 
investment in biotechnology, and, if such a strategy had 
sufficient economic value, whether the proposals before the 
committee would accomplish the purpose of attracting econom- 
ic development. To that end, the advisory committee would 
recommend any changes in the proposals it thought necessary. 
If the economic return justified such an investment by state 
government, the advisory committee would suggest to the 
study committee how it could be made in such a way that the 
economic benefit could be spread across the state. The 
discussion which followed indicated that the committee 
members looked favorably upon Dr. Lindsey ' s proposal. 

At this point, the committee discussion turned to the 
fact that, if the committee were to make any recommendation 



-28- 



to the short session of the Legislature, its time was 
running short. The committee was mindful of the fact that 
there was intense competition in other states to garner 
potential economic development from biotechnology, and that 
the universities of the state were concerned with maintain- 
ing their places in the development of biotechnology related 
programs. Also, Mr. William Veeder, a member of the commit- 
tee and a member of the Board of Directors of the North 
Carolina Technological Development Authority, which was 
created by the General Assembly during the 1983 Legislative 
Session, had brought to the attention of the committee the 
Authority's need for increased funding for its programs, 
which he felt dovetailed with the efforts of the 
Biotechnology Study Committee. Both their incubator facili- 
ties program and their Innovation Research Fund were de- 
signed to assist small business development related to 
various kinds of technology in such a way that economic 
benefits were spread across the state. The Authority's 
first call for proposals for the use of their initial 
funding had been so successful that it was obvious that the 
resources of the Authority could not meet the demand. Mr. 
Veeder pointed out that some 20 per cent of the proposals 
for innovation research grants were biotechnology related 
and that the incubator facilities program could shelter 
biotechnology related companies as well as other technology 
based businesses. 



-29- 



The committee agreed to appoint a subcommittee consist- 
ing of the cochairmen of the study committee and Senator 
Royall and Representative Huskins to formulate a proposal 
for the short session of the General Assembly, in coopera- 
tion with the Governor and the universities. The work of 
that subcommittee resulted in the recommendations contained 
in this report. 

The final meeting of the committee prior to the 1984 
Short Session of the Legislature, was held on May 15, 1984. 
The committee received the report of its subcommittee and 
adopted its recommendations. It also defined the scope of 
its work when it begins meeting after the close of the 1984 
Short Session. The section of this report which follows 
contains an outline of the additional work the committee 
will undertake at that time. 



-30- 



FUTURE ACTIVITIES OF THE COMMITTEE 
The next phase of the committee's work, which will 
culminate in its report to the 1985 Session of the General 
Assembly, will focus primarily on the question of long term 
needs necessary to make North Carolina a center of excel- 
lence in biotechnology. Several important questions must be 
answered before the committee is in a position to make its 
final recommendations. 

Given that the effect of biotechnology will be perva- 
sive, and that there is economic potential in biotechnology, 
the committee must determine whether or not the proposals 
before it (Appendix F) will attract this economic develop- 
ment to the state. If so, will it be sufficient to justify 
the cost associated with such a long term plan? If a long 
range plan is put into effect, and it does attract economic 
development, how can that economic development be spread 
across the state so that it is not concentrated in only one 
or two areas? 

Turning those questions around, the committee has also 
raised the question of what would happen if you undertook 
something less than a full scale comprehensive effort aimed 
at economic development? For example, what if you undertook 
an effort directed only at the specific, existing strengths 
in the state, such as agriculture and forestry? Finally, 
there is the question of what happens if you do nothing? 



-31- 



In order to help resolve these questions, the committee 
has decided to appoint an advisory committee, as suggested 
at Its meeting on April 19, 1984. (See pages 27-28 of this 
report.) This advisory committee will be given a reporting 
date that will allow the study committee sufficient time to 
receive its information and make decisions for the 1985 
session. 

The committee must also reach final conclusions on the 
question of whether or not the federal guidelines for 
biotechnology related research undertaken with federal funds 
are a sufficient device, or whether there should be any laws 
enacted to control research. There are presently no specif- 
ic statutes or guidelines for the actual development of 
biotechnology related products, and the committee will have 
tt) roach a conclusion on this point as well. 

The committee intends to resume its meeting schedule 
immediately after the close of the 1984 session of the 
Legislature . 



-32- 



APPENDIX A 



MEMBERS 
LEGISLATIVE RESEARCH COMMISSION 1983-84 



House Speaker Listen B. Ramsey 
Chairman 

Representative Chris S. Barker, Jr, 

Representative John T. Church 

Representative Bruce Ethridge 

Representative John J. Hunt 

Representative Margaret Tennille 



Senate President Pro Tempore 
W, Craig Lawing, Chairman 

Senator William N. Martin 

Senator Helen R. Marvin 

Senator William W. Staton 

Senator Joseph E. Thomas 

Senator Russell Walker 



MEMBERS 
BIOTECHNOLOGY STUDY COMMITTEE 



Senator William G. Hancock, Jr. 
Cochairman 

Senator Robert M. Davis, Sr. 

Senator Charles W. Hipps 

Senator Robert B. Jordan, III 

Senator Kenneth C. Royall, Jr. 

Senator William Staton 

Dr. Wendell Allen 

Dr. Roy E. Morse, Sr. 

Mr. William Veeder 



Representative Bobby R. Ethridge 
Cochairman 

Representative Sam Beam 

Representative Marie Colton 

Representative John J. Hunt 

Representative J. P. Huskins 

Mr. Charlie Carpenter 

Dr. Frank Hart 

Mr. James E. Gapinski 



Steven Rose, Committee Counsel 
Jerry Batchelor, Committee Clerk 



Dr. Laura Meagher, Acting Administrator, 

North Carolina Biotechnology Center and 

Dr. Don I. Phillips, Executive Director, 

Government/University/Industry Research Roundtable, 
National Academy of Sciences, formerly Director, 
North Carolina Biotechnology Center, served as 
technical staff to the study committee 



B 



APPENDIX B 

GENERAL ASSEMBLY OF NORTH CAROLINA 
SESSION 1983 

SENATE JOINT RESOLUTION 620* 




Sponsors; ,^ j. n i_ ■• 3 

^ Senators Hancock, Jordan. 



Ref erred_toj R ules and Operat i on of the Senate . 

June 15, 1983 

1 A JOINT RESOLUTION AUTHORIZING THE LEGISLATIVE RESEARCH 

2 COMMISSION TO STUDY THE NEEDS FOR THE DEVELOPMENT OF 

3 BIOTECHNOLOGY IN NORTH CAROLINA. 

'' Whereas, biotechnology is a new frontier of science that 

^ will lead to new products and processes worth UO billion dollars 
^ in the year 2000 and that will affect 70 percent of the GNP in 30 
^ years; and 

o 

whereas, biotechnology is already the basis for new 

q 

products in the human and animal health field and has even 
greater potential to lead to new, valuable agriculture and 

forestry products; and 

1 2 

Whereas, advances in biotechnology will be critical to 

^■^ maintaining the health and vitality of the State's traditional 

1 4 

industries - agriculture and forestry - and of many of its 

15 

developing industries - pharmaceuticals and health care - and 

1 f\ 

biotechnology also will be the basis for the development of new 

17 

small businesses; and 

18 

Whereas, a strong educational, research, financial, and 

19 . 

institutional base is necessary to attract the substantial funds 

20 



GENERAL ASSE MBLY OF NORTH CAROLINA SESSION 1983 

^ now being invested in biotechnoloqv and to nurture the 

2 development of existing industry and new small businesses; and 

3 Whereas, North Carolina has the potential to realize 
y economic benefits from advances in biotechnoloqy , but the 

5 competition is severe among the states to attract the investments 

6 and to nurture the growth in biotechnology; and 

7 Whereas, earlier concerns with the safety of 

8 biotechnology research and development have decreased 

9 substantially; 

10 Now, therefore, be it resolved by the Senate, the House of 

11 Representatives concurring: 

12 Section 1. The Legislative Research Commission shall 

13 review the basis of the projections that biotechnoloqy will have 
lU a pervasive impact on industries such as pharmaceuticals, 

15 agriculture, forestry, chemicals, pollution control, and other 

16 areas that the Commission might identify. 

17 Sec. 2. The Commission shall review the devlopment of 

18 the federal guidelines for the safe conduct of biotechnology 

19 research and development and the experiences of other states that 

20 have addressed this issue. 

21 Sec. 1. The Comnission shall review the steps being 

22 taken by other states to strengthen their education, research, 

23 financial, and institutional resources in biotechnology. 

2li Sec. U. The Coraaission shall review the current status 

25 and l.uture plans of the biotechnology programs in North 

26 Carolina's universities, the North Carolina Biotechnology Center, 

27 North Carolina companies, the Department of Commerce, and any 
28 

2 Senate Joint Resolution 620 



GENERAL ASSEMBLY OF NORTH CAROLINA SESSION ^1983 



1 other organizations concerned vith nurturinq the rlev<> lopmont of 

2 biotechnology in the State. 

3 Soc. S. The Coinmission shall determine the short-term 
U and long-term needs for North Carolina to be at the forefront of 

5 the technological and economic developments in the rapidly 

6 advancing field of biotechnology. 

7 Sec. 6. The Commission may call upon any State 

8 department or agency to provide it with information pertinent to 

9 its inquiry. In addition, the Commission may invite 

10 representatives of private industry and universities as veil as 

11 experts from other states and the federal government to offer 

12 pertinent testimony. 

13 Sec- 7. The Commission shall appoint a Committee to 
111 conduct the study outlined above. The membership of the 

15 Committee shall consist of five members of the House and five 

16 members of the Senate, two representatives of North Carolina 

17 universities with programs in biotechnology, two officials from 
13 North Carolina companies engaged in research, development, and 
1^ production in biotechnology, and two representatives from the 

20 financial community knowledgeable concerning the investment 

21 climate in biotechnology. 

22 Sec- 8. The Commission shall file a report with the 
2"^ Governor and the General Assembly no later than Hay 1, 1981. The 
?li report shall set forth the Study Commission's findings, 
2'^ conclusions, recommendations, and proposed legislation, if any. 

26 At this time, the Commission also mav request that the study be 

27 continued. 
28 

Senate Joint Eesolution 620 ? 



GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 1983 



1 Sec. 9. The Legislative Services Commission shall 

2 provide professional and other staff assistance upon the request 

3 of the Commission. The Commission may wish to seek additional 
^ staff assistance from the North Carolina Biotechnoloqy Center and 

5 the universities. In addition, up to twenty-five thousand 

6 dollars ($25,000) of the appropriations in 1983-84 and 1984-8S to 

7 the Biotechnology Center in "The New Technology Jobs Act" shall 

8 be used by the Center to support this stuc'y. 

9 Sec. 10. This resolution shall become effective July 1, 
10 1983- 

11 
12 
13 
llj 
15 
16 
17 
18 
19 
20 
21 
22 
23 

^U 
?s' 

27 

J 8 

4 Senate Joint Resolution 620 



APPENDIX C 



□ 



GENERAL ASSEMBLY OF NORTH CAROLINA 
SESSION 1983 

HOOSE JOINT RESOLOTION 1282* 




Sponsors: Representative Bob Etheridqe. 



Ref erredtoj Rules and Operation of th e Ho use. 

June ^H, 1983 

1 A JOINT RESOLOTION ROTHORIZING THE LEGISLATIVE PESEAPCH 

2 COMMISSION TO STUDY THE NEEDS FOR THE DEVELOPMENT OF 

3 BIOTECHNOLOGY IN NORTH CAROLINA. 

4 Whereas, biotechnology is a new frontier of science that 

5 will lead to new products and processes worth HO billion dollars 

6 in the year 2000 and that will affect 70 percent of the GNP in 30 
^ years; and 

8 Whereas, biotechnology is already the basis for new 

^ products in the human and animal health field and has even 
^° greater potential to lead to new, valuable agriculture and 
^^ forestry products; and 

^2 Whereas, advances in biotechnology will be critical to 

13 maintaining the health and vitality of the State's traditional 
i** industries - agriculture and forestry - and of many of its 
'^ developing industries - pharmaceuticals and health care - and 
^^ biotechnology also will be the basis for the development of new 
small businesses; and 



18 



Whereas, a strong educational, research, financial, and 



1 9 

institutional base is necessary to attract the substantial funds 

20 
21 



GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 1983 

1 now being invested in biotechnology and to nortare the 

2 development of existing industry and new small businesses; and 

3 Whereas, North Carolina has the potential to realize 
U economic benefits from advances in biotechnology, but the 

5 competition is severe among the states to attract the investments 

6 and to nurture the growth in biotechnology; and 

7 Whereas, earlier concerns with the safety of 

8 biotechnology research and development have decreased 
'^ substantially; 

10 Now, therefore, be it resolved by the House of Representatives, 

11 the Senate concurring: 

12 Section 1. The Legislative Research Commission shall 

13 review the basis of the projections that biotechnology will have 
Ih a pervasive impact on industries such as pharmaceuticals, 
1$ agriculture, forestry, chemicals, pollution control, and other 

16 areas that the Commission might identify. 

17 Sec. 2- The Commission shall review the devlopment of 

18 the federal guidelines for the safe conduct of biotechnology 

19 research and development and the experiences of other states that 

20 have addressed this issue. 

21 Sec- 3. The Commission shall review the steps being 

22 taken by other states to strengthen their education, research, 

23 financial, and institutional resources in biotechnology. 

2i4 Sec. a. The Commission shall review the current status 

25 and future plans of the biotechnology programs in North 

26 Carolina's universities, the North Carolina Biotechnology Center, 
lI North Carolina companies, the Department of Commerce, and any 
28 

2 House Joint Resolution 1282 



GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 198 3 

1 other organizations concerned with nurturinq thp (development of 

2 biotechnology in the State. 

3 Sec- 5. The Commission shall determine the short-teini 
h and long-term needs for North Carolina to be at the forefront of 

5 the technological and economic developments in the rapidly 

6 advancing field of biotechnology. 

7 Sec. 6. The Commission may call apon any Statf 

8 department or agency to provide it witii information pertinent to 

9 its inquiry. In addition, the Commission may invite 

10 representatives of private industry and universities as well a;: 

11 experts from other states and the federal government to offer 

12 pertinent testimony, 

13 Sec. 7. The Commission shall appoint a Committee to 
III conduct the study outlined above. The membership of the 

15 Committee shall consist of five members of the House and five 

16 members of the Senate, two representatives of North Carolina 

17 universities with programs in biotechnology, two officials from 

18 North Carolina companies engaged in research, development, and 
I'' production in biotechnology, and two representatives from the 

20 financial community knowledgeable concerning the investment 

21 climate in biotechnology. 

22 Sec. 8. The Commission shall file a report with the 

23 Governor and the General Assembly no later than Hay 1, 1P8U. The 
2ii report shall set forth the Study Commission's findings, 
25 conclusions, recommendations, and proposed legislation, if any. 
2b At this time, the Commission also may request that the study be 
•^ f continued. 



House Joint Resolution 1282 



GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 1983 

1 Sec. 9. The Legislative Services Commission shall 

2 provide professional and other staff assistance upon the request 

3 of the Commission. The Commission may wish to seek additional 
U staff assistance from the North Carolina Biotechnology Center and 

5 the universities. In addition, up to twenty-five thousand 

6 dollars {$2S,000) of the appropriations in 1983-8a and 19Ra-R5 to 

7 the Biotechnology Center in "The New Technology Jobs Act" shall 

8 be used by the Center to support this study. 

9 Sec. 10. This resolution shall become effective July 1, 
10 1983. 

11 
12 
13 

la 

15 
16 
17 
18 
19 
20 
21 
22 
23 
2h 
25 
2b 
.•'/ 
28 

*♦ House Joint Resolution 128? 



APPENDIX D 



GENERAL ASSEMBLY OF NORTH CAROLINA 
SESSION 1983 

RATIFIED BILL 



CHAPTER 899 
HODSE BILL 1122 
Ih ACT TO CREATE THE NEW TECHNOLOGY JOBS ACT. 

Whereas, uneaployaent rates vary considerably from one 
region of the State to the next; and 

Whereas, the creation of sore and better job 
opportunities for North Carolinians at all age and skill levels 
in all regions of the State are a top priority in relation to 
balanced growth considerations; and 

Whereas, snail businesses of all kinds, including but 
not lifflited to agriculture, aquaculture and forestry enterprises, 
are the primary sources of employsent throughout the State and 
they are likely to reaain the primary sources of enployment in 
the future; and 

Whereas, biotechnology is a new frontier of science that 
is already the basis for new products and businesses in the huaan 
and aniaal health field and has even greater potential to lead to 
new, valuable agriculture and forestry products; and 

Whereas, in recognition of the iaportance of 
biotechnology to the industrial base of the State, the North 
Carolina Board of Science and Technology established the North 
Carolina Biotechnology Center to pursue opportunities in 
biotechnology research, education, and business developaent 
special benefit to the State; and 

Whereas, the Biotechnology Center has docuaented that it 
can leverage its State funds with at least an equal additional 
aaount froa non-State sources and that it can contribute to the 
development of new and existing businesses and research 
opportunities; and 

Whereas, scientific and technical advances in general 
flowing from research and acadeaic institutions can be applied to 
the development of existing and new saall businesses throughout 
the State; and 

Whereas, principal growth iu employment has come froa 
the introduction of new technology; and 

Whereas, adequate capital and affordable space for the 
research activities of existing and new saall businesses are key 
ingredients to the development of new and existing small 
businesses; and 

Whereas, partnerships between State and local 

government, financial institutions, business, labor, and research 
and academic institutions provide the most effective aeans for 
utilizing technological resources to create new iobs throughout 
the State; Now, therefore. 
The General Assembly of North Carolina enacts: 

Section 1. G.S. 1438-433 is amended by inserting a new 
subsection to read: 

" (22) The North Carolina Technological Development 

Authority,". 



Sec. 2. irticle 10 of Chapter 1U3B of the General 
Statutes is amended by addinq a new Part to read; 

"Part 12. North Carolina Technoloqical 
Development Authority. 

"§ 1 43 8- 471. C reatio n of Author! tj. — There is hereby created 
the North Carolina Technoloqical Development Authority, to 
increase the rate at which new jobs are created in all reqions of 
the State, by stinulatinq the development of existinq and new 
small businesses. The Authority shall be administratively 
located within the Department of Commerce, but shall exercise its 
powers independently of the head of that department, as if it had 
been transferred to the Department of Commerce by a Type II 
transfer as defined in G. S. m3&-6(b)- 

"§ 143B-471.1. C omposition of Author ity* — (a) The Authority 
shall be governed by a board composed of 12 members, eiqht of 
whom shall be appointed by the Governor, two of whom shall be 
appointed by the General Assembly upon the recommendation of the 
President of the Senate under G.S. 120-121, and two of whom shall 
be appointed by the General Assembly upon the recommendation of 
the Speaker of the House of Representatives in accordance with 
G.S. 120-12 1. Consideration should be given to the appointment 
of persons, including minorities and females, with technical 
expertise as well as experience in entrepreneurial business 
development and capital formation. 

(b) Members shall serve four-year terms effective July 1, 
1983, and quadrennially thereafter, except that the two members 
appointed by the General Assembly upon the recommendation of the 
Speaker of the House of Representatives shall serve for two-year 
terms effective July 1, 1983, and biennially thereafter. No 
person appointed to a four-year term shall serve more than two 
consecutive terms. 

(c) Vacancies shall be filled by the Governor to serve the 
remainder of the unexpired term, except that vacancies in 
appointments made by the General Assembly shall be filled in 
accordance with G.S. 120-122. 

"§ 143B-471.2. O ffi cers; meetings .-- (a) The Governor shall 
appoint from the members of the Authority a chairman. The 
Authority shall elect from amonq its members a Vice-chairman and 
shall elect a secretary. 

(b) The Authority shall meet at the call of the Chairman, upon 
the written call of the majority of its members or upon 
resolution of the Authority- 

(c) A quorum shall consist of seven members of the Authority. 
"§ 143B-U71.3. C ompensation . — Members of the Authority shall 

receive per diem and necessary travel and subsistence expense in 
accordance with G.S. 138-5. 

"* 143B-47 1.3A. Powers. — In order to enable it to carry out 
the purposes of this Part, the Authority may: 

(1) Exercise the powers granted corporations under G.S. 55-17; 

(2) Employ an Executive Director, whose salary shall be set by 
the Governor and the Authority, after consultation with the 
Advisory Budget Commission. The Authority may employ such other 
professional staff and clerical and secretarial staff as it deems 
necessary within the funds available to it. The salaries of such 
other personnel shall be set under the State Personnel Act; 

2 House Bill 1122 



(3) Establish an office for the transaction of its business at 
Raleigh ; 

(4) Apply for and accept grants of money from the State of 
North Carolina, or any political subdivision thereof, froa the 
United States, or froB any person, corporation', foundation, 
trust, or business or froa any foreign government for any of the 
purposes authorized by this Part; 

(5) Establish and administer the incubator facilities program; 

(6) Administer the North Carolina Innovation Research Fund; 
and 

(7) Adopt reasonable rules to effectuate the purposes of this 
Part- 

"§ 14 3B-47 1.4. Incubator facilities program . — (a) The 

Authority shall establish one or more incubator facilities within 
the State- An incubator facility is a building or buildings that 
provides space and support services for small businesses concerns 
which are beginning. 'Small business concern* has the same 
meaning as that contained in Chapter 14i of Title 15, Onited 
States Code, and regulations promulgated under it. 

(b) The Authority shall select sites for incubator facilities. 
The Authority in selecting sites shall evaluate areas for 
potential sites using the following criteria but is not limited 
to them: 

(1) the unemployment rate, 

(2) the need for industrial and economic 
diversification and development, 

(3) the interest by the locality in the establishment 
of an incubator facility in the area as manifested 
by grants from public and private sources and 
cooperation agreements between local government, 
business, labor and educational institutions 
demonstrating the probability of the success of the 
incubator facility, 

(c) The Authority may make one-time grants to establish 
incubator facilities. A grant may not exceed two hundred 
thousand dollars ($200,000). Local government and interests must 
at least egual in cash or real estate value any grant made by the 
Authority; provided, however, that contributions by State 
agencies may not be included in the matching grant. 

(d) Only nonprofit corporations which are affiliated with 
local universities, colleges, community colleges or technical 
institutes or combinations thereof to advance the educational and 
research programs of these institutions shall be eligible to 
receive a grant from the Authority. Pursuant to rules adopted by 
the Authority, the corporation shall: 

(1) manage and maintain the incubator facility, 

(2) develop a mechanism to provide technical, 
management and entrepreneurial expertise to 
resident small business concerns and to small 
business concerns throughout the area, and 

(3) abide by rules adopted by the Authority. 

(e) The incubator facility and any improvements shall be owned 
by the State but may be leased to the corporation. Small 
business concern residents of the facility may be provided 
secretarial and other support facilities and utilities for which 



House Bill 1122 



the corporation may charge them a part or all of the cost. No 
small business concern may renain in the facility for more than 
two years- Notwithstanding any other provision of law, the State 
shall not be liable for any act or failure to act of any 
organization granted funds under this Part, or any small business 
concern benefiting from the incubator facilities program. 

"§ 1438-471.5. North C arolina Innovation B esearch Fund. — (a) 
The North Carolina Innovation Research Fund is hereby created to 
provide equity financing for the research activities of new and 
existing small business concerns in veirious regions of the State, 
including agriculture, aquaculture and forestry enterprises. 
This financing is designed to enable small business concerns to 
acquire technical and management assistance and otherwise to 
conduct research leading to new or improved product or service 
development . 

(b) The Fund will take an equity position in contracting 
concerns through the purchase of stock, the receipt of royalties, 
or other equity instruments. 

(c) The Fund will consist of appropriations from the State; 
monies derived from federal, local governments and private 
grants; receipt of royalties and sale of equities- 

(d) Awards per research project shall not exceed fifty 
thousand dollars ($50,000) per fiscal year. Awards will be 
limited to concerns physically located in North Carolina, but the 
awards shall not be limited to incubator-affiliated projects- 

(e) To protect its investments, the Authority shall make 
development agreements with contracting concerns, to ensure 
proper use of Fund awards and the receipt of royalties, where 
appropriate. Development agreements shall assign all rights to 
abandoned projects to the Authority. 

(f) Any funds received through the receipt of royalties, 
dividends, or the sale of equity instruments shall be deposited 
in the Fund and are available to the Authority for use under this 
Part. " 

Sec. 3- G.S. 120-123 is amended by adding a new 
subdivision to read: 

" (6a) The North Carolina Technological Development Authority 
as created by G.S- 143B-471." 

Sec. 4. Of the funds appropriated from the General Fund 
to the Department of Commerce in Section 2 of Chapter 761 of the 
1983 Session Laws, for fiscal year 1983-84 the sua of five 
hundred thousand dollars ($500,000) and for fiscal year 1984-85 
the sura of five hundred fifty thousand dollars ($550,000) is 
designated for the purposes of the North Carolina Technological 
Development Authority. Of the funds so appropriated for fiscal 
year 1983-84, the sub of two hundred twenty-five thousand dollars 
($225,000) is available only for the North Carolina Innovation 
Research Fund, the sum of two hundred thousand dollars ($200,000) 
is available only for grants to incubator facilities, and the sum 
of seventy-five thousand dollars ($75,000) is available only for 
the operation of the Technological Development Authority. Of the 
funds appropriated for fiscal year 1984-85, the sum of two 
hundred fifty thousand dollars ($250,000) is available only for 
the North Carolina Innovation Research Fund, the sum of two 
hundred thousand dollars ($200,000) is available only for grants 



House Bill 1122 



Tf^chnolo.7ical DevelopniGnt Authority. operation of the 

i-^ ^-K^ n ''^*''^: ^'\ °c ^^^ ^'^"'^'' appiopti.itcd from the General Punrl 
iqfl^ %^^r ""?' ^^ Commerce in Section 2 of Chapter 761 of tSe 
^TnLJ, r. ^^*'^' J""' ^^^""^ ^^^^ ^^«3-84 the sum of four 

year 19ir85'"t;r ''°"''S' J^"-'"'" <*'^^^'^^°' ^'^^ f°- fi-'l 
^Sa^O ITn^ fl / r. 2^ ^^^'^ hundred ninety thousand dollars 

($490 000) xs designated for the purposes of the Biotechnoloqy 
Center provided that funds for fiscal year 1984-85 shall not 21 
K f"! .ll^''^^'^*^^ Biotechnology Center has raised at leas^five 
hundred thousand dollars ($500,000) in non-State funds during the 
period beginning with the date of ratification of this acJ and 
ending on June 30, 1984; provided further t ha? these 

for"5?8's!fl7°"'i''"\\°"'- '""""'" P^^* '' ^^^ continuation budget 
for 1985-87 unless the Biotechnology Center has raised a total of 
one million dollars ($1,000,000) in non-State funds by D^c^mb^r 

* 4-v, r^ ^^^' ^' °^ ^^^ funds appropriated from the General Fund 
1?83 se^''''"^' °^^°'»'"^'^-^ in section 2 of Chapter ^e^of tit 
in fiscS'y^L ireUf ITa ^W'^^-^^ ^^ — "^ 'dollars ($15,OoSr 
f$10 onm fn ^ \ -^^ ^"'' ""^ *^^° thousand dollars 

($10,300) in fiscal year 1984-85 is transferred t r. thl 

Legislative Research Commission to conduct a study of the field 
of biotecnnology. j-ieia 

Sec 7. This act is effective upon ratification. 

fhi. 4->,o oi .5^ General Assembly read three times and ratified, 
this the 21st day of July, 1983. i-aui.j.i«u. 



JAMES_C^GREEN 

James C. Green 
President of the Senate 



LISTON B RAMSEY 



Liston B. Ramsey 

Speaker of the House of Representatives 



House Bill 1122 



APPENDIX E 

STATE OF NORTH CAROLINA 
LEGISLATIVE RESEARCH COMMISSION 

STATE LEGISLATIVL BUILDING 

RALEIGH 27611 




January 27, 1984 



MEMORANDUM 

TO: Members of the Biotechnology Study Committee 
FROM: Steven Rose, Committee Counseli^ 
RE: Summary of ideas and concerns expressed at meeting of 
December 14 and 15, 1983 



Introduction 



The first meeting was structured to educate the study 
committee on the subject of biotechnology. The speakers 
explained what it is, talked about the potential for the 
future, and were given an opportunity to express initial ideas 
and concerns on the subject to the committee. Although the 
meeting was lengthy and covered a wide range of ideas, it was, 
nevertheless, an overview and it is expected that some aspects 
of what was heard by the committee will be earmarked for 
further study. It is the purpose of this memorandum to pull 
these ideas and concerns together in order to assist the 
committee in determining what it wants to look at in depth. 



What Is motechnolugy ? 

Biotechnology is not a new or separate scientific disci- 
pline. One way of looking at biotechnology is that it is a 
collection of new techniques, which make possible novel exten- 
sions and combinations of existing scientific disciplines, 
centering on biology, and new industrial applications. The 
understanding of the structure of DNA, combined with the 
ability to manipulate genes and to reproduce the results of 
that manipulation, is what biotechnology is all about. These 
new techniques will revolutionize many sciences and manufactur- 
ing processes and will have a pervasive effect on everyone's 
life in the very near future. 

Biotechnology will affect the areas of food production and 
processing (plants and animals, on land and in the water), 
marine biology, forestry, fiber, medicine, chemicals, mining, 
pollution control and waste management. A few examples which 
were given at the meeting will suffice to show the revolution- 
ary aspects of the changes that will be coming. For instance, 
virtually all chemicals are presently petroleum based. 
Biotechnology will change the way chemicals are produced in the 
future so that many will no longer be petroleum based. A 
biological basis for chemical production will vastly reduce 
this country's, and the world's, dependence on oil. In the 
area of food plant production, there will be a shift away from 
chemicals to control pests and disease. Eventually, resistant 
strains will be quickly identified and will be reproduced 
using cloning techniques. In medicine, the committee heard 



about the "magic bullet" technique of treatment. This ability 
to identify those cells which are responsible for an illness 
and create treatments which will seek out and treat only those 
cells holds the promise for cures for many forms of cancer, as 
well as other diseases. 

There were many other examples of such things to come 
given over the course of the two day meeting. The point was 
that changes are coming, and the future will be here sooner 
than we might think. These changes hold the prospect of affect- 
ing the lives of everyone in the world. 

In the area of safety and control of biotechnology re- 
search, the initiative was originally taken by the scientific 
community itself and resulted in comprehensive National Insti- 
tute of Health guidelines on recombinant DNA research. These 
include provisions for individual approval of certain kinds of 
experiments. Although they are only applicable to federally 
funded projects, they are generally accepted as policy models 
by private concerns and by other countries. A few states and 
local governments around the country have adopted the NIH 
guidelines as law, allowing them to exercise control over the 
private sector. 

The Economic Potential of Biotechnology for North Carolina 
It was obvious from the presentations that the big com- 
panies are very much aware of the future impact of biotech- 
nology, especially those whose businesses will be changed by 
it, such as chemical companies. Small companies are becoming 
increasingly involved, as well. It was also obvious that the 



academic institutions of the state are very much aware of the 
impact and are already well on their way in terms of being 
substantially involved in biotechnology. 

The fact that biotechnology based sciences will have such 
a pervasive influence on our lives, means there is high 
economic potential to be exploited. But some geographic areas 
will benefit more from it in terms of increased jobs and plant 
investment than others. 

One of the charges of this committee is to determine how 
this economic benefit can be brought to North Carolina. One of 
our speakers, Dr. Stuart Bondurant, Dean of the Medical School 
at UNC-CH, said that in order to attract the biotechnology 
related companies to our state, it is important that we rate an 
"A" grade as a biotechnology center. Presently, he rated North 
Carolina as a strong "B." However, according to Dr. Bondurant, 
there are presently only two centers for biotechnology in the 
country that rate an "A," those being the San Francisco - Palo 
Alto area and the Boston area. So there is still time for 
North Carolina to achieve that higher grade. Just what do 
these companies look for in choosing a location, or putting it 
another way, how can we earn that "A" grade? 

Various speakers indicated that the following were factors 
which would influence companies to locate in North Carolina: 

1. Excellent universities, public and private. 

2. Accessibility to industry of the university research 
bases. 



3. A demonstrated interest in biotechnology by the state 
government. 

4. The existence of a facility like the Research 
Triangle Park. 

5. The presence of other biotechnology firms (the 
magnet effect) . 

6. A productive labor pool willing to be trained. 

7. Available skills training. 

North Carolina has a head start over most other states in 
all of these areas. However, there are stirrings in this field 
all over the world. So one question becomes, how can we 
capitalize on what we already have, thereby maintaining this 
head start? 

Specific Points and Concerns. 
The following is a list of specific points, needs, and 
concerns raised by the speakers. Some were raised by only one 
speaker, while others were repeated many times. 

I , University related institutional needs. 

A. Strong and continuing financial support for basic 

research. (Researchers must be able to depend 
on long-term financial support for long-term 
research projects.) 

B. More research space. 

C. Proper research equipment. 

D. Legislature needs to be attentive to requests for 

money related to biotechnology research. 

E. Expansion of the "small grants program" to 



support innovative but high risk research. 

F. Redirection of some traditional research areas. 

G. Facilitation of multi-disciplinary research. 
H. Encouragement of cooperation between academic 

institutions . 

II . University "people" concerns. 

A. The need to attract world class researchers. 

B. Stopping the "brain drain" of scientists and 

technicians from the universities. 

C. The need for great teachers to train those 

researchers and technicians who will work in 
biotechnology. 

D. Providing money for better salaries to help 

accomplish the preceding three. 

E. Creating an environment which supports and 

encourages people to get their ideas into actual 
production. 

III . Relationships with industry. 

(Virtually all of the items under this section deal 
with public institutions.) 

A. Possible changes in patent and licensing 

arrangements between universities and industry. 

B. Exploration of royalty arrangements between 

universities and industry. 

C. Incentives for individual researchers, such as 

royalties, consulting opportunities, or other 
monetary relationships with industry. 



IV. other university related points. 

A. Do we need new programs or a way to facilitate 

the blending of existing programs? 

B. Stipends and other support for graduate students. 

C. Exploration of state restrictions on salary 

enhancement. 

D. Ear-marking of biotechnology related funds by the 

legislature . 

E. Inclusion of the private institutions in the 

state's biotechnology efforts. 

V. Public schools and community colleges. 

A. Create biotechnology literacy for the general 

public. 

B. Provide good teachers and proper equipment to 

train those who will be the workers in biotech- 
nology related industries. 

C. Insure that those teachers remain in the public 

school and community college systems and are not 
drained away to industry. 

D. Begin the educational focus on biotechnology in 

the junior high schools. 

VI . Private sector development. 

A. Find people for jobs already here. 

B. Providing research and other support facilities 

for industry. (Some of these may be of the 
incubator type, but some of these may interface 
with existing and larger corporations.) 



C. Seed money for start-up capital. 

D. Insuring that North Carolina is perceived as a 

biotechnology center. 

E. Explore creating a structure similar to the 

Microelectronics Center. 
VII . Safety and control. 

A. Should the State regulate the safety and control 

aspects of biotechnology research and 
production? 

B. If so, what should those controls be? 
VIII. Miscellaneous points. 

A. What will the effect of biotechnology be on the 

family farm? 

B. How can we encourage cooperation between state 

government resources, academia and industry? 

C. How can we facilitate the movement from research 

to actual application? 

D. What might the future structure and direction of 

the Biotechnology Center or the Technology 
Development Authority be? 

E. How might other state agencies promote 

development of North Carolina as a biotechnology 
center? 

The Role of the Legislature 
One observation which must be made is that while many of 
the items listed above might be influenced by legislative 



action, many cannot. It is important that the committee keep 
sight of this as it defines what its work will be. 



APPENDIX F 
STATE OF NORTH CAROLINA 
LEGISLATIVE RESEARCH COMMISSIDN 

STATE LEGISLATIVE BUILDING 

RALEIGH 27611 




February 17, 1984 



MEMORANDUM 

TO: Members of the Biotechnology Study Committee 

FROM: Steven Rose and Laura Meagher 

RE: Staff Proposals For A Comprehensive Approach to the Development of 

Biotechnology in North Carolina 



These staff proposals are prepared in response to the request of the 
Legislative Study Committee on Biotechnology on January 27, 1984, for an initial 
overview of an initiative that might be taken by North Carolina if it is to 
achieve "A" status nationwide in biotechnology. The plan outlined here was 
prepared in light of informal input from Frank Armstrong, North Carolina State 
University; Marshall Edgell , University of North Carolina at Chapel Hill; 
Quentin Lindsey, Office of the Governor; Don Phillips, formerly North Carolina 
Biotechnology Center; individuals from Duke University administration, and other 
individuals and institutions. As a draft, it is intended to reflect in a 
preliminary fashion many of the concerns expressed by various individuals, 
institutions, and organizations; but it is not yet in any sense a "formally" 
approved document and modifications would therefore be expected. It is hoped, 
however, that this document will respond to the Committee's request by providing 
a framework with which to envision viable possibilities for a comprehensive 
approach to the development of biotechnology in North Carolina. 



- 2 - 



RATIONALE 



A. Introduction 

North Carolina has been called a "Solid B" in biotechnology; at this moment 
it enjoys a headstart among states seeking to develop their biotechnology cap- 
abilities in strategies for economic development. North Carolina's present 
status rests upon investments already made by the state in its universities, the 
North Carolina Biotechnology Center, and its relationships with industry in the 
Research Triangle Park and elsewhere. In order that these investments be 
utilized to their maximum potential, particularly in light of the immense 
promise of biotechnology, the Legislative Study Committee has asked for an 
outline of possible steps which the state might take to move from a B to an A. 
This draft document has been prepared to provide one possible comprehensive view 
of additional resources needed to move the state ahead to that leadership 
position. 

Biotechnology itself is so multi-faceted, and North Carolina's capabilities 
so multi-dimensional , that choosing the best fomi to be taken by this additional 
effort is a complicated endeavor. For this reason, at this point in the delibe- 
rative process, it seems appropriate to make very clear the nature of this docu- 
ment, what it is and what it is not. It is not a final, formal document which 
has gone through official channels of approval. Instead, it is a draft which 
represents an attempt to synthesize in a preliminary fashion input and concerns 
from public and private universities, the private sector, and state government. 
Al thought it is hoped that this document is in fact reflective of varied needs, 
it is equally expected that several iterations of revision will take place. At 



- 3 



present, in short, this draft is a "talking piece". The aim of this document is 
three-fold (1) To present in one document an overall sense of the necessarily 
comprehensive nature of a statewide biotechnology effort; (2) To provide 
information on a framework of resources that may be needed to move North 
Carolina to an "A" in biotechnology; (3) To present an overview of possible 
steps to be taken, along with order of magnitude costs, over the next five 
years. 

In this draft, a brief overview of very broad, general goals will be fol- 
lowed by an outline of more specific, attainable objectives which will address 
those goals, and then by an outline of resources needed to meet those objec- 
tives. The draft will conclude with an outline of specific needs , over the next 
five years, that the Legislature may wish to consider in its deliberations. The 
intent is to move progressively from overall goals through a coordinated 
framework of concerns to practical steps which can be taken to further those 
goals. Again, possiblities put forward here are suggestions only, yet is hoped 
that, at the least, these suggestions will serve to highlight the sorts of 
decisions that need to be made in the near future if North Carolina is to become 
an internationally recognized leader in biotechnology. 

B. Goals 

1. Industrial development in North Carolina 

Clearly, a broad overarching goal for any state initiative is the 
improvement of life in North Carolina, and one key to this is a healthy economy. 
Industrial development in biotechnology could, over time, contribute 
significantly to the economic growth of North Carolina. This development could 



4 - 



take the form of the location in the state of research and development and/or 
production facilities of established national firms, as well as of the emergence 
of small, entrepreneurial company activity in biotechnology. North Carolina has 
already embarked upon a route of seeking industrial development. First, the 
existence of the Research Triangle Park demonstrates an openness to industry- 
university interactions. Individual universities have reexamined patent, 
consulting, and technology transfer policies, or are in the process of doing so. 
The state's highly visible and significant investment in the Microelectronics 
Center of North Carolina and to a lesser degree, the North Carolina Biotech- 
nology Center, have signalled a commitment in high technology to the national 
private sector. In addition, experimental efforts are now emerging which are 
directed toward the encouragement of entrepreneurial activity. The Technology 
Development Authority established by the Legislature in 1983 is a prime example 
of this sort of effort. 

The impact of biotechnology is already being felt in a variety of 
industries, and the economic implications for the future are profound. Both 
through its research community and through industrial development. North 
Carolina has or could have an opportunity to address some further fundamental, 
far-reaching goals through biotechnology. Participation in achieving these 
goals can earn North Carolina a leadership role. 

2. Improved livestock, crop, tree and aquaculture production . 

These are goals of obvious relevance to a state as active in, and 
dependent upon, these areas as is North Carolina. 

3. Improved health through medicine and pharmaceuticals . 
Documentation is already emerging for the ability of biotechnology to 

improve, sometimes "miraculously", present capabilities in medicine and 



5 - 



phamaceutical . Whether through "magic bullets" of medication, diagnostic kits 
or increased understanding of the genetic basis of diseases, biotechnology plays 
a role in this established area of emphasis in North Carolina. Obviously, 
improved medical capabilities leads to improved quality of life for North 
Carolina. Several other long-range goals of universal interest have roles still 
open for North Carolina to play. 

4. Production of useful chemicals . 

The improvement of the capabilities of the various chemical 
industries, for instance, could lead to decreased dependence on petroleum. 
Biotechnology could have a significant impact in terms of feedstock production, 
fermentation processes, enzyme-based processes, and synthesis of new materials. 

5. Protection of the environment . 

Effective use of renewable resources, including biomass, could apply 
biotechnology to energy production as well as to waste treatment and utilization 
and detoxification of poisonous wastes. 

6. Marriage of biotechnology and microelectronics . 

The merging of biotechnology with microelectronics in the future 
production of sensors and "biochips" is a long-range goal currently receiving 
much attention worldwide. North Carolina has an unusual combination of 
capabilities in these two areas to be merged. 

7. New frontiers in basic research . 

Finally, perhaps the single most far-reaching goal is improved 
capabilities in basic research. If key areas of biology, such as molecular 
genetics, gene regulation, cell differentiation and development, and so on are 
actively pursued, their potential is unpredictable, but may be revolutionary in 



scope. The most unexpected areas of "pure" research may lead to discoveries of 
commercial relevance. After all, biotechnology with all its vast industrial 
impact, springs from findings of the n»st basic of research. North Carolina has 
already invested heavily in high quality education and research universities; 
the complementary strengths of its various public and private institutions give 
it a unique breadth of capabilities. This unusual breadth can serve the state 
well in its efforts to attract high technology industrial development and the 
investment can be returned many-fold. 

These goals are broad and far-reaching ones. As such, they demand multi- 
faceted, interwoven strategies for their attainment. Not only must conceptual 
breakthroughs be achieved, at the lab bench, for instance, but also, the new 
ideas and techniques must be moved along out into the realm of practical 
development. Industry--whether in the fom of established companies or of 
entrepreneurial start-up companies--must be able to pick up and move with these 
new ideas and techniques. Appropriate financing, often venture capital, must be 
available in the early stages of development. Widespread perception of North 
Carolina as a center for biotechnology activity is likely to draw additional 
resources to each stage of the process, whether through recruitment of top 
quality research faculty, or attraction of financial investment. After all, 
existing "A" areas in biotechnology have developed in areas adjacent to multiple 
universities of national repute, and have involved facu'ity from those univer- 
sities in significant entrepreneurial activity. 

What is critical to remember is that no one element can stand alone; all 
must be closely interwoven for the necessary synergistic effect to occur. 
Linkages are vital. These may take the form of linkages across scientific 



- 7 - 



disciplines, because biotechnology is opening up questions that require a 
variety of perspectives and expertise. Connections between research and 
commercial development are equally necessary. There must be some degree of 
accessibility at which the universities operate, such that results of basic 
research can be transformed into commrcial products and processes. At the same 
time, the private sector bears responsibilities of its own in what must, if it 
is to succeed, be a two-way partnership. Seed, start up and venture capital, 
and other forms of financing, must be linked to appropriate efforts. In short, 
any successful statewide effort in biotechnology must be comprehensive; the 
establishment of not only strong individual "components" of a biotechnology 
strategy, but also an open yet helpful network among the components could make 
North Carolina unique. 

The above-mentioned are large-scale, fundamental goals. They constitute 
the overall context or rationale for involvement by the state in biotechnology, 
and are thus important to bear in mind. These broad goals can, however, be 
distilled into more specific, more attainable "objectives", which may be more 
useful as foci in this action-oriented document. 



- 8 - 



II. OBJECTIVES TO BE MET IF NORTH CAROLINA 

IS TO BE TRANSFORMED INTO A LEADERSHIP ROLE 



Introduction 

A substantive North Carolina initiative in biotechnology can be seen as 
addressing three primary objectives: (1) new agricultural, biomedical, and 
industrial development and investment in North Carolina, (2) creation of new 
knowledge and techniques (education and research), and (3) enhancement of North 
Carolina's image as a national leader in biotechnology. 

These objectives are not, of course, completely separable from each other, 
nor should they be. The extent to which each objective is met can only serve to 
strengthen the response to the others. For example, research conducted at the 
frontiers of one field within biotechnology could so enhance North Carolina's 
image as to attract the establishment in the state of an industrial facility 
involved in the practical application of that field. In turn, this facility 
might give rise to a spin-off entrepreneurial company in yet another field of 
biotechnology, perhaps directly or perhaps only tangentially related to the 
original research. The highly visible presence of this sort of activity could 
encourage other companies to become established in North Carolina (the "snowball 
effect"). Those canpanies might themselves hire consultants in North Carolina 
universities or participate in University/NCBC/Industry collaborative research 
centers, and thus the interweaving could progress indefinitely. 
A. Objective 1: New Agricultural, Biomedical and Industrial Development and 

Investment 

New industrial development and investment in the state can take several 
forms: (1) Established firms may choose to locate biotechnology research 



- 9 



facilities and/or production facilities in the state. Substantial research 
facilities, such as those of CIBA-GEIGY, may in some cases come first, attracted 
to the high quality of university research capabilities in the state. Later, as 
biotechnology matures and industrial applications become realities, production 
facilities may be located in the same state as the research facilities, although 
not necessarily in the same city. (2) Small to medium-sized companies may 
incorporate biotechnology into their business plans if they can perceive both 
advantages to biotechnology in general and ready access to biotechnology 
capabilities. (3) Finally, if university scientists and engineers operate in 
the midst of a supportive infrastructure, they tnay themselves initiate small 
entrepreneurial companies. Venture capital investment could thus become an 
increasingly vital element of the overall North Carolina picture. 

B. Objective 2: Creation of New Knowledge and Techniques Which Will Lead to 

Developments in All Fields . 

North Carolina could build upon its already existing excellence in research 
to become a leader in biotechnology. The University research strength needs to 
be equivalent to the very best already present in existing centers (i.e. Boston, 
and the Palo Alto, California areas.) Multiple university-centers of strength 
have been the major foci of biotechnology to date. Importantly, each of North 
Carolina's primary research universities — public and private--has particular 
strengths; taken as a total, the university research strength could be unmatch- 
ed in the U. S. Such complementarity is particularly important when research 
problems are as interdisciplinary as they are in biotechnology. To the extent 
that collaborative efforts actually take place and a true community grows, the 



- 10 



total force of biotechnology in North Carolina could be significantly more than 
the sum of its parts. This is one "edge" over other states, that North Carolina 
currently possesses and could deliberately develop. The spectrum of training 
capabilities present in the state already makes possible biotechnology education 
at the undergraduate, masters, and doctoral level. The Community College System 
is currently investigating the feasibility of offering biotechnology training, 
providing skilled labor at yet another level. 

C. Objective 3: Enhancement of North Carolina's Position as a Home for 

Biotechnology Enterprise 

North Carolina's national image can be enhanced simultaneously on several 
levels. If North Carolina becomes highly visible at the forefront of research 
in several biotechnology-related fields, this will demonstrate quite clearly the 
essential credibility of a state initiative. A leadership role in training at 
several levels should be demonstrated not only by educational institutions but 
also by industrial firms. If North Carolina can prove sufficiently attractive 
to cause several established firms to set up research and development or produc- 
tion facilities here, each firm will add to the state's national image as a 
natural home for biotechnology industry. Similarly, each reasonably successful 
start-up company can demonstrate a climate conducive to entrepreneurial acti- 
vity. It is vital that all these activities, as they take place, be made highly 
visible on the national scene. To the extent that they are perceived not as 
chance occurrences, but as elements co-existing in a synergistic, multi faceted 
statewide initiative, then each activity will strengthen development of other 
activities through enhancement of North Carolina's overall image. 



11 



III. TYPES OF RESOURCES NEEDED TO MEET OBJECTIVES 

Introduction 

To achieve these objectives, certain resources are needed. These fall 
generally into three categories: People, Supportive Infrastructures, and 
Facilities. As mentioned above, the primary objectives for a statewide initia- 
tive overlap extensively. So, too, do these resources. In many cases a 
resource--such as a critical mass of world class researchers--will prove useful 
in the attainment of all three of the objectives. 

A. People 

Ultimately, the quality of our scientific enterprise is determined by our 
scientists and engineers and the vigor of their ideas and activities. Thus, 
"people" comprise the essential resource upon which the level of biotechnology 
development in the state will depend. 

1. Top Quality Individuals: Recruitment and Maintenance 

Resources include the development of a broad base of top quality 
individuals, to be recruited and substained. A major component of this is the 
deliberate recruitment of an appropriate number of "superstars", or world class 
scientists. Estimates of current North Carolina scientists in biotechnology who 
could now be assigned this standing tend to range from 5 to 15 (definitions are 
difficult). Estimates of the critical mass necessary fall more in the range of 
20-40 minimum. Questions of distribution among fields and institutions may 
solve themselves naturally; the key idea seems to be one of critical mass in the 
state as a whole. Not only will this place North Carolina at the forefront of 



- 12 - 



research quite dramatically, it will attract industry's attention on a sound and 
lasting basis--not as a "gimmick" but as a sustained and substantial investment. 

In addition to the superstars, a number of young scientists and engineers 
of the highest caliber is necessary. The presence of a stimulating level of 
potential collaboration will not only attract and retain the superstars, but 
will also produce good science, interest industry, and provide excellent train- 
ing opportunities. With these younger cutting-edge researchers complementing 
the world-class individuals, outstanding graduate students and postdoctoral 
fellows will be all the more readily attracted. Furthermore, a "pool" is thus 
created from which world-class researchers of the future can be generated as 
products of North Carolina. Generally, this infrastructure allows room for 
diversity in expertise, research pathways explored, new techniques cultivated, 
and direction of research into new areas of commercial application. Perhaps a 
useful rule of thumb is that two to three young but excellent researchers should 
be added to the research pool for every one established world class scientist or 
engineer. Such clusters can be deliberately constructed to provide concentra- 
tions of expertise in a variety of focussed areas. The rationale is that four 
scientists added to the existing strength in a particular area of focus should 
stand a very good chance of creating a national center of excellence here in 
North Carolina. Taken together, this can lead to a concentration of strengths 
second to no other state. 

2. Top Quality Labor Supply 

A top quality "labor supply", resulting from the training 
opportunities in the state, could include a pool of bachelor and masters and 
Ph.D. level individuals who could be available to a growing industrial need in 



13 



the state. Significant funding for postdoctoral and graduate student support 
could contribute to this objective by (a) attracting top quality students and 
Ph.D.'s to North Carolina, some number of which may join activities in the 
state; (b) enriching the level of programs now ongoing; and (c) alerting 
industry and others on a national level that North Carolina is making a serious 
commitment to biotechnology. Trained-- and therefore employable--undergraduates 
who are familiar with the techniques and subject matter of the new technology 
should prove an asset to the state. Course support will enable top quality 
students at all levels to be trained at the forefront of knowledge, with updated 
equipment and supplies. Less directly, community college and K-12 education 
will prepare more individuals for (a) industrial jobs in biotechnology, and (b) 
informed public awareness of potential challenges and opportunities afforded by 
biotechnology. 

B. Supportive Infrastructures 

1. Supportive policies: institutional 

Supportive policies on an institutional level are necessary if top 
quality people present in and recruited to the state are to be retained. As one 
example, the attraction of a superstar to the state is not effective if he or 
she becomes frustrated by the working environment, and leaves--or simply becomes 
less productive--after only a short stay in North Carolina. To attract and 
maintain top quality people--both superstar and solid high caliber individuals, 
supportive policies related to such concerns as patents, overhead, professional 
opportunities, consulting, and equipment access, should expedite creativity, 
rather than stifle it. Each institution, including UNC GA is now working 
through these points, and many committees have been appointed; but, of course. 



14 



pertinent changes must be "felt" by the working scientist in order to be 
effective. 

2. Supportive structures for entrepreneurial activity 

In a similar vein, extension of supportive structures to entrepre- 
neurial activity encourages a sense of creativity and "possibilities" that will 
be attractive to many academics of top quality. The lure of new challenges as 
well as the opportunity to gain additional income are attractive to many acade- 
mics, and has recently become acceptable in biology as it has traditionally been 
in engineering. The benefit of such infrastructures does not extend merely to 
academics. Accessibility to business management advice, case history "cook- 
books", seed capital and space for start-up ventures are obviously of direct 
importance to the vitality of entrepreneurial activity in North Carolina. 
Statistics indicate that small businesses can provide a disproportionately high 
number of jobs. The federal Small Business Innovative Research Act has directed 
the set-aside of research funds for innovative research and development by small 
commercial firms. Some of this funding may be allocated to biotechnology. In 
North Carolina, in addition to the Technological Development Authority, a Coun- 
cil for Entrepreneurial Development has been organized by private sector firms. 
Encouragement of entrepreneurial activity in general can lead to a certain 
momentum, increasing the probability that more companies will arise in biotech- 
nology. 

3. Means of Mobilizing Resources Around Areas With Potential for 
Development in North Carolina 

Means of mobilizing resources form a critical component of a broad 
supportive infrastructure. As the word "mobilizing" would indicate, these are 



15 



mechanisms for facilitating the imperatives of the North Carolina effort. For 
example, the more quickly and effectively the findings of basic research labs 
are moved into the development of applications, the more successful North 
Carolina will become at competition nationwide in the commercialization of 
biotechnology. The North Carolina Biotechnology Center has already had 
experience in bringing individuals together in unusual collaborative research 
efforts, stimulating conferences, fellowship programs, and other joint efforts 
among institutions. Furthermore, initial attempts have been made, and must be 
expanded, to transfer research into practical reality. For instance, the North 
Carolina Biotechnology Center is collaborating with the Research Triangle 
Institute to test the application of commercialization methodology to new bio- 
technology advances. 

Experimental efforts such as the Monoclonal Lymphocyte Technology Center, 
need to be continued. In this case, researchers from several North Carolina 
universities, the North Carolina Biotechnology Center, National Science Founda- 
tion, as intended, 5 to 20 industries will join in a Cooperative University/ 
Industry Research Center. Similarly, the North Carolina Biotechnology Center 
acts as a common contact point for venture capital, entrepreneurs, and others 
interested in developing university/industry relations. Under the New Techno- 
logy Jobs Bill, which provides the North Carolina Biotechnology Center with its 
current funding, the Technological Development Authority was also established. 
With further development and expansion, this is an institution which will 
implement seed and start-up capital, incubator facilities, and other means of 
stimulating small business development and spin-offs from research. Thus it can 
serve as an additional means for stimulating entrepreneurial ventures throughout 



- 16 - 



the state. The North Carolina Biotechnology Center itself, in addition to its 
focussed work with entrepreneurs and industry generally, works with public and 
private universities in bridging the span between basic and development work so 
that ultimately all communities will have a vital stake in local agricultural, 
biomedical, and industrial development throughout the state. 

For the overall synergistic possibilities of the state to bear fruit, in 
short, there must be room for a "catalyst", a forger of linkages, an organiza- 
tional entity, in short, that is able to experiment. Effective ways of mobiliz- 
ing resources will be varied; flexibility is demanded if a truly multifacted 
interwoven initiative in North Carolina is to grow. In order to gain the 
maximum yield possible from the strengths of the universities -- both public and 
private -- within the state, there needs to be an organization that brings 
individuals from the institutions together to work on common objectives. Such 
joint activities have been and can continue to be effective at lowering the 
natural barriers interfering with institutional collaboration. Cooperative 
efforts between universities and industry can also take many forms, and can be 
very successful if appropriately approached. A competitive program which would 
fund biotechnolgy research proposals submitted jointly by university and indus- 
try researchers in the state, for instance, might be one approach to fostering 
work based on mutual interactions and trust. Other approaches could also be 
tried, all with a view of enhancing positive and appropriate relationships. 

C. Facilities 

Finally, facilities will of necessity play an important role in North 
Carolina's establishment in a leadership position. Without adequate. 



- 17 - 



up-to-date, state of the art equipment, research and training will be seriously 
handicapped. 

1. Pilot Plant R&D facilities 

Perhaps the outstanding "need" as far as specific facilities are 
concerned is a need felt nationwide: the lack of hardware which can be used in 
R&D for fermentation and biological processing in general. The national need 
for research and expertise in bioprocess engineering and scale-up is emphasized 
in the Office of Technology Assessment's Commercial Biotechnology, An 
International Analysis, 1984 ; a niche is currently open for leaders in this 
field to become established. A pilot plant which can be used in analysis of the 
production aspects of biotechnology by research scientists and engineers at 
North Carolina institutions, by industrial firms, and by start-up companies 
would have widespread use, it would be highly attractive to individuals in all 
these spheres of endeavor, and would allow North Carolina to forge ahead in an 
area of current national weakness. Furthermore, establishment of such facili- 
ties would in some form declare more strongly than mere words could ever do, 
that North Carolina is committed to the practical realities of biotechnology. 

2. Research Center 

A Research Center which serves as an incubator facility for biotech- 
nology could provide another practical dimension to a well-rounded biotech- 
nology initiative. University researchers, other entrepreneurs and even 
established firms moving tentatively into areas new to them, could make use of 
facilities wherein basic ideas are turned into development opportunities. This 
addresses the gap which currently exists between innovative "ideas" springing 
from basic research and a prototype product convincing to investors. 



- 18 



3. Space for Research 

Another sort of needed facility is the provision of necessary space 
for research to be conducted by all the scientists and engineers that the state 
hopes to recruit. Top caliber people will not come to a situation where 
excellent but full laboratory conditions compromise their ability to conduct 
cutting edge research. In this case, additional research space is likely to be 
needed at all participating research institutions, to some degree. 
4. Computer network 

A facility that could help to draw researchers together, across 
disciplinary and institutional boundaries, would be a common computer network, 
an electronic "mail system" with which researchers throughout the state could 
communicate almost instantaneously about fresh data, questions, or access to 
resources. 

5. Specialized R&D equipment capabilities 

Finally, it would be helpful to researchers in the state to have 
available certain specialized R&D equipment capabilities. Certain expensive, 
highly sophisticated equipment items such as some NMRs or crystallography 
equipment, for instance, might be shared. 

Conclusion 

Inasmuch as they all contribute to the caliber of North Carolina research, 
training, and commercial development capabilities, the preceding resources will 
serve to enhance North Carolina's image. More directly, the hosting of national 
or international scientific meetings, in appropriate conference facilities, will 
call attention to the level of activity in North Carolina, So, too, will 



19 



substantive opportunities for universities, government, industry scientists and 
others involved in biotechnology on the national level to interact. The same 
mechanisms which mobilize resources in North Carolina may serve to heighten 
national awareness of the unique character of North Carolina's initiative. 



20 



IV. SPECIFIC NEEDS FOR CAPABILITIES TO BE PRESENT IN THE STATE BY 1989 
(these are in addition to resources already existing in the state). 

Introduction 

It seems clear that two sorts of closely-connected questions will need to 
be addressed very specifically in future deliberations. 

First, what specific capabilities are needed if North Carolina is to become 
an "A" state? Second, what expenditures must be made at what times for these 
capabilities to be put into place? 

The very rough preliminary attached figures are presented to stimulate 
further focussed consideration of specific answers to these questions. An 
overall timeframe of five years was chosen based on the premise that if North 
Carolina has not attained "A" status by 1989, it is likely to have missed the 
boat, to have lost its chance at a leadership role. The attached tables and 
figures are based on rough dollar amounts, which are intended at this time to 
give approximate order of magniture of expenditures, for one possible plan. 
Obviously, not only the figures but the overall patterns of spending may be 
varied in different ways. However, the plan defined by these expenditures 
appears to present one reasonably straightforward approach, and, it is hoped, 
will prove useful in deliberations. 

If North Carolina is to seize and hold national leadership in biotechno- 
logy, it seems likely that in five years, the year 1989, the canponent resources 
considered in the preceding text will in some form be present in the statewide 
picture. ( Table I, lA, IB, IC: "Total and State Expenditures Allocated to 
Biotechnology Resources FY 1984-FY 1988"; Figure 1: "Allocation of Funds to 
Resources: People, Supportive Infrastructure and Facilities".) Individual 
components may be decided for or against, or modified; but the broad cumulative 



- 21 - 



base is most probably a necessity for a solid state effort. Th^ process of 
attaining the "A" position by 1989 will demand significant investment of 
funds--by the state and by others--prior to 1989. 

Hard analysis of these preliminary outlines should lead to establishment of 
priorities, some of which may be constrained by time. For example, a limited 
pool of potentially recruitable world-class scientists and engineers exists; 
universities in other states will oe competing vigorously for those people. To 
some degree, the sooner N. C. aggressively recruits them, the better our state's 
chances will be be. As another example, if it is hoped that some level of 
entrepreneurial activity will be reached by 1989, a supportive infrastructure 
must have been in place for some time prior to that. If it is decided that 
pilot plant facilities will serve the needs of universities, help generate some 
small companies, assist in the attraction of established firms moving into 
biotechnology, then earlier construction rather than later will allow a 
"snowball" effect to get into action. The visibility and credibility of a 
strong state effort may have particular importance at a particular time. These 
sorts of considerations, viewed in light of the overall economy of the state, 
may lead to a time frame of expected funding and accomplishments. 

Two alternatives to the time frame of the proposed plan, the one which is 
derived from the attached figures, are sketched in Figure 2 : "Spending 
Alternatives Over Time"; earlier substantial investment is portrayed in one 
alternative, postponed investment in the other. Whatever time frame is chosen 
for action, however, it is assumed that roughly the same amount of expenditures 
must have been made by the end of FY 1988 for North Carolina to have its full 
program in place. Thereafter, costs to sustain the program may be borne 
primarily by non-state funds. 



22 



V. PROPOSED SOURCES AND CHANNELS OF RESOURCES 

A. Sources 

The premise throughout this document is that, if North Carolina is to 
achieve a truly cohesive, broad based initiative in biotechnology, one which 
will entail extensive industrial development in the state, significant invest- 
ment by the state government will be required additional to what is currently 
being spent. In addition to "getting the job done", this extraordinary level of 
commitment by the state will signal to the world that biotechnology activity is 
both welcome and nurtured in North Carolina. 

Other funds are and will be available for biotechnology. Funding from the 
private sector can be aggressively pursued, as experiences of the North Carolina 
Biotechnology Center to date demonstrate. Far more is possible, particularly 
with iTOre funds to "leverage" matches. Federal agency and foundation funding is 
also available. For example, the Monoclonal Lymphocyte Technology Center 
currently being developed as a multi-university center administratively support- 
ed by tiie North Carolina Biotechnology Center, has already brought in federal 
funding and is expected to become self-supporting with at least a half million 
dollars per year from the private sector. In short, matching or even seed fund- 
ing from the state, particularly when used in creative programs and projects, 
can draw forth far greater amounts of outside funding. 

An attempt is made here, in developing rough figures for components of the 
overall picture, to reflect ways in which federal, foundation, and private 
sector funding will contribute to many costs. ( Table II: "Funding Sources by 
Year".) If quality is in fact sought, and programs creatively organized, far 



- 23 



more should thus be accomplished than the absolute value of stat.e dollars alone 
and programs creatively organized, far more should thus be accomplished than the 
aosolute value of state dollars alone would indicate. ( Figure 3: "Sources of 
Funds for Biotechnology in North Carolina".) Each world-class researcher added 
to the state, for instance, while receiving salary and perhaps $100,000, of 
initial research support from the state, may bring hundreds of thousands per 
year in federal grants as well as several postdoctoral fellows. Programs of 
interest to industry should, if properly organized, receive funds from the 
private sector, and an attempt is made to reflect this susbtantive interaction. 
Furthermore, of course, the establishment of private facilities in North 
Carolina by biotechnology-related firms does not even enter into the figures 
presented here, but should prove to be the truly significant contribution to the 
state in temis of return on dollars invested. 

Thus, if handled successfully, the investment by the state should leverage 
far greater funds. A sixty million dollar investment by the state in biotech- 
nology over 5 years might give rise to, for instance, a total investment three 
times that amount. To add perspective in the total expenditure of the state it 
might be considered here that one company (Hoechst) funding research at one 
university-affiliated hospital (Massachusetts General Hospital) provided some 50 
million dollars over a five year period. Monsanto has a 23.5 million dollar 
agreement with one university (Washington University) over a five year period. 
Michigan's state government is already investing a minimum of $6 million 
dollars/per year in a five year total of $30 million dollars. By interweaving 
academic, private and public sector activities as well as dollars, however. 
North Carolina's investment can lead to a far higher level of return. 



- 24 



B. Channels of Resources 

Of course, some of the most difficult problems that arise whenever funding 
is considered have to do with distribution of funds. What channels will be the 
most effective, as well as the most appropriate, for funding directed toward 
certain ends? Further dialogue among concerned public and private institutions, 
the private sector, the North Carolina Biotechnology Center and the Committee 
will be needed to answer this question; the answer may well lie in a deliberate 
mixture of channels. 

Some general points are likely to prove valid. Public institutions will be 
able to receive funding through: 1) competitive processes for fellowships, 
grants, etc., perhaps handled by the North Carolina Biotechnology Center; 2) 
joint efforts of public and private university researchers assisted by the North 
Carolina Biotechnology Center; 3) Central Research facilities; 4) conference and 
symposia; and 5) budget requests submitted through normal channels to the Legis- 
lature. Private universities are more likely to participate through 1) competi- 
titve processes for fellowships, grants, etc.; 2) joint efforts; 3) Central 
research facilities; and 4) conferences and symposia. Other organizational 
entities will doubtless have a role to play. Furthermore, commercial firms will 
benefit somewhat less directly but no less significantly from state allocations 
which stimulate a positive funding initiative in biotechnology. Further 
dialogue will bring these possibilities into sharper focus. 



- 25 



C . Summary of Rationale Concerning Resources 

The premises on which this discussion has been built are straightforward. 

1) Past Investment by the state in high quality research and education has 
brought the state to a strong, if not yet leadership, position in biotechnology. 

2) Because this broad base exists, along with more recent experiments in 
supportive Infrastructures and interweaving of resources. North Carolina has an 
unparalleled opportunity to serve a leadership role in developing technology 
which will have a dramatically significant Impact on the economy of the future. 

3) With some reaonable level of Investment, the state can leverage other funds 
to create a funding situation so substantive as to carry a unique initiative in 
biotechnology. 4) If appropriately and creatively approached, a comprehensive 
interwoven initiative unlike any other will make Morth Carolina an "A" state 
within 5 years--a state recognized as a natural home for industrial development 
in biotechnology. 



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Figure 1. 
ALLOCATION OF FUNDS 70 KESOUKCCS: IMOPLL, SUPPORTIVE INFRASTRUCTURE AND I AGILITIES 

i 



Total 

Expenditures 

on 

Biotechnology 

from al 1 

sources 

per 

year. 



$50,000,000.. 



$40,000,000 



$30,000,000 



$20,000,000 



$10,000,000 



"4^ 



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SI 



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. H' 84 _.. FY_85_^ LtSe^^JJ 87_ ^ FY 88 FY 89 ' 

(sustaining) 



P 

SI 

F 



--I 



People 

Supportive Infrastructure 
Facilities 



Figure ?. 
■•iPENOIMG ALTERNATIVCS OVF.R TIME 



$60,000,000 



Total 

l>:pendi tures 

on 

3intc-chnology 

from 3I 1 

sources 

per 

year. 



$50,000,000,. 



$■10,000,000 



$30,000,000 



-0-0-0- -a- 



■0-0-0-a 



S?0,000,000 



$111,000,000 



a -a -0 



FY 84 



FY 'Sb (Y !"16 FY 8/ FY 38 I V 09 

(sustaining) 



AUernativL' 1) ( orrc'>;'Onding to plan prosentd 
Alteriiativ.' 2) in which early investment i"^ less, vjith insjority 
of investnipnt in later years is greater 



Q-o- Alternative 3) in which early investment is greater 



Figure 3. 
SOURCES OF FUNDS FOR BIOTECHNOLOGY IN NORTH CAROLINA 



Total 

Expenditures 

on 

Biotechnology 

from all 

sources 

per 

year. 



1, .. 

'i 

$bO. 000,000. 

•i 


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— 


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