Testimony, February 19, 2004, Office of the President, University of Maryland

Economic Impact

Figure 15: Maryland's Enterprise Campus

Study after study links the economic development of a state or region to the presence of high quality research universities. A report issued in November 2003 by the Milken Institute, an independent economic think-tank, linked the economic prospects for the state of California to its universities: "California remains a state with more than its share of challenges, from budget deficits to high costs for business, but its huge store of talented workers, world-class universities and risk-taking entrepreneurs will overcome these woes and return the state to global leadership."

Following years of careful tracking, the Milken Institute has concluded that investments in science and technology—from higher education to industry research and development—are the crucial factors in deciding the fates of regional economies.

The University of Maryland has enormous potential that we are beginning to realize. The establishment of a new university research park, the University of Maryland Enterprise Campus—known as M Square, is a significant and major leap forward in the University's prospects for attracting new research activities and businesses to the area. We are grateful for the support we have received from the State for this initiative. The 128-acre Enterprise Campus already has its first tenant, the Department of Defense-UM Center for Advanced Study of Language.

M Square occupies 128 acres owned by the University of Maryland. The area has approximately two and one-half million square feet of buildable research and development space—potentially the largest university-related research park in the state of Maryland and the Greater Washington Region. Full build-out will bring to the area over one-half billion dollars of construction over 15 years. Approximately $7 million in annual property tax revenues are anticipated at full build-out. An estimated 6,500 jobs will be at the site.

The research park will be the latest in a long list of activities and programs through which the University brings the expertise of our faculty to bear on the economy of the State. For one, the China research park is progressing on schedule. This will be the base and hub for China's technology entrée into the United States, and other parks would be located around the country in places like California and Massachusetts. The potential benefit for the State by this effort is very large. Since August 2003, the University has hosted 148 leaders from Chinese industry and commerce in specially designed executive leadership training programs. Because of our growing reputation, we have been able to capitalize on our "unfair advantage," the proximity of the University to the major federal labs. Our partnerships with NOAA, NASA and NIST provide opportunities for the University to engage in mutually beneficial partnerships on research and education programs. We are developing new initiatives to tap the potential of national labs and help them get much more of their technology out of the public sector for commercialization. An increased transfer of technology will benefit area businesses and raise the economy of the State and the entire metropolitan area.

MAES and the Agricultural Sector

The University also benefits State businesses through programs and activities that engage us directly with the private sector. The work of the Maryland Agricultural Experiment Station (MAES) has a significant impact on the agricultural economy of the State.

Integrated pest management (IPM) research conducted by MAES scientists has led to a 50% reduction in pesticides used in Maryland's greenhouses. This saves growers in the State over $12M per year and also reduces exposure of growers and consumers to toxic pesticides.
MAES scientists have developed new poultry feeds that contain significantly less phosphorus. Reduced phosphorus in feed will save the Maryland poultry industry hundreds of thousands of dollars each year. More importantly, however, new feeds result in less phosphorus in poultry manure, which reduces the amount of phosphorus entering the Chesapeake Bay.
Traditional methods of cleaning up polluted soil cost approximately $2M per acre. A new technology developed by MAES scientists, called phytoremediation, uses plants to extract contaminants from soil. Contaminants can then be extracted from the plant and purified and sold to recover the cost of the cleanup. For soil contaminated with nickel, a common soil pollutant, it is possible to generate income of nearly $1K per acre per year.

Services to Industry Provided by MTECH

The Maryland Technology Enterprise Institute (MTECH) continues to be a major source of transfer of faculty expertise to the businesses and industries of Maryland through its now familiar programs: Maryland Industrial Partnerships (MIPS), Technology Advancement Program (TAP), Maryland Technology Extension Service (MTES) and Maryland Biotechnology Program (BIOTECH).

MIPS' Economic Impact

Five of MIPS' top project companies have reported approximately $1.7 billion in sales and revenue. Each of these companies developed major products made possible partly through MIPS R&D-funded projects.

When combined with MIPS' support for research and development since 1987, which exceeds $112 million, the total economic impact of MIPS on the Maryland economy is more than $1.8 billion. This does not include increased productivity resulting from process-oriented MIPS R&D, and only reflects a partial listing of company sales and revenue.

MIPS' funds are significantly leveraged. While MIPS' funding of R&D projects is more than $23 million, company matching funds exceed $96 million for a total of almost $130 million. Thus, every MIPS dollar results in five dollars being spent for R&D in Maryland; and, historically, MIPS has brought $96 million in research funding into the University System of Maryland for industry-relevant, commercially driven research projects. The Technology Advancement Program (TAP), the incubator, helps early-stage companies advance towards maturation by providing technical assistance, business guidance, access to key relationships and low-cost physical infrastructure.

Impact:

TAP accommodates 10-12 companies at one time; maximum incubation period is four years.
Over 350 applicants from 1985 through 2003; 64 companies admitted.
Graduated 48 companies, with over 70% sustaining operations after five years.
Over 1,000 jobs created.
$778 million has been invested in TAP companies since 1985 from a variety of sources.
Approximately half of former and current companies are in biotechnology, with the remainder in areas such as IT, electronics, optics and materials.
Two NASDAQ IPOs, with a combined market capitalization of $2.5 billion.

TAP was ranked number one in the country in 2002 among incubators for research grant support realized by its companies, according to a survey conducted by the National Business Incubation Association (NBIA). TAP was ranked 3rd for the number of patents held by its client companies and 2nd for biotechnology patents.

Beginning in 2001, the State of Maryland's Incubator-of-the-Year Awards were established to recognize outstanding achievements by incubator companies in various categories. TAP companies have won three years running. In 2001, Neuralstem Inc. won the overall Incubator Company of the Year award, while Claragen Inc. won the Biotechnology Sector award. In 2002, Chesapeake PERL and Advanced Thermal Concepts Inc. (ATEC) won in the Biotech/Life Sciences and Best New Incubator Company categories, respectively. In 2003, DataStream Conversion Services won in the Technology Services category.

Two exceptional biotech companies in Maryland, Martek and Digene, are graduates of TAP. These two companies represent 10 percent of Maryland's 20 public biotech companies. Powerize.com, another graduate, served more than half of the Fortune 500 companies before the company was acquired by Hoover's Inc. in 2000 for $17 million. Dun & Bradstreet subsequently acquired Hoover's.

MTES: The mission of the Maryland Technology Extension Service (MTES) is twofold:

1. Apply Clark School of Engineering resources to benefit Maryland manufacturers; 2. Strengthen the competitiveness of Maryland manufacturers by providing information, decision support and implementation assistance. In 2003, to better serve Maryland manufacturers and work with the State of Maryland's Department of Business and Economic Development, MTES realigned into three consolidated regional offices. The new MTES regional offices are:

MTES Potomac Region
University of Maryland, College Park
MTES Chesapeake Region
University of Maryland, Baltimore
MTES Eastern Shore Region
Salisbury University

Biotech Program

MTECH's Biotechnology Program is an umbrella program combining academic and industry-focused initiatives supporting biotechnology companies in Maryland, including advanced bio-processing facilities and services, workforce training and consulting for bio-manufacturers.

The Bioprocess Scale-Up Facility (BSF), an MTECH laboratory dedicated to the development of biotechnology products and processes that already served biotech giants such as Human Genome Sciences, NIH and MedImmune, as well as start-ups such as Digene Corporation and Martek Biosciences, recently upgraded its main fermentor to 250 liters, enabling the facility to scale-up even larger biological products and processes. The BSF is also developing a program to train employees of biotech companies in the latest production techniques. Fermentation, cell culture and purification will be featured in the new workforce training initiative. Services have been utilized by both large pharmaceutical companies and small biotech start-ups. Large companies such as MedImmune and Human Genome Sciences, and innovative start-ups as small as OncoImmunin and Chesapeake PERL, have each benefited from the resources the BSF has to offer. Appendix A lists the Maryland companies and federal laboratories that have used the Bioprocess Scale-Up Facility.

New Markets Growth Fund

Another new activity to promote economic development is the New Markets Growth Fund (NMGF) initiated by the Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business. The New Markets Growth Fund closed a $20-million venture capital fund in April 2003 to invest in early and expansion stage companies, primarily located in economically distressed sections of Maryland and Washington, D.C. This fund is the first of its kind at a university and is 50% supported by Small Business Innovation Research funds. Its first investment ($500,000) took place in December 2003 and went to NAVTRAK, a Salisbury, Md., company that provides monitoring, mapping and reporting for mobile workforces.

>>Funding Comparisons: UM and Peers

Office of the President, University of Maryland, College Park, MD 20742