Making Minnesota a player in biotech

Gov. Tim Pawlenty wants Minnesota to be at the forefront of biotechnology research. With much fanfare, a step in that direction came last week when the governor announced the formation of a research partnership between the University and Mayo Clinic. Using money from the state and leveraging the strengths of each institution, the partnership’s stated goal is to make Minnesota a leader in biotechnology and medical genomics. Although exactly how the partnership would work remains unclear, the general idea makes economic sense in these tough fiscal times. But as the governor aspires to put Minnesota on the biotechnology map, both the state and the University must be aware of the stakes involved.

If Minnesota becomes a true pioneer in the biosciences, there would be many benefits to the state’s economy. The partnership along with other biotech efforts could lead to valuable scientific discoveries in areas such as diagnosing and treating human disease, improving technology for food and agriculture research, and creating new businesses and jobs. Minnesota has the core elements: a strong academic research enterprise at the University and the Mayo Clinic, along with corporations like Medtronic and Cargill Dow.

Currently, though, Minnesota lags behind many states. To catch up, the state must fork over large sums of money for initial investments in research, infrastructure and startups. This comes at a time when the huge budget deficit has spurred calls for cuts to many of the state’s vital spending areas. But if the state’s initial investment in biotechnology is not enough, it could stand to lose millions in the long run. Thus, if the governor wants to compete with other states in conducting research on the frontlines of medicine, he has to move quickly and put the money where his mouth is, something he has been loathe to do.

And therein lies the problem.

The governor, sticking to his pledge not to raise taxes, said the state’s general fund cannot be used to invest in biotech initiatives. This position greatly worries the Mayo Clinic, which needs help to keep on par with other leading medical research centers and to contribute to making the state a biotech powerhouse. One area where the state can help out the Mayo Clinic is by brokering a partnership with it and the short-changed University. Another is a tax favor.

A bill that would repeal the MinnesotaCare provider tax is currently making its way through the House. It calls for an elimination of the care provider tax and a $1 increase in cigarette taxes (as well as a tax proportionate to the tax on cigarettes for other tobacco products) to offset the revenue lost by repealing the provider tax. Having paid $150 million in provider taxes over the past 10 years, Mayo Clinic could gain millions in tax savings that could be used invest in its endeavors. For the governor, the bill is simply a matter of one tax offsetting the other. The University gets the short end of the deal.

The partnership is welcomed because it would make the University and Mayo Clinic partners in receiving grants, scrap duplicated research activities and add to valuable discoveries in biosciences. The University and Mayo Clinic cannot afford to compete against each other while carrying out cutting-edge research. But as Minnesota’s leader, Pawlenty must level with the Legislature and the people about the huge costs and efforts that are needed to make Minnesota a biotechnology leader. And as with any partnership, the University must be sure it does not get taken along just for the ride.