Life Sciences and Biotech in Lexington

The Bluegrass Region has acquired a niche within the plant and genetic engineering segment of the life sciences industry, and many area companies are creating valuable pharmaceuticals, including Alltech, Naprogenix, ParaTechs Corporation, MosquitoMate, Evolva, Transposagen Biopharmaceuticals, and Hera BioLabs.

Alltech is a top ten animal health company founded in Lexington, with biosciences centers in the U.S. and Ireland, offices and distributors in more than 120 countries, and nearly 100 production facilities globally. Alltech’s $200 million algae production facility in Winchester is one of the largest algae production facilities in the world and was so successful that Alltech expanded to a second facility in Brazil. Algae are expected to become a crucial area of development as the United States pursues renewable sources of energy to power the country in the coming decades. Locally, the company is known for its award-winning line of beers and spirits with a brewery and distillery in downtown Lexington and, soon, in Pikeville.

Naprogenix is a startup biotech research company that derives compounds from native Kentucky plants to develop new technologies. Plants have a variety of uses in food and medicine and Naprogenix enhances specific bioactivity and qualities of native plants through genomics and molecular pharmacology to increase their usefulness to the pharmaceutical, health, and agrochemical industries. Naprogenix’s products are natural, giving the company a competitive advantage as consumers increasingly pull away from synthetic ingredients in both chemicals and medicines.

ParaTechs Corporation recently developed a bio-insecticide targeting corn earworm moths, the highest crop-damaging pest in North America and the second-highest worldwide. ParaTechs’s bio-insecticide is a mutated nudivirus, a sexually transmitted disease that sterilizes 100% of corn earworm moths it infects, compared to a 30% effectiveness rate when the nudivirus occurs in nature. In addition to increased effectiveness, ParaTechs’s bio-insecticide reduces the need for chemical pesticides and is unlikely to affect other species that do not mate with corn earworm moths.

MosquitoMate developed a biopesticide to reduce or eliminate Asian tiger and Aedes aegypti mosquitoes through sterilization. These pests carry several diseases that are harmful to people and animals, such as dengue, yellow fever, heartworm, West Nile virus, chikungunya fever, and the Zika virus. MosquitoMate infects male mosquitoes with a form of Walbachia bacteria and releases them to mate with females, who are permanently sterilized by the Walbachia. As a result, the next generation of mosquitoes is reduced and the spread of disease is prevented. MoquitoMate’s biopesticide is not transmitted to humans, animals, or other insects, and does not include chemicals or genetic modification.

Evolva, formerly Allylix, Inc., generates and isolates natural chemical compounds that are in high demand for pharmaceutical, agriculture, and flavor-and-fragrance industries. Evolva uses a reengineered version of the fermentation process to grow compounds in a way that is faster and more reliable that the traditional plant extraction process, and cheaper and less complicated than the chemical synthetization process. Evolva is developing a library of compounds that will make many previously unstudied compound samples available for research screening by biotechnology and pharmaceutical companies. These compounds can be used in the manufacturing of products such as foods, medicines, cosmetics, insecticides, and industrial cleaners.

Transposagen Biopharmaceuticals is a worldwide leader in genome engineering technologies and services with applications in therapeutics, research, drug discovery, bioproduction, clinical genetic testing, and agriculture. Transposagen specializes in genetic manipulation technologies, stem cell engineering services, and creating genetically modified laboratory rats.

Hera BioLabs Inc. is a Lexington-based Contract Research Organization (CRO) and a spinoff of Transposagen. Like Transposagen, Hera uses gene editing tools and services to manufacture genetically specialized products and services. In 2016, Hera announced an investment of $1.8 million to move its operations from its current location on the University of Kentucky campus and establish a new headquarters.

Many of these companies operate around the world and several were founded by University of Kentucky researchers.

For more about each of these companies, check out our Life Sciences webpage and white paper.

Lexington’s Health Care Industry

The 2017 Kentucky Annual Economic Report released by the University of Kentucky Center for Business and Economic Research (CBER) identified health care as a growing industry in Kentucky, accounting for more jobs than manufacturing, and anticipates that this trend will continue.

Health care and social assistance jobs are in high demand in Kentucky with over 7,500 advertised jobs, according to the Kentucky Career Center (on March 8, 2017). The Bureau of Labor Statistics estimates that there are over 16,700 establishments within the health care and social assistance industry in Kentucky, employing over 240,000 people.

Fayette County is a major health care hub in Kentucky, with the second-most health care and social assistance establishments and employees in the state and earn the fourth-highest wages. In fact, over 23,000 people were employed in the health care and social assistance industry in Fayette County in the third quarter of 2016 (most recent data available), earning an average weekly wage of $1,041, much higher than the state average of $952.

Health care is part of the life sciences industry, one of Commerce Lexington’s strategic targets for the region. In the Bluegrass Region and Kentucky, Lexington is a hub for the life sciences industry. Lexington has leveraged its culture of innovation and commercialization, a superior business climate, top ranked research programs at the University of Kentucky, and an expansive network of medical centers to provide an environment where any market niche of the life sciences industry can grow. The life sciences industry has two components: direct patient care and biotechnology.

Direct patient care includes hospitals, nursing facilities, and medical centers, and is a prominent market in Lexington with a strong base of health care facilities, employers, and resources. There are several major medical centers including Baptist Health, Shriner’s Hospital for Children, St. Joseph Hospital (part of KentuckyOne Health), and the UK Medical Center. In fact, the UK Healthcare System is an extensive network that includes four hospitals, over 80 specialized clinics, more than 140 outreach programs, and six health professional colleges. In 2015, the UK HealthCare network served over 581,000 outpatient visitors and performed 31,200 surgeries. The Lexington Clinic, a multi-specialty medical group with 25 locations throughout the Bluegrass Region, employs 200 physicians and provides services to more than 2,000 patients every day and 600,000 patients every year.

Direct patient care is a major employment industry for Lexington, with a high-quality stock of human capital for medical professionals. According to the U.S. Bureau of Labor Statistics, over 19,000 people were employed as health care practitioners and technicians in 2015, including more than 5,100 physicians, 1,100 dentists, 184 optometrists, 560 specialty therapists, and 7,200 registered nurses. Biotechnology includes institutions involved with animal and plant science research and designing and manufacturing medical/veterinary products. Biotechnology is one of the fastest growing industries in the United States, and Lexington is committed to fueling its growth in the Bluegrass. In fact, over 50 biotech companies have chosen to locate in Lexington. Health care and biotechnology are supported by strong ties to academic programs at the University of Kentucky. UK’s College of Pharmacy is one of the nation’s top pharmacy programs, ranked the 6th Best Pharmacy Programs by U.S. News in 2016. The cutting-edge medical research on disease and drug development performed by the graduate students and faculty has benefited the area and the nation. Graduates enrich the workforce and faculty members have created 25 startup companies since 1989. Furthermore, UK allocates nearly $328 million to research and development annually and the overwhelming majority of UK’s R&D expenditures (over 70%) are devoted to the field of life sciences.

Seven industries are part of the life sciences: pharmaceutical and medicine manufacturing; medical equipment and supplies manufacturing; scientific research and development services; veterinary services; ambulatory health care services; hospitals; and nursing and residential care facilities. In 2015, around 21,000 people were employed in the life sciences, with an average annual salary of $55,800, according to the Bureau of Labor Statistics.

Check back next week to learn more about Lexington’s life sciences industry!

Click here to read more about the 2017 Kentucky Annual Economic Report.

Click here to read more about health care, life sciences, and biotech in Lexington.

Lexington MSA GDP Over $28.5 Billion

The Lexington MSA GDP totaled over $28.5 billion in 2015, the most recent year for which data is currently available.

The largest contributor was manufacturing at $5 billion, followed by real estate, rental, and leasing at $4.1 billion, and professional and business services at $3 billion.

Durable goods manufacturing made up 75% of manufacturing, such as motor vehicle parts, computer and electronics products, machinery manufacturing, and fabricated metal products. Half of the business and professional services GDP was professional, scientific, and technical services such as legal occupations, accounting, engineering, and veterinary services.

Over the past five years, Lexington MSA’s top five industry areas have all seen increases (health care and social assistance data not available for 2011 and 2012). Professional and business services had the largest growth of 26%, followed by manufacturing at 23%. Retail increased by 16%, indicating that the overall economy has been growing stronger and that residents have more discretionary income to spend. In dollar terms, manufacturing saw the largest increase, $928 million.

The Lexington MSA is home to 13.3% of Kentucky’s population, but contributes a higher percentage of the state’s GDP, particularly in educational services, health care, and social assistance (36.2%), real estate and rental and leasing (20.6%), and professional and business services (19.1%).

Note: The Lexington MSA does not include Franklin County.

 

“Robust Growth” Expected for Kentucky

The University of Kentucky Center for Business and Economic Research (CBER) released the 2017 Kentucky Annual Economic Report earlier this week.

The report includes economic inputs and outputs and offers a comprehensive review of Kentucky’s economy organized into twelve areas: Agriculture, Community, Economics, Economic Security, Education, Energy, Environment, Health, Infrastructure, Innovation, Population, and Public Finance. There are nearly 170 sub-topics, meaning that a complete review is beyond the scope of this blog. Let’s review a few aspects of Kentucky’s economy covered during the Economic Outlook Conference, attended by two members of the Commerce Lexington Economic Development team.

Unemployment Rate – Kentucky’s unemployment rate has steadily decreased since the recession, averaging around 4.9% in 2016, and seems to be leveling. Between May 2016 and October 2016, Kentucky’s unemployment was around 5%, the first time in over fifteen years that the unemployment rate has been so low for six consecutive months, indicating a recovery from the recession.

Goods and Services – Kentucky’s economic activity is increasingly being driven by service-provision industries. In the 1960s, Kentucky’s GDP was about 50% goods production and 40% services provision, but this began to change in the 1980s and today services contribute about 59% of Kentucky’s GDP and outputs and goods production contributes around 27%.

Manufacturing Establishments and Outputs – Although manufacturing employment is growing at a slower pace due to technology improvements, manufacturing output is growing in Kentucky.

Health Firms – Establishments and employment in the healthcare industry are growing and account for more jobs than manufacturing in Kentucky.

Golden Triangle – Lexington, Louisville, and Northern Kentucky continue to be strong contributors to Kentucky’s overall economy and have recovered better than the state as a whole. Unemployment in all three cities was below 4.2% and each experienced higher job growth than the country.

Introducing the 2017 report, Dr. Chris Bollinger writes: “We expect robust growth in Kentucky’s gross domestic product this year. Increases in both hourly warnings, as well as weekly earnings, suggest a strengthening labor market, which potentially bodes well for workers during the coming year.”

The 2017 Kentucky Annual Report is available here.

BEAM International 2.0 Export Promotion Grant Program

We’re excited to introduce the BEAM International 2.0 Export Promotion Grant! Companies may apply for grants up to $5,000 for export development services:

  • Prepare for exporting
  • Identify best markets
  • Participate in trade shows and trade missions
  • Find the right international business partner

Ideal companies are small businesses with ten or more full-time employees and an exportable product or service, who are operating profitably, and are ready to find new international customers. Minimum criteria:

  • Produces a product or service that has been exported successfully, or could be exported successfully.
  • Meets the sector-specific SBA definition of a small business detailed in 13 C.F.R. Part 121
  • Has been registered to do business in Kentucky or Indiana for no less than 1 year.
  • Is operating profitably based on operations in the United States.
  • Is registered to do business in Kentucky or Indiana (preference given to companies located in the BEAM region)
  • Has a minimum of 10 full-time employees.

FUTURE EXPORTERS
Grant funds help qualified future exporters purchase business development services to prepare them for the international marketplace. Funds can be used for an export readiness assessment, market research, market strategy development, analysis of supply chain, cash flow, operations and more.

CURRENT EXPORTERS
Grant funds help current exporters to identify and execute new international sales opportunities. Awards can be used for market research, business to business matchmaking services, strategic planning assistance, financial and cash flow analysis and planning, improvement of web presence, education, translations, trade shows and more.

The submission deadline is March 10, 2017. Complete application and guidelines can be found here. To learn more about the Bluegrass Economic Advancement Movement, check out the BEAM page on our website.

Preference will be given to companies in the BEAM counties:

  • Kentucky: Bourbon, Bullitt, Clark, Fayette, Franklin, Hardin, Henry, Jefferson, Jessamine, Madison, Meade, nelson, Oldham, Scott, Shelby, Spencer, Trimble, Woodford
  • Indiana: Clark, Floyd, Harrison, Washington