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The Honolulu Advertiser

Posted on: Sunday, June 5, 2005

Life sciences could bring Hawai'i a boom

By Lisa Gibson and Dew-Anne Langcaon

The history of Hawai'i's economy has always been a story of constant rebirth. What began with sandalwood trade and later cattle production for whaling ships evolved into export crops such as sugarcane and pineapples, and eventually, large-scale tourism.

From aquaculture to gene therapy

Life sciences in Hawai'i cover a wide swath of disciplines, from biotechnology to aquaculture. Directly or indirectly, life sciences affect everyone from farmers who depend on researchers to develop insect-resistant crops to florists who look to the University of Hawai'i to create commercially viable ornamentals. Here is a list of life sciences activities:

• Agri biotechnology

• Aquaculture

• Bioengineering

• Biofuels

• Bioinformatics

• Biomaterials

• Bioremediation

• Biotechnology

• Clinical trials

• Cosmuceuticals

• Diagnostics

• Drug discovery

• Environmental

• Gene therapy

• Genomics

• Health information

• Technology (wireless, sensors, telemedicine)

• Healthcare

• Medical devices (instruments, supplies & diagnostics)

• Pharmaceuticals

• Nutrition & nutraceuticals

• Industrial

• Proteomics

• Marine biotech

• Renewable energy

Source: Hawai'i Life Sciences Council

The newest opportunity is based on intellectual property instead of the tangible assets that we in Hawai'i are more used to. Within that space, life sciences — with a potential global market value of $200 billion — is undoubtedly the most promising sector.

Most significantly, it's a clean industry that creates well-paying jobs that can keep kama'aina in the Islands and bring back our children who have graduated from top Mainland schools but are unable to find work in Hawai'i.

Clearly the Aloha State is not the only region that finds life sciences of interest. In the global marketplace, we're competing with 40 other U.S. states and 17 countries around the world. To fully grasp Hawai'i's competitive advantages in this global industry, last year the Hawai'i Life Sciences Council, in partnership with Enterprise Honolulu and with financial support from the Kamehameha Schools, hired a firm called New Economy Strategies to produce a life-sciences "roadmap"— an extensive analysis of our assets and where we stand in the international marketplace.

On Thursday, a group of citizens gathered at the Hawai'i Prince Hotel in Waikiki to hear the conclusion of this long-awaited effort — a laborious process that involved the participation of nearly 300 leaders in the academic, entrepreneurial, real estate, government, military and venture-capital sectors.

The upshot was that this industry has the potential to reshape our economy much in the way that San Diego (once a provincial Navy town) was completely remade from the ground up by life sciences over the past 20 years.

What kind of possibilities can we visualize for Hawai'i?

One of Hawai'i's fastest-growing life-sciences firms is 'Aiea-based Hawai'i Biotech, which is developing vaccines for dengue fever, avian flu (bird flu) and West Nile virus. If Hawai'i Biotech produces one moderately successful vaccine for any of these scourges, it could be a $2 billion product that could lead to thousands of new manufacturing jobs in the state.

Considering that local tourism expenditures are valued at $8.7 billion and construction is roughly $2.5 billion, one gets the idea of the enormous potential of this industry.

This is just one illustration. There are a number of local companies and organizations that have this kind of potential. Not only are private firms doing innovative work, but long-

standing research conducted at the University of Hawai'i and by local physicians and hospitals is also bearing fruit.

Below is a survey of some Hawai'i life-sciences organizations making headway:

• Cellular Bioengineering Inc., which was launched in 2003 with more than $7 million in funding, is focused on the field of regenerative medicine — the bioengineering of replacement parts for aging and diseased organs. (More than half of CBI's team of top scientists are kama'aina returning to the Islands).

CBI's cutting-edge technology hopes to have a major impact in restoring vision to the more than 10 million people worldwide afflicted by corneal- related blindness. CBI is developing new technologies to regenerate nerves and soft tissues — targeting a potential $1 billion market.

• Pacific Health Research Institute, a private, not-for-profit medical research organization that conducts clinical trials and other clinical research, has approximately 120 employees and an annual budget of about $10 million. In addition to its core mission, PHRI plans to tap the Asia market in a counterintuitive way.

As Asia evolves from Third-World to industrialized-world standards of living, CEO Dr. David Curb believes PHRI can help Pacific Rim medical professionals ameliorate preventable diseases normally associated with the West, such as diabetes, heart disease, cancer, etc. In the near term, he sees the Asia market having a potential in the hundreds of millions of dollars.

• Hawai'i could become a global center for studying emerging infectious diseases of the Asia-Pacific region, according to Dr. Duane Gubler, director of the Asia-Pacific Institute of Tropical Medicine and Infectious Diseases at the University of Hawai'i's John A. Burns School of Medicine. Our geographic proximity to the Pacific Rim makes Hawai'i a perfect listening post for disease-detection systems and allows us to react quickly to perceived threats.

Research by the Asia-Pacific Institute could help protect both our population and Hawai'i's tourism industry. It could also stimulate research, development and evaluation of vaccines, drugs and new diagnostic technologies.

• Kona Bay Marine Resources is a Big Island marine biotechnology company that supplies the global aquaculture industry with products such as shrimp broodstock and bivalve seed. Its hot product is a shrimp resistant to Taura disease, which CEO Brian Goldstein says is critical to the continued growth of the global shrimp aquaculture industry.

He sees a market of more than $50 million for the SPR-Taura broodstock and estimates the company's revenues will double in the next two years.

• Hawai'i's agri-biotech and traditional seed crops are growing in importance. Corn seed, developed for Mainland and overseas farmers to confer resistance to pests, is now a $50 million industry — and over the last 10 seasons, the industry has grown at an average annual rate of 20 percent.

Cindy Goldstein, business and community outreach manager for Pioneer Hi-Bred International, said, "Seed crops provide a high-value crop that can be produced as we see a decline in pineapple and sugar lands." Delan Perry, president of the Hawai'i Papaya Industry Association, is optimistic about the rise in popularity of the transgenic Rainbow papaya, which was developed to counter the dreaded ringspot virus.

Perry says overseas premium markets offer a huge potential for Hawai'i growers, and projects growth of 30 percent a year over next three years in Japan, with sales of $20 million.

• Tissue Genesis Inc. is a Kaka'ako-based tissue engineering company. TGI's core product is an automated instrument for culturing cells, called the Bio Optimization System or BOS. Using the BOS, TGI can produce cell-lined grafts that replace natural veins and synthetic grafts currently used in vascular procedures such as heart-bypass operations and renal dialysis.

These implantable tissue grafts are lined with the patient's own cells, which enable a longer-lasting graft that resists blockage and reduces rejection and complications. Corporate vice president Nola Miyasaki said the market for cardiovascular arterial bypass (heart-bypass) grafts is estimated at $1.8 billion.

Other vascular applications, for the renal dialysis patients and for peripheral bypass procedures, also have high potential markets.

• Barry Raleigh, former dean at the UH School of Ocean and Earth Science and Technology, says that as the price of oil begins to erode the economic base of the energy-poor tropical nations, Hawai'i could emerge as the leader in the development and application of technologies for biomass fuels.

Says Raleigh, "Fuels from biomass, unlike solar energy or wind technology, are a niche where we have competitive advantages." There are several companies positioned to take advantage of this trend. Among them is Carbon Diversion, which creates carbon and generates power from green waste and tires. CEO Mike Lurvey projects sales of $35 million in the next five years and $300 million in a decade.

• Cancer research is increasingly important to the community because the number of cancer cases is expected to double from 5,500 new cases per year currently to 11,000 per year by the year 2030.

To help meet the demand, construction of a new Cancer Research Center in Kaka'ako will be completed by 2008. Director Dr. Carl-Wilhelm Vogel says the center will give Hawai'i residents access to innovative new drugs and devices as those emerge from the research pipeline. The center currently brings in $45 million per year and, according to Vogel, "this figure will grow significantly as opportunities for research expand."

The most important outcome of the creation of new life-science companies is job creation. As newspaper articles have lamented for the last decade, many if not most of our best and brightest kids flee to the mainland in search of quality jobs. While important to our state, Hawai'i's service industries such as tourism have not been able to create the high-value employment that will attract and sustain a 21st-century economy. This trend must be ameliorated.

David Heenan, former dean of the UH College of Business and author of "Flight Capital," a new book on halting America's brain drain, said "Hawai'i is losing the global war being fought over human capital. We're losing to other areas such as San Diego and the San Francisco Bay Area that can provide the jobs that depend on intellectual capital. To diversify our economy we'll need to create employment that will allow our state to become more than a surf and sand paradise."

We can have a vibrant life-sciences industry in our state that provides local people with meaningful jobs and living wages. With the support of the state, the university and the private sector, we can grow our own indigenous life-sciences sector in the center of the Pacific Ocean.

Just watch — it's already beginning to bloom.

Lisa Gibson is president of the Hawai'i Life Sciences Council, a life-sciences industry organization based in Honolulu. Dew-Anne Langcaon chairs the council's board and is an executive vice president at Hawai'i Pacific Health.