REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - LA JOLLA, CALIFORNIA “BIOPARKS 2008 CONFERENCE”

MONDAY, June 16, 2008

AS PREPARED FOR DELIVERY

Introduction by Jackie Kerby Moore, Executive Director, Sandia Science and Technology Park

I. OPENING

Thank you, Jackie, for that kind introduction. I’ve had the pleasure of knowing Jackie for several years now and she is truly one of our nation’s certified smart people in the field of innovation-led economic development. The Sandia Science and Technology Park is celebrating its 10th anniversary this year, and, thanks in large part to Jackie’s leadership, it is viewed as one of the most successful science and technology parks in the nation.

At the Economic Development Administration, we are proud of our partnership with Jackie and equally proud that we were among the first investors in the Sandia Science and Technology Park. So congratulations to the Sandia Science and Technology Park on their 10th anniversary, and to Jackie for your leadership.

It is an honor to be at the Salk Institute – a perfectly fitting place to discuss research, science and “what’s next.” It is a pleasure to be back in San Diego on behalf of President George W. Bush. This is one of America’s most beautiful – and innovative – cities. What other city could host the largest biotechnology event in the world AND the U.S. Open in the same week? The truth is that my Commerce Department colleague, Matt Crow, and I would like to extend our stay in San Diego beyond this conference, but apparently no one with an I.Q. under 125 is allowed – and Matt and I will have to leave town and return to Washington, where, clearly, no minimum I.Q. score is required.

One of President Bush’s top priorities is keeping America the most competitive economy in the world. In fact, President Bush is the first president to make competitiveness a specific policy priority for his Administration. At the end of the day, when it comes to competitiveness in the 21st century economy, it is the ability to innovate that is the only possible sustainable competitive advantage. It’s not location. It’s not the cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. But if a nation, region, or company can maintain its edge in innovation – it will grow and prosper.

That is clearly what is happening here in San Diego when it comes to the biosciences. San Diego is one of the top biotech clusters in the world. Universities and biotech research institutes have spun off an estimated 200 biotech companies in the region, creating a biotech cluster that has an annual economic impact of over $9 billion. Biotech jobs in the region pay an average wage in excess of $80,000 – 83% above the average pay for all jobs. It is clear that the San Diego region knows how innovate, and that innovation is paying off big time.

Part of San Diego’s success can be attributed to a forward-looking, innovative, private-sector led economic development effort coordinated by my friend Julie Meier-Wright of the San Diego Regional Economic Development Corporation – which is nationally recognized as one of the nation’s top economic development organizations. Julie, thank you for your leadership.

A key part of San Diego’s – and other regions’ – success in the 21st century can be linked to advancements in bioscience. The importance of the work that all of you are doing to advance bioscience across the nation is clear. The health benefits promised by advancements in this field are vast, while the economic impact is stunning.

The biotechnology industry has mushroomed in the recent years – just look at U.S. healthcare biotech revenues alone, which have increased from $8 billion in 1992 to $51 billion in 2005. The biosciences employ over 1.2 million people in the United States and have generated an additional 6 million related jobs. This quantity is matched by quality – the average annual wage of U.S. bioscience workers was more than $26,000 greater than the average private sector job.

So, the role of the biosciences – and the role of bioparks in particular – to the American economy and to our nation’s competitiveness is clear. As we discuss that role at this conference, it is important to consider the larger economic context in which we are all working.

II. ECONOMIC PICTURE TODAY

We meet at a time when many Americans are facing challenges. They are concerned about the economy. Gas prices are high by U.S. standards – now over $4 a gallon – and continue to rise. This is driving up the price of not only getting to work but also food and other costs, and is slowing our economic growth. After six years of record economic growth, our economy is indeed growing at a slower pace than the President, I, and you, would like.

Our economy is still growing and unemployment is still generally low – not something you’d realize by just listening to the media. Our unemployment rate is 5.5% – higher than recent months, but generally considered in the healthy range. Last quarter, our GDP grew about 1% following 2.2% growth in 2007. While this is not set-your-hair-on-fire GDP growth, it is positive growth and demonstrates that our economy continues to function and is on a sound foundation.

One of the reasons for this sound foundation is our tremendous success in exporting to the worldwide marketplace. At a time when our economic growth has slowed, U.S. exports are booming. In 2007, we saw a record $1.6 trillion in exports, up about 13% from 2006 – and exports are growing even faster in 2008 with an 18% increase over the same period last year. In addition to our growing success in exports, exports now account for a larger percentage of our GDP – 12% – compared with only 5% forty years ago. The translation is that the more successful we are exporting, the more successful our economy will be.

The fact is that 95% of our potential customers live in a country not called America. The vast majority of our customers – current and potential – live outside our borders.

That’s why free trade agreements – FTAs – are so important to those of us interested in economic growth and job creation. When President Bush took office, we had free trade agreements with just 3 countries – Israel, Canada, and Mexico. Today, we have free trade agreements with 15 countries with three more in the approval process.

FTAs help our companies, farmers, manufacturers, and workers gain access to new markets around the world – access to the 95% of our potential customers that don’t call America home.

One of the responsibilities that government and economic development organizations have is to educate companies on how to take advantage of the benefits of free trade agreements – because only a small percentage of businesses today are exporting. This is particularly important to companies in the biosciences – as your innovations will be in demand across the globe, not just across the nation.

The question today is what do we need to do going forward to maintain and strengthen our leadership position in the worldwide economy? The answer, of course, is innovation – our national competitive advantage.

America is clearly the world’s leader in innovation. From Edison's light bulb to Henry Ford’s assembly line to Jonas Salk’s polio vaccine to Jarvik’s artificial heart to Steve Job’s iPod to the frozen pizza, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive, and more prosperous.

Of course, we cannot rest on our laurels. Other nations are rapidly advancing their capacity to innovate. In the 21st century, change will come faster, cycle times for products and trends will accelerate; and the nations, regions, organizations, and individuals that succeed will be those best able to innovate and continually adapt. Keeping our innovative edge will be hard work. It won’t just happen.

III. BUSH ADMINISTRATION EFFORTS TO ADVANCE INNOVATION

President Bush is committed to keeping America on the cutting edge, and is leading the way to continue to build an environment that encourages innovation. A key element is the Federal commitment to investing in innovation-enabling research – an area in which the President recognizes that other nations are catching up and even challenging our efforts.

In his 2006 State of the Union Address, the President announced the American Competitiveness Initiative – the ACI – the President’s $6 billion commitment to strengthen education, encourage entrepreneurship leading edge technologies, and substantially increasing the Federal commitment to basic research. The ACI called for the doubling of Federal investments in research over 10 years – putting the Federal commitment to research at the same level of GDP as during the Apollo Space Program.

Last year, Congress passed legislation supporting the ACI in the form of the America COMPETES Act of 2007. The Act authorized the President’s request for doubling funding for Federal research, authorized the President’s Math Now proposal to improve instruction in mathematics, and authorized the President’s proposal to significantly increase low-income student’s access to Advanced Placement classes.

Unfortunately, when it came time to appropriate the funds to back-up this commitment, the Congress fell short. In fact, the Congress funded only one-third of the President’s requested increase in civilian research. And, to add insult to injury, the Congress directed over half of what they appropriated to earmarks and unrequested new grants programs. Full funding for the ACI is an ongoing effort and something the President and I continue to press for – and hope the new Administration – of either party – will pick-up in January 2009.

But the ACI – and the new national dialog on the issue of competitiveness – has generated some results. Last year, our fourth and eighth-graders achieved the highest math scores on record. We still have a lot to do to reform and improve our K-through-12 public education system, but at least there is some positive news to celebrate.

Another part of encouraging innovation is to offer intellectual property protection to scientists and researchers for their advances, discoveries, and innovations. This has been a critical function of the Department of Commerce’s Patent and Trademark Office for more than 200 years.

U.S. intellectual property – which today is worth more than $5 trillion – is a key element of our nation’s economic competitiveness. Intellectual property represents 40% of U.S. economic growth and it is directly responsible for the employment of 18 million Americans in good, higher-skill, higher-wage jobs.

Congress is engaged in a serious effort to reform our patent system – the first such effort in more than 50 years. The Bush Administration strongly supports patent modernization legislation that enhances innovation by improving the quality of patent applications and fairly balancing the interests of innovators across all industries and technologies. Without such a balance, we risk creating disincentives for innovators and slowing the pace of innovation.

Looking more specifically at the Bush Administration’s efforts in the area of the biosciences, the White House Office of Science and Technology Policy – OSTP – is focused on fostering the development of biotechnology by coordinating Federal biotechnology efforts. This White House effort identifies emerging opportunities in biotechnology research, stimulates international cooperation, and assesses U.S. policy on issues concerning biotechnology research.

Some of these efforts include:

• Developing a Federal interagency strategy focused on research in specific biotechnology areas, including metabolic engineering, tissue engineering, and agricultural biotechnology;

• Coordinating the research, training, and infrastructure support for genome-enabled microbial science across Federal agencies; and

• An effort to support molecular vaccine research by coordinating Federal R&D focused on molecular vaccines and related technologies.

IV. EDA ADVANCES INNOVATION

Meanwhile, across the street from the White House at the Department of Commerce, the Economic Development Administration is playing an important role in supporting the President’s efforts by investing in economic development strategies that promote innovation.

While there is no “one size fits all” strategy for promoting innovation, one thing is clear; universities and university research parks, including bioparks, are ideally suited to help. In most parts of the world, the division between the world of Ivory Tower Academia and the world of Commerce are indeed worlds apart. Universities in the U.S., however, are far more engaged with the private sector – and that is a competitive advantage for the United States.

Universities are becoming full partners in regional approaches to innovation-led economic development, and EDA – the Federal Government’s venture capitalist for innovative economic development – is committed to advancing this trend. EDA has invested $300 million in universities to support 800 development projects since 2001.

A good example is the BioInnovation Center in New Orleans, in which EDA invested $1.25 million in 2006. The Center is a technology business incubator developed by a consortia of universities – including LSU, Tulane, the University of New Orleans, and Xavier – that aims to stimulate bioscience entrepreneurship. The Center focuses on nurturing the development of biotechnology-related companies in the heart of an area that was devastated by Hurricane Katrina.

Another example is St. Louis’ Center of Research, Technology & Entrepreneurial Exchange – known as CORTEX – a 250-acre research district created when five educational and research institutions joined forces to build a national hub for life sciences research, development, and commercialization. EDA invested

$3 million in 2004 to assist with the construction of wet lab facilities to support the incubation of biotechnology companies that are creating a life sciences cluster in the region and bringing higher-skill, higher-wage jobs to St. Louis’ inner city.

Our efforts are not limited to leading research Universities. EDA has recently invested $1.3 million in Santa Clara Community College here in California in their Emerging Technologies Program that is training laboratory technicians for employment in high-tech companies using bio- and nano-technology. So it’s not just the big research universities that have a role in advancing leading edge science.

Through these types of investments in forward-looking, university-led economic development initiatives, EDA is working to advance bioscience and strengthen American innovation in the 21st century – and this is consistent with our priority to lead the Federal agenda in economic development by focusing on innovation and competitiveness.

EDA is also looking to support bioscience industry and bioparks using our bully pulpit, not just our checkbook. Many of you are aware that the Biotechnology Center of Excellence Corporation is collaborating with the Technology Park Network of the Basque Country in Spain to organize a mission of technology park executives, university officials, and other professionals in an effort convene many of the best and the brightest in the field to discuss best practices and tour Spain’s effort in this area.

Our agency is looking at this event as another possible way to highlight and support the work that you are doing and we are considering – if there is support in the U.S. biopark community – leading the U.S. delegation to the event to highlight the academic, government, and private sector support in the U.S. for such efforts.

V. CLOSING

The importance of innovation in the 21st century cannot be overstated or applied broadly enough. Some view innovation as the exclusive domain of private industry or white-coated researchers in a lab. But government, education, and non-profit organizations have the same responsibility to be innovative in their approach to fit the changing times.

Just look at the innovative thinking of a few farsighted public sector leaders here in San Diego some years ago when they decided to focus Torrey Pines Mesa on science and research. That decision, while risky at the time, has paid dividends many times over in cutting-edge research, new life sciences companies, the creation of higher-skill, higher-wage jobs, and the further diversification of the regional economy of San Diego.

In our dynamic, global economy, we can no longer rely on business models or government approaches designed for yesterday’s environment. If we know one thing about the future, it is that being able to adapt – at both an institutional and individual level – will be the key to our success. It comes down to our ability to innovate – to answer the “what’s next” question.

As we address the “what’s next” question, I encourage all of you, as you talk with your government partners – local, state, and federal – to ask them what are they doing to answer the “what’s next” question. What are they doing to update their approach to advancing innovation in our changing 21st century global marketplace. In government, it is too easy to maintain the status quo. It takes the encouragement of leaders such as yourself to press both executive and legislative officials to consider new ways of doing things in order to address new challenges. Innovation is just as important in the public sector as it is in the private sector.

Clearly, biosciences and the work you in the bioparks community are doing to advance bioscience and the associated economic benefits that come with the advancements being achieved in your parks is a critical part of the “what’s next” question. I appreciate your leadership and the important scientific and economic role you play in the 21st century.

On behalf of the President of the United States, it has been my sincere pleasure to be with you today. My best wishes for an enjoyable and successful conference.

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