May 5, 2000
BIRMINGHAM, AL — A new economic impact study of UAB’s (University of Alabama at Birmingham) high-tech business incubator calls its success in helping new companies take discoveries from the laboratory to the marketplace “remarkable.” The study released by Department of Economics Chair S. D. Lee reports seven-year gains are most dramatic in job creation, contribution to income and expansion of the credit base of the MSA.
The high-tech business incubator known as The Office for the Advancement of Developing Industries (OADI) has helped generate 1,366 jobs in Alabama, a 34 percent increase since the economic analysis was conducted two years ago. Of those 1,135 were created in the Birmingham MSA, said Wilson Harrison, director of the UAB Research Park and OADI. For the seven-year period, job development increased 95 percent.
Some 58 graduates and tenants of OADI, comprising computer technology, biotechnology, biomedical technology and pharmaceutical industries, generated $129.5 million (85 percent increase) in gross-sales impact in the metropolitan area and $166.2 million throughout Alabama (92 percent increase).
They also contributed to $48.7 million in local income, nearly a 77 percent increase in the same two-year period, plus generated $3.6 million in taxes to local governments and added $133.9 million to the local credit-lending base. Since 1993, local income increased 338.7 percent and the credit base has expanded 234 percent.
OADI provides UAB faculty researchers and other Birmingham-based, technology-oriented entrepreneurs with low-cost space, professional services and other resources to nurture companies from early stage development through graduation to self-reliance. It is housed in the OADI Technology Center, the first of 25 buildings planned for the UAB Research Park.
Thirty-six companies have graduated since the incubator's inception in 1986; collectively, their revenues exceeded $73.9 million, a 145 percent increase in two years. Harrison said the new report is a direct reflection of the success of these graduate companies; 94 percent have gone on to commercial success. Topping the list of successful graduates are: BioCryst, which has an influenza drug in phase III clinical trials through a partnership with Johnson & Johnson pharmaceuticals; BioHorizons, whose dental implant recently went on the market; and DollarMark Systems and SBS Corp., which each carried multi-million price tags during recent sales.
Faith in the future commercial viability of OADI tenant companies is reflected in the sharp increase in capital and grant funding, Harrison said. Nine firms raised $91.5 million in capital and grants not included in the report because it focuses only on a short-term economic impact. That figures is a 119 percent increase in capital and grants in the two years since the last study.
“The type and quality of the research being conducted by companies at OADI has drawn the increases in capital funding and grant monies and is creating more and more interest from venture capitalists,” Harrison said. “It starts with UAB attracting the best researchers in the world to conduct ground-breaking research in its laboratories. It continues with the support of the UAB Research Foundation, which helps secure patents and licensing agreements for those discoveries, and comes to fruition with OADI and the Research Park, which provide the place for those ideas to grow into marketable products.”
OADI’s success also includes being a model for other high-tech enterprises. Last year 82 domestic visitors and more than 20 visitors from around the world, including China, Russia, Japan and Europe, toured the facility.
“We are a model,” Harrison said, “because we offer more services.”
This leadership was recognized in a recent Southern Technology Council report, which placed UAB among the best-in-class for transferring technology licenses to start-up companies and for royalty income received from businesses within the state.
“UAB also acts as a magnet for scientists and others who might otherwise take their ideas, and the money they generate, elsewhere,” Harrison said. “UAB provides the anchor.”
The time a company spends developing its products at OADI can range from months to years, depending on the federal and other testing requirements, Harrison said. Medical-related products can require several years of testing.
“Our economic impact is so great because we are creating products for which there is a real and recognized need,” Harrison said. “Our products, including pharmaceuticals, require a much greater investment in time and research dollars, but in turn they are products that demand a greater price at market.
“These companies also provide jobs for some of our brightest college graduates. The minimum wage for a technology company is about $30,000.”
OADI : Doubling digits
The seven-year impact of UAB's high-technology business incubator shows percentage gains well into the double digits, and in some instances, tripled volume.
1993
jobs BHAM - 655
jobs ALA - 700
in millions:
Related Sales - $63.4
Credit MSA - $40.1
Local income - $11.1
Local Taxes - $1.15
1995
jobs BHAM - 684
jobs ALA - 847
in millions:
Related Sales - $79.8
Credit MSA - $64.6
Local income - $15.75
Local Taxes - $1.48
1997
jobs BHAM - 900
jobs ALA - 1,020
in millions:
Related Sales - $86.2
Credit MSA - $94.5
Local income - $27.5
Local Taxes - $1.79
1999
jobs BHAM - 1,135
jobs ALA - 1,366
in millions:
Related Sales - $129.5
Credit MSA - $133.9
Local income - $48.7
Local Taxes - $3.6, including $451,000 in occupational tax
Source: Economic Impact, Office for the Advancement of Developing Industries, 1994, 1996, 1998, 2000.
(EDITORS: For more information, call Wilson Harrison, (205) 943-6560, and/or S.D. Lee, (205) 934-8831.)