Study endorses economic development push for biologistics

Memphis Business Journal
November 18, 2005
By Einat Paz-Frankel

Given the strength of logistics and growing momentum of biotechnology in Memphis, a new study shows that an emerging hybrid biologistics industry looks promising.

Commissioned by the Memphis Bioworks Foundation, the study explored ways in which Memphis can capture a share of the growing biomedical market through serving it with logistics, warehousing and distribution.

According to the study presented to the Regional Logistics Council, 2005 annual sales of biomedical products in the U.S. is estimated at $294 billion, supported by biologistics services of $13.8 billion. By 2015, biomedical sales are expected to grow to $682 billion, which will necessitate biologistics services of $32 billion.

Currently, Memphis has an estimated 3.8% of the American biologistics services market, and researchers recommend the region should increase its share to 5.6% by 2015.

"The industry trends favor the Memphis region for realizing substantial growth in the biologistics services market and achieving market share gains," says Dan Romney of Health Pathways, which conducted the study.

The economic impact on the Memphis region could be substantial, with revenues reaching $1.8 billion in 2015, Romney says. Moreover, some 10,000 new logistics jobs will be created and result in 6,000 additional jobs in unrelated industries. Biologistics jobs are expected to pay more than logistics jobs and require more advanced skills.

"Packaging and shipping cell tissues is not like shipping refrigerator parts or even pharmaceuticals," says Steve Bares, president and executive director of Memphis Bioworks Foundation, a non-profit organization dedicated to promoting biomedical technology.

The cost of biomedical products, the speed in which they need to be delivered, along with the federal regulatory guidelines their handling requires, make biologistics a highly specialized industry, he says.

"Biologistics was never thought of as a segment of its own," Bares says.

He emphasizes that this is the first biologistics market study in Memphis and that more studies need to be done. However, this study shows there is enough potential in Memphis to make economic development efforts that will attract biologistics companies and departments to the region, Bares says.

"It's a huge, growing market," he says. "Memphis has a lot to bring to the table."

According to the study, Memphis offers a substantially lower cost of doing business than other research-rich communities such as Boston and the Bay Area. Additionally, Memphis' existing infrastructure could also prove beneficial for biologistics companies. For example, FedEx's late shipment times from Memphis allow companies to capture more business.

Several biotech companies already enjoy Memphis' flexible shipping schedules. Cordova-based Transnetyx, which provides genotyping for mice labs in the U.S. and Europe, receives and ships tissue biopsy samples through FedEx, says senior vice president Bob Bean. This way, a lab can ship a sample and receive results the next day, he says.

"FedEx allows us to be competitive with speedy, accurate and timely results," Bean says. "We ship results as early as 4:30 a.m., before anyone else in America. It's a great opportunity."

Bares says the customized biomedical market will grow in the next 10 years with "more personalized medicine, individual pills, and solutions customized to specific genetic needs," which will further enhance the need for biologistics.

Work force training is the biggest challenge facing this newly emerged industry, says logistics consultant Cliff Lynch of C. F. Lynch and Associates.

"We desperately need work force development for both logistics and biologistics," he says. "Labor has always been our Achilles' heel. We're getting ahead of ourselves."

The biologistics study acknowledges this challenge and recommends on-the-job training as well as high school and advanced programs.

Bares says the Bioworks Foundation's education committee is working to promote new college programs such as a two-year associate's certification in the biologistics field.

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