Arizona's biosciences sector is expanding despite the still-struggling economy - boosted in Southern Arizona by expansion at companies like Oro Valley-based Ventana Medical Systems/Roche.

Employment in Arizona's biosciences sector rose 7.4 percent from 2009 to 2010, according to the latest update of a statewide bioscience plan commissioned by the Phoenix-based Flinn Foundation.

Locally, much of that job growth came at Ventana Medical Systems, which has added more than 300 jobs since being acquired by Swiss drug giant Roche AG in 2008.

And the company is still expanding, the company's chief said Thursday at a biosciences industry update hosted by Flinn at the Marriott University Park.

Ventana, a University of Arizona technology spinoff that makes tissue-diagnostics instruments, now employs about 1,200 people in Arizona and plans to bring in more workers from recently acquired companies, said Mara Aspinall, named president of Ventana Medical Systems last August.

"Ventana is very proud to be here," Aspinall said in one of her first public speeches since taking Ventana's top post. "We doubled our acreage in the Oro Valley area, and we intend to continue to expand there."

Since Arizona's Bioscience Roadmap was launched in 2002, through 2010, private biosciences employment including hospitals has grown 41 percent, compared with 11 percent nationally, according to a road map update.

In the Tucson region, non-hospital employment in research, testing and medical labs rose 33 percent over the same nine-year period, says a study by the Battelle Technology Partnership Practice.

But much work remains to be done to adequately fund the state's research universities, boost federal research grants and attract venture capital to nourish bio startups, said Walter Plosila, senior adviser to Battelle and the report's author.

"The numbers for the whole decade are very strong, and more importantly, we continue to make progress," Plosila said.

Private equity investment in Arizona bioscience firms by venture-capital funds and individual "angel" investors fell from more than $40 million in 2002 to about $25 million last year, the report found.

However, the amount of so-called "risk capital" - considered the lifeblood of many biotech startups - rose last year to an estimated $69 million, Plosila said.

Much of that was attributable to Southern Arizona, where Tucson-based HTG Molecular Diagnostics announced a $15.7 million venture-capital deal, he noted.

"The entrepreneurial engine of Arizona is clearly in the Tucson region," Plosila said, though he added that Arizona still lags in locally based investment.

Arizona has outpaced the nation in the growth of funding from the National Institutes of Health, but the state still gets less than its share of funding by population, Plosila said.

The growth of NIH grants to non-university private research institutes has outpaced university grants, with the dollar amount of grants rising nearly 80 percent between 2002 and 2011, compared with 18 percent for the universities, Plosila noted.

While that's a testament to the strength of private research in the state, it also may reflect the impact of cuts to state university funding, Plosila said.

"The cutbacks in higher-ed funding in the state - $428 million in cuts to date - that's going to be a major challenge," he said.

T.J. Johnson, president and CEO of HTG Molecular and co-chair of the Biosciences Leadership Council of Southern Arizona, said the council recently hosted an event with about 40 legislators to stress the importance of university funding as well as K-12 education.

Arizona's low rankings for public schools don't go unnoticed by prospective employees, said Johnson, whose company has more than doubled its staff since 2008 to about 45 now and plans to double again in the next five years.

"No question - people read the statistics," Johnson said.

Ventana's Aspinall said Arizona's biotechnology assets and collaborative efforts make the state well-positioned to prosper as the medical industry moves toward "personalized" health care - essentially using genetics and related technologies to match patients to therapies.

The state needs to get the word out, she said, adding that she was surprised by the relative strength of the state's biotech industry after arriving from the Boston area.

"Arizona is a hidden gem," she said. "One of the key messages, maybe in the next stage of the road map, is ensuring that others know outside of the community - that is a key piece to creating that movement."

View the report

To read the most recent progress report on Arizona's Bioscience Roadmap, go to www.flinn.org.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.