About two dozen Pennsylvania biotechnology entrepreneurs gathered outside Philadelphia in 1989 to hear why they should form a trade association that would tell the story of their nascent industry.

Dennis M. “Mickey” Flynn was there and recently recalled, “We did not look like we’d amount to too much.”

After all, traditional pharmaceutical companies were the dominant force in new drug development. Centocor Inc., the Philadelphia region’s first biotech firm, was only about 10 years old with no drug approvals. Cephalon Inc., now the region’s largest independent biopharmaceutical firm, had started only two years before.

Flynn was elected chairman and president of the Pennsylvania Biotechnology Association at that inaugural meeting. It had no money, and was run by executive director Jeff Davidson out of State College until it moved to Malvern in 1998.

By the end of 2009, the renamed Pennsylvania Bio has 378 members and is run by a professional staff headed by Flynn, who returned for a second tour as president in 2005.

Flynn, who will turn 69 in May, last week announced that he will step down as of June 30. Christopher Molineaux, 44, a veteran of the communications teams at Centocor and Johnson & Johnson, will succeed him.

Since September, Molineaux has been senior vice president for membership services at the nonprofit trade group. During a year when many other business organizations lost membership, Pennsylvania Bio had a net gain of 32 members, Flynn said.

According to its latest filing with the IRS, Pennsylvania Bio had revenue of $1.51 million for 2008, with $741,750 of that coming from membership dues. An additional $598,180 was generated from running a series of life-sciences educational and networking meetings.

With the biotech industry accounting for more than 77,000 direct jobs in Pennsylvania, it no longer seems necessary to get the word out about the business, but Flynn begs to differ. Now, the industry faces workforce training and transition issues that it couldn’t have imagined back in the late ’80s.

Lack of small “incubator” space also remains a priority. Flynn said Pennsylvania Bio and the University City Science Center are working to establish a biotech incubator in Chester County. The science center currently operates one in West Philadelphia.

The United States makes, will the world take?

We’re about to find out as the Obama administration plans an ambitious effort to double U.S. exports over the next five years.

The president mentioned his National Export Initiative during the State of the Union speech last week, and Thursday Commerce Secretary Gary Locke filled in the details.

Obama has requested a 20 percent increase - a total of $78 million - for the 2011 budget of the Commerce Department’s International Trade Administration. Those funds would be used, in part, to hire as many as 328 trade experts to advocate on behalf of U.S. companies.

The president also wants the Export-Import Bank, which finances U.S. companies that export, to increase the financing available to small and medium-size businesses to $6 billion from $4 billion over the next year.

Coming at a time when so many other countries are counting on expanding exports to repair their damaged economies, is this even feasible?

Well, just look at recent history. U.S. exports nearly doubled from $977.5 billion in 2002 to $1.83 trillion in 2008. Most of us never noticed because imports rose from $1.52 trillion to $2.52 trillion over the same span.

Locke said exports accounted for 11 percent of U.S. gross domestic product last year and supported nearly 10 million jobs. Since Washington is now all about jobs, the Obama team projects that doubling exports would create two million jobs.

As we’ve seen when job creation statistics are thrown into any federal spending discussion, it’s anybody’s guess what the actual number might be.

But two Philadelphia-area people involved in exporting certainly think the new emphasis is a good idea.

Linda Conlin, now president of the World Trade Center of Greater Philadelphia, has spent much of her career working on trade. “I think this initiative is great. It’s right in line with what we do for companies in this region,” said Conlin, a former vice chairwoman of the Export-Import Bank in Washington who took her current job in June.

Last year, the World Trade Center provided consulting to about 400 firms in the area, accounting for an $80 million increase in sales, she said.

Gary Biehn, chairman of the business department of White & Williams L.L.P., focuses his law practice on helping firms do business in the Far East. He said domestic-only firms had been seriously challenged with the financial issues of this downturn and many may see exporting as a way to grow their businesses.

Financing, intellectual-property protection, and cultural differences are among the hurdles that businesses looking to export face. Right now, a weak U.S. dollar makes U.S. exports competitive. But that advantage can fade quickly.

The good news is that Washington has had the infrastructure in place for years to promote export activity. “The devil is getting the funding to back up the programs,” Conlin said.

The funding is on order. Asian economies are mending faster than that in the United States. The open question is whether more small and medium-size firms are prepared to risk doing business overseas.

The once-invincible American consumer has met its Kryptonite.

The Great Recession, a debt binge, high unemployment, and a collapse in housing prices have all sapped the once miraculous ability of shoppers to spend the U.S. back to economic health.

That was the message economist Ellen Beeson Zentner brought to the Philadelphia Council for Business Economics at the Federal Reserve Bank of Philadelphia Wednesday.

The talk, titled “The U.S. Consumer - Shocked into Submission,” made the case that while the U.S. economy is in recovery mode, the consumer may sit it out.

Zentner, the senior U.S. macroeconomist at the Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, is forecasting a 1.8 percent increase in consumer spending in 2010. That may sound good, coming after a decline of 0.6 percent in 2009 and 0.2 percent in 2008 - the first back-to-back contraction since 1933.

But 1.8 percent growth is anemic compared with the average rise of more than 5 percent that occurs during the recovery phase of the business cycle, she said.

Several long-term trends factor into her forecast. First, Americans’ dependence on debt grew over 25 years. She calculated that household debt as a percentage of disposable income surpassed 140 percent in 2007.

During the last two years, Americans have paid back more debt than they ever have. But their debt burden is still 30 percent above disposable income, she said.

Consumer spending will lag because job growth will be slow, the housing market remains weak, and household formation has slowed.

That last point may sound like economist-speak. But Zentner, who will quote the lyrics of the hip-hop group Black Eyed Peas to make a point, said household formation is a big driver of consumption. When you buy a house or rent an apartment, you need to buy other things to fill the space.

When Zentner outlines the prospects for the 16- to 24-year-old age group, it’s a bleak view. Persistent unemployment and underemployment will hold down their lifetime earnings. In a weak job market, they’ll live with their parents, rather than start their own households.

“I feel bad for them, but they’ll be the poorest generation since World War II,” Zentner said.
 

It sounds reasonable: Provide more capital to small community banks so that they will be inclined to lend to small businesses who will then expand and add jobs.

That’s the logic behind the $30 billion plan President Obama floated in New Hampshire Tuesday.

But just one problem: The federal government already tried it and botched it with the $700 billion Troubled Asset Relief Program. You know it as the program that sunk billions into Citigroup, Bank of America and other big banks as well as AIG, General Motors and Chrysler.

At first, the Bush financial crisis squad had hung a “welcome” sign on the TARP, seeking banking’s capital poor and those huddled institutions yearning to lend again.

But quickly, many of the 707 banks that accepted TARP capital became a target for public and political criticism, viewed as needing a bailout. Congress changed some of the rules after the fact, including limiting compensation of TARP recipients.

Those changes scared off small and community banks from participating in TARP, said Camden Fine, president of the Independent Community Bankers of America. In fact, 600 banks that had submitted applications to the Treasury Department pulled them in early 2009, he said.

The bottom line: Did the effort increase small business lending? Not according to the Special Inspector General for TARP.

“Despite the fact that the explicit goal of the Capital Purchase Program was to increase financing to U.S. businesses and consumers, lending continues to decrease, month after month,” states its most recent report.

The latest Federal Reserve Beige Book contains anecdotal reports that loan demand remained weak and declined in many areas of the country. Credit quality is deteriorating and commercial loan delinquencies are on the rise.

For many businesses, lack of credit is not their most pressing challenge. The National Federation of Independent Business’ most recent survey of small-business owners asked what was the single most important problem facing them in December. It was poor sales, followed by taxes, not access to credit.

Still, the Treasury Department clearly believes that creating a new program focused only on community banks with less than $10 billion in assets will succeed where TARP failed.

What’s to prevent a backlash from happening again? “Simply because this program [TARP] became so deeply stigmatized does not mean one designed for community banks will be,” said Gene Sperling, counselor to the Treasury Secretary.

Sperling contended that the American public draws “a big distinction” between the big banks at the heart of the financial crisis and the community banks on Main Street who engage in “long-term relationship lending.”

I’ll agree with that, but will new lending fix the economy or will a better economy fix lending?

Both Fine’s trade group and the American Bankers Association support the intent of Obama’s small-business lending initiative. But given that it’s up to Congress to make it all happen, the details are what matters.

“It may start off as a horse and turn into a platypus,” Fine said.

There certainly was an international accent to the deals announced yesterday involving Philadelphia-area companies.

A Brazilian company bought Sunoco Inc.’s polypropylene business for $350 million. Braskem S.A. is buying a foothold in the huge U.S. chemicals market from Philadelphia’s Sunoco.

In the other deal, Frazer-based Cephalon Inc. bought a Swiss generic-drug maker for $590 million. The transaction is the latest move by a pharmaceutical company to become less reliant on the U.S. market for its sales.

The purchase of Mepha AG will double the size of Cephalon’s international business. The privately held Mepha had sales of about 400 million Swiss francs, or about $379 million, in 2009.

For its nine months ended Sept. 30, Cephalon generated $266.3 million in net sales in Europe compared with $1.35 billion in the United States.

Mepha employs 1,000 people worldwide, including 500 in Switzerland. Expected to close in the next 12 weeks, the deal would bring Cephalon’s global workforce to about 3,800.

New CEO

David Pernock has been named chief executive officer of Fibrocell Science Inc., a small Exton company that’s been developing a wrinkle treatment.

Until November, Pernock had been a senior vice president at GlaxoSmithKline P.L.C. in the Philadelphia area.

Pernock, 55, was chairman of Fibrocell when it emerged from bankruptcy on Sept. 3. He replaces interim CEO Declan Daly, who is now chief financial officer.

In December, the FDA issued a “complete response letter” regarding Fibrocell’s wrinkle treatment. That means that the company will have to supply more information before the agency can consider possible approval.

Quotable

Stated another way, even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.

- from a quarterly report to Congress issued Saturday by the Office of the Special Inspector General for the Troubled Asset Relief Program.

You can’t be tired of earnings season already. It’s just getting interesting.

This is the week when some of the region’s biggest and best-known companies report financial results. We’re talking Sunoco Inc., Cigna Corp. and Unisys Corp. as well as Dow Chemical Co. and Pfizer Inc., both of which bought huge Philadelphia-area employers in Rohm & Haas Co. and Wyeth during the last year.

Sunoco’s results bear watching because the current business cycle has been awful for oil refiners. As a result, Valero Energy Corp., Chevron Corp., Sunoco and others have been closing refineries and slashing their workforces. Sunoco has posted net losses in its last two consecutive quarters.

On the flip side, Unisys will try to make it three quarters in a row in booking a profit, something the computer-services company hasn’t done since 2004.

But as usual, Comcast Corp. will probably get most of the attention when it releases its fourth-quarter and year-end results on Wednesday. Last quarter, the Philadelphia company said it lost 132,000 cable TV customers, but added 736,000 phone and high-speed Internet customers.

Plus, it may have some news on the employment front. In November, Comcast said it was looking at cost cutting and expected to take a charge for severance costs in the fourth quarter.

On Thursday, Comcast CEO Brian L. Roberts and NBC Universal CEO Jeffrey Zucker will be in Washington to make their case for the combination of their media enterprises.

They will testify at two hearings: the House Energy & Commerce subcommittee on communications, technology and the Internet at 9:30 a.m., and the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights at 2:30 p.m.

Think DirecTV will be covering the hearings live in HD?

Earnings

Here’s the scorecard for this week’s earnings avalanche.

Today: Crown Holdings

Tuesday: Dow Chemical, Hershey, Kenexa

Wednesday: Comcast, eResearchTechnology, Pfizer, Republic First Bancorp, Triumph Group

Thursday: Cigna, EnerSys, FMC, GlaxoSmithKline, Knoll, Kulicke & Soffa Industries, Nobel Learning Communities, Sunoco, Technitrol, Unisys

Friday: Aetna, PPL.

What drives people crazy about the economy are the mixed messages sent by the different statistics in the news every day.

Today, we get the “advance estimate” on how U.S. gross domestic product changed in the fourth quarter. The good news, according to a Bloomberg survey of economists, is that economic output likely rose at a 4.7 percent annualized rate, compared with 2.2 percent in the third quarter.

UPDATE: The Bureau of Economic Analysis reported the economy grew at a 5.7 percent annual rate in the fourth quarter.

Will you feel any better knowing that? GDP is a statistic from 30,000 feet, hard to distinguish for those walking along Main Street, where conditions don’t look so good.

One economist who isn’t eagerly awaiting the initial read on GDP is S. Boragan Aruoba of the University of Maryland. I first talked with him a year ago after the Federal Reserve Bank of Philadelphia launched the Aruoba-Diebold-Scotti Business Conditions Index, named after its three creators.

The index is built from six indicators: weekly initial jobless claims, quarterly real GDP, and monthly data on payroll employment, industrial production, personal income, and manufacturing and trade sales.

Given his index’s use of GDP, I’d wondered if new data would cause a significant shift in the direction of the ADS Index.

Aruoba said it shouldn’t, because the index is updated regularly using more frequently issued data. An eye-popping GDP number should not swing the ADS Index one way or another because critical employment and industrial production data are already baked into it.

“I’m personally not dying to hear what the number is going to be,” he said. “If I trust the index, it won’t give me much more information than I already have.”

In January 2009, the ADS Index was showing a plunge in business conditions that had not been seen since 1980. After that, the index began a rapid ascent, reaching positive territory during July. Its trend line supports the widespread belief by economists that the recession ended at some point between June and August.

And that’s what makes the ADS Index so useful. At a glance, you can see if conditions are decelerating, accelerating or stuck in neutral.

Unfortunately, the ADS Index lately has meandered around its zero line, meaning we’re stuck in neutral.

Those starting businesses are often different from those with a lot of money to invest. The challenge is getting the two sides to meet.

This April, more than 100 investors are expected to gather at the Union League in Philadelphia to hear presentations from 30 entrepreneurs at the 12th Annual Angel Venture Fair. (Angels are the private investors, not the scrappy start-ups. The new companies would nevertheless be godsends should they prove to be fast growers and create lots of jobs.)

Who will those companies be? Well, first, they’ll be those that paid $250 to submit an application just to vie for one of those spots.

Sounds like a case of “it takes money to make money.” But Valerie Gaydos, executive director of the Private Investors Forum, which will host the event, said the application and fee are the first screens to weed out those that aren’t serious.

Gaydos said angel investors - many of whom were once entrepreneurs themselves - are more likely to read and offer feedback on a business plan when they know an entrepreneur has parted with some cash.

Most likely to get selected are businesses that have a product and revenue, or those started by people who have started and sold businesses previously, she said.

From the pile of applications, a panel of judges will invite 50 semi-finalists to make live presentations on March 4. From that group, 30 will be chosen to make 8-minute PowerPoint presentations to the angelic host at the April 6 venture fair.

Another 20 will participate in “speed dating” sessions. Each entrepreneur makes a 2-minute pitch to a table of angel investors, then moves to the next table, and so on.

If it all sounds like a lot of blather, consider that companies at the 2009 Angel Venture Fair raised a total of $4.4 million by year’s end and had commitments for up to $2 million more in follow-on financing.

Gaydos said she expects more investors will be looking to do deals this year. “These are people who have money sitting in bank accounts not getting interest,” she said. “They’re screaming for opportunities for where to park their money.”

The application process is totally electronic at the Angel Venture Fair Web site. But hurry because the deadline to apply is Feb. 2.

Maybe tiny Delaware really can make a comeback in the auto-assembly industry, thanks to technology and tax dollars.

A Bellevue, Wash., company that has developed hybrid electric vehicle technology was in Dover, Del., giving rides in its prototypes to state officials, including Gov. Jack Markell.

AFS Trinity Power Corp. calls its vehicle, which is a reconfigured Saturn VUE SUV, the XH150. It first showed off the prototypes at the North American International Auto Show in Detroit in January 2008 and brought them to Philadelphia that April.

AFS Trinity CEO Edward W. Furia, a Philadelphia native, said the company made the trip east to meet with Markell on the suggestion of attorney Stephen M. Goodman, a partner in the Philadelphia office of Morgan Lewis & Bockius.

In the last two years, Delaware lost two huge auto-assembly factories when Chrysler and General Motors closed them. But last fall, the California-based Fisker Automotive announced plans to build its electric cars at GM’s shuttered Wilmington plant. And as PhillyDeals reported last week, AutoPort Inc. was picked by the U.S. Postal Service to build prototype electric vehicles in Wilmington.

Furia said he views Delaware’s idled factories and able workforce as a viable option to produce AFS Trinity’s hybrid, which has an all-electric range of 40 miles on a single charge. But the privately held company is not close to picking a location.

While Markell was test-driving AFS Trinity’s XH150, GM said it would invest about $246 million in its Baltimore Transmission factory to build electric motors, creating 200 jobs in Maryland. GM was able to do so, in part, with funding from the U.S. Energy Department.

AFS Trinity didn’t apply for any of the billions offered by the Energy Department in 2009, Furia said, because “the regulations were not friendly to small business.” I’ve heard other alternative-energy entrepreneurs make the same complaint.

To be chasing his electric car dream after 20 years, Furia had convince lots of people to take a chance of him. Furia said John Andrews “Jay” Harris IV, of Berwyn, who died Dec. 29, had supplied critical funding that enabled him to build the prototypes that spent Tuesday tooling around Dover.