Scott Burdette, all of nine years old, wanted to see what fire would do to a can of spray paint. When the can exploded, the left side of his body was covered with flaming paint.

He was flown by helicopter to the Children's National Medical Center (Washington, D.C.), where his burned skin was replaced with a new covering of skin that quickly relieved his pain. He left the hospital eight days later and was back in school three weeks after the accident. Today, two years later, a casual observer would never know Scott had been burned.

Doctors often treat severe burns with grafts of a patient's own skin. But the skin that helped Scott didn't come from his or anyone else's body. It came from the factory of Advanced Tissue Sciences Inc. (ATS, La Jolla, Calif.), a corporate pioneer in the fledgling field of tissue engineering, which seeks to provide off- the-shelf replacement body parts.

State of the industry

Biomedical science has made a lot of progress in understanding how cells grow into functioning tissue and what chemical and other cues they need to do it right. Tissue engineering is the application of that knowledge to the building or repairing of organs, including skin, the largest organ in the body. Generally, engineered tissue is a combination of living cells and a support structure called a scaffold. The scaffold, depending on the organ in production, can be anything from a matrix of collagen, a structural protein, to synthetic biodegradable plastic laced with chemicals that stimulate cell growth and multiplication. The "seed" cells that initiate this propagation come from laboratory cultures or from the patient's own body.

But while tissue engineering has made great gains as a science, it has been much less successful as a business. Two leaders in the industry fell into financial trouble this fall. On 10 October, Scott Burdette's supplier, ATS, filed for Chapter 11 bankruptcy, which allows the company to continue operations while figuring out how to restructure its finances. To keep the supply of skin coming, the company sold its stake in its skin-making operation to its more financially stable joint venture partner, the medical device maker Smith & Nephew PLC (London).

Weeks earlier, the other skin manufacturer, Organogenesis Inc. (Canton, Mass.), was forced into Chapter 11 bankruptcy, when its marketing and distribution partner, the drug company, Novartis International AG (Basel, Switzerland), refused to renegotiate how much it was paying Organogenesis for skin. It turned out that the contracted price was too low for the manufacturer to sustain itself. Industry insiders blame the bankruptcies on a combination of lackluster sales, the high cost of winning regulatory approval, and poor profit margins.

The bankruptcies are certainly a loss for the industry, but not a fatal one, says Michael J. Lysaght, biomedical engineering center director, School of Medicine, Brown University (Providence, R.I.) and keeper of tissue engineering industry statistics. Sales of engineered skin, about half of the industry's US $50 million output for the year ending in June 2002, were on the rise; the rest of the total comes from engineered cartilage for joint replacement. Overall, companies involved in tissue engineering grew from 66 in 2000 to 99 in 2002, and investment in tissue engineering grew 14 percent to $675 million, Lysaght revealed at a joint meeting of the IEEE Engineering in Medicine and Biology Society and the Biomedical Engineering Society in October.

According to Gail K. Naughton, cofounder of ATS, the companies' poor margins were largely due to a lack of automation in their manufacturing processes. For future ventures to succeed, she says, they will have not only to tackle the myriad scientific problems still left, but also to replace today's largely manual processes with automated electronics-rich operations.

For one thing, precise sensors and control systems will be needed to create and maintain the biochemical and mechanical environments that nurture tissues like skin. Also, robotics and other automation will be needed to remove people from the tissue growth process. Already, fledgling firms and tissue engineering labs are borrowing some advanced engineering practices, like high-precision rapid prototyping and photolithography, as they strive to create engineered bone, cartilage, blood vessels, and internal organs. These technologies may be the forerunners of automated factories capable of mass-producing a head-to-toe variety of life-improving and life-saving body parts, including factory-built hearts and livers. This development could put an end to transplant waiting lists—and the suffering of those on them.