Boosting Biosciences In 2012
Featuring significant exports, world-class innovation and quality jobs, the multifaceted biosciences industry — whose subsectors include agricultural feedstock, drugs and pharmaceuticals, medical devices, R&D commercialization laboratories and major medical centers — continues to be a bright spot in the American economy and a magnet for states and startups alike.
“There’s a realization that our industry features very high-income jobs, attracts people from all over the world and has one of the highest multiplier effects of any industry out there, both in terms of dollars spent and jobs created,” says Fritz Bittenbender, vice president of alliance development and state government relations, Biotechnology Industry Organization (BIO). “So even with the economic downturn, almost every state in the country is pursuing economic development targeted to biosciences, with many states re-upping programs and focusing their dollars in areas that they think can help support small company growth.”
According to BIO, there are more than 47,000 bioscience companies and 1.4 million workers in the United States. Moreover, the industry has grown an average 3.5 percent each year during the past decade with research and health care leading the way. It is also a high-tech powerhouse where emerging fields of study such as bioinformatics, biofuels and bio-based chemicals, nutraceuticals, nanotechnologies and personalized medicine are opening up new opportunities.
However, globalization has brought a new dynamic to the industry, with the United States no longer the undisputed leader in bioscience industry development. Companies and communities are adapting to these new realities by investing in new capabilities and building strong networks among entrepreneurs, research institutions and academia.
Typically, multinational firms drive commercial development while smaller enterprises contribute on the technological side. Amidst fierce global competition, U.S. biosciences companies of all sizes are dealing with increased scrutiny of the R&D process and facing industry consolidation while having to lower their clinical testing and production costs. For startups especially, lack of seed capital is another barrier to growth.
Bittenbender points out that good ideas are still getting funded, but because the shift of private equity away from early-stage companies has compelled states to try to fill that gap, proper site selection is critical. Some states are allowing monetization of earned R&D and net operating loss credits, sales tax exemptions for the purchase of R&D equipment and investment tax credits to drive angel capital investment in the bioscience industry. At the federal level, the R&D tax credit is likely to be extended retroactively to January 1, 2012, but probably not until the lame duck legislative session at the end of the year.
Clusters Move Forward
New Jersey, home to a well-established cluster which includes 15 of the world’s leading pharmaceutical companies, is building on its past success by streamlining public policy and boosting collaboration to drive growth.
“The outlook is bright — we’re building on a strong foundation through deployment of laser-focused research, a global marketing campaign and integrated set of financing tools and resources to give New Jersey a competitive edge in the life sciences sector,” says Tracye McDaniel, president and CEO, Choose New Jersey. “Governor Christie has championed several initiatives, including the establishment of a three-pronged, collaborative Partnership For Action [comprised of the Economic Development Authority, Business Action Center and Choose New Jersey] that’s making a very noticeable difference.”
One result of the state’s renewed focus is the January announcement by Watson Pharmaceuticals Inc. to invest $4.5 million in its Global R&D Technology Center in North Brunswick. The move comes two years after Watson relocated its global corporate headquarters to Parsippany, in a facility designed to support its global expansion and ultimately employ as many as 500 people.
“New Jersey has long been a center of excellence for pharmaceutical companies,” says Charlie Mayr, senior vice president of corporate affairs, Watson Pharmaceuticals. “Here we can collaborate with highly-skilled global pharmaceutical experts while having access to a supportive state government and the financial center of the world in New York City.”
Heading south, biopharma companies and specialized education initiatives are expanding in South Carolina where Nephron Pharmaceuticals Corp. — whose owners established the Kennedy Pharmacy Innovation Center at USC’s Innovista research campus last year — will also establish a new pharmaceutical manufacturing campus in Lexington County.
The $313 million facility will add to an established base of pharmaceutical companies comprised of bulk manufacturers, chemical processors, generic and proprietary drug makers, hygiene product producers and packagers including Bausch & Lomb, Capsugel, GlaxoSmithKline, The Ritedose Corp., IRIX Pharmaceuticals, Perrigo Co. and Roche Pharmaceuticals.
Georgia’s Innovation Crescent Regional Partnership is home to firms such as Merial, CyroLife, Porex, Immucor, Elan and Noramco. The partnership spans 13 counties from Atlanta to Athens. Parts of its activities include identifying current and future workforce and training needs, as well as assisting with bioscience career pathways. Pathways have been developed for high school students, and bioscience tasks have been developed for middle school students. Gwinnett Technical College has been selected as a beta site for the NSF-funded Bridge to Biotech project, which provides entry level courses for students that lack scientific backgrounds.
Other advantages for bioscience industry companies include the Georgia BioBusiness Center at the University of Georgia in Athens. The incubator is a partnership with the Center for Applied Genetic Technologies. Each year, Athens Technical College graduates 80 technicians and technologists from its biotech program.
“The biosciences cluster in Athens centers primarily on research talent and discoveries associated with the University of Georgia,” writes Mac Brown, president, Athens-Clarke County Economic Development Foundation, in an email. “Many small businesses have been created and nurtured as a result of the university’s discoveries and technology transfers in genetics, pharmacology, bioinformatics, veterinary medicine, crop improvement and other areas.”
Brown says partnerships with corporate clients have produced a wide range of results in basic research and product development.
One company that calls Athens home is Merial, the animal health division of Sanofi and the world’s largest manufacturer of veterinary pharmaceutical products. Merial has a manufacturing facility in Athens, and its global headquarters is located within an hour’s drive.
Moving to San Antonio, Texas, the bioscience and health care industry is a dominant force in the city’s economy and includes a thriving mix of research organizations, educational institutions, bioscience firms and health care systems.
“We’ve been a major center of medicine for this part of the country for a long time,” says Mario Hernandez, president, San Antonio Economic Development Foundation. “That’s a big advantage, but we also have a fully-integrated industry supply line where a company can develop a product at local research facilities, tap into a seed fund during the idea stage, access venture capital to commercialize the concept, then use local operations to produce it.”
Notable local facilities include the InCube life science incubator, the nation’s only privately operated, maximum containment (BSL-4) laboratory and the Texas Biomedical Research Institute which operates the world’s largest computing cluster for genetics and genomics research. San Antonio also features one of the largest military medical complexes in the world and is the only U.S. city with three Level I trauma centers.
Medtronic’s new Diabetes Therapy Management & Education Center opened in San Antonio in 2009 and in June 2011, Becton, Dickinson and Co. opened its North American Services Center Headquarters, the first of four professional service centers the company plans to establish across the globe. Both companies received a mix of cash grants, tax abatements and workforce training funds.
In northern Kentucky, a life sciences sector is emerging around the city of Covington, supported by the expansion of bioLOGIC, an R&D accelerator providing startup biotech firms with CLIA-certified lab space and assisting in commercializing projects. Duke Energy recently awarded bioLOGIC with a $100,000 grant to develop a life sciences corridor.
“We’ve put a focus on life sciences over the last several years and made many positive steps in forming an industry corridor — like being the first to match SBIR grants which are very attractive to small startups,” says Karen Finan, senior vice president, Northern Kentucky Tri-ED. “There’s no one way to set up the right environment, but we have a great value proposition across several areas of the industry, especially in R&D work, pharmaceutical distribution and medical devices.”
A key part of the region’s strategy rests on a high-touch approach. “Proximity to the P&G health science scene was important,” Finan says, “but bioLOGIC wanted to be in an environment where they could get a lot of attention and make a difference. We find so often in Northern Kentucky that a smaller to mid-size company can do well in our community because we really take the time to work with them, find programs that match their needs and network them with other companies so they can hit their sweet spot.”
Aptitude And Attitude Count
Communities looking for success in the biosciences should pay particular attention to fostering technology transfer, upgrading research capabilities and meeting the industry’s distinct funding and human capital needs. With global competition high and development times long, they should be also prepared to consider new legislative strategies and pursue opportunities over the long haul.
“Companies are taking notice of New Jersey’s business-friendly environment,” McDaniel notes. “Novo Nordisk’s decision to invest $215 million into a new headquarters in Princeton was based largely on the positive fiscal and regulatory reforms implemented to foster an environment conducive to growth, business expansion and job creation. Cutting red tape, removing outdated taxes and developing powerful incentive programs have put us on an equal playing field with other competing states.”
“There are many cities that have outstanding bioscience companies and health care systems.” Hernandez says. “We’ve got a great industry ecosystem here, but it’s very important that we’ve also got the resources, leadership and community who desire to be one of the best. Our future depends on it.”
Mark Kleszczewski is president and CEO of GoBusiness Group, LLC and a freelance writer on critical business topics. He can be reached at email@example.com.
For complete details on the organizations featured in this article, visit:
Athens-Clarke County (Ga.) Economic Development Foundation
Biotechnology Industry Organization
Choose New Jersey
Nephron Pharmaceuticals Corp.
Northern Kentucky Tri-ED
San Antonio Economic Development Foundation
Watson Pharmaceuticals Inc.