StreetTalk: States' Battle Over Biotech Business Begets Brainstorming

In the life sciences industry, just as in real estate, location is everything
Mar 01, 2006
Volume 19, Issue 3

Brian O'Connell
The above statement reflects the opinion of a growing number of US governors and key state lawmakers.

The last few years have seen a big uptick in state investments in biotechnology, with places like New York, Pennsylvania, Florida, and Wisconsin pouring millions into new biotech ventures such as life sciences "campuses," new funding ventures, and added budget outlays for additional academic study of life sciences issues. States will bend over backwards for more biotech business, offering not only financing, but tax breaks, use of state university research labs, and one-on-one face time with top state officials to lure life sciences companies across their state lines. The potential for adding thousands of high-paying jobs doesn't hurt either.

The race for biotech business has helped the US compete globally. In a recent study of biotechnology "hot beds" located across the globe, four of the top five locations were US-based (California, Maryland, New Jersey, and Wisconsin, with Singapore the only non-US locale).

At the Biotechnology Industry Organization's (BIO) annual meeting in Washington, DC, Ernst & Young presented an interesting statistic: the life sciences industry has grown to nearly 1,500 companies in the United States, employing nearly 195,000 workers, with revenues of $33.6 billion in 2002. That is up from a decade ago when the industry employed 79,000 workers in nearly 1,200 US companies with revenues of $8 billion. Public and private financing is at a standstill, however. According to BIO, biotech firms raised $20.1 billion in public and private monies, a bit less than the $20.8 billion raised in 2004.

But with industry growth increasing—the US Bureau of Labor Statistics estimates that life sciences will grow by 13 percent through 2012—and with more college graduates obtaining life sciences degrees, states are are trying to lure biology sciences firms. Question: how are they doing? Anwer: not bad.

  • New York recently funded $800 million towards a new life sciences center.
  • Florida is plowing more than $500 million in a new branch of the Scripps Research Institute, the prestigious academic center that helped make San Diego one of the world's leading biotech cities.
  • Arizona designated $90 million to lure a genomics research center to locate in Phoenix.
  • Pennsylvania has earmarked $2 billion in tobacco settlement funds for life-sciences investment.
  • Missouri is giving state biotech companies $36 million per year from 2007 through 2025.
  • Georgia recently rolled out a $1 billion public-private cancer research initiative.
  • California, through its Proposition 71 initiative, which sets aside $3 billion in state monies for stem-cell research, is offering free rent to life sciences companies in San Diego, along with legal assistance, free meeting facilities, and hotel rooms over the next 10 years.


States with heavy academic credentials, such as Massachusetts, California, and New York lead the pack in state-sponsorship of biotech initiatives. Massachusetts alone expects 150,000 new biotech jobs in the state by 2010. With Harvard, MIT, the University of Massachusetts, and other high profile colleges located in the state, Massachusetts has a leg up over other locales.

There are a few others not far behind. Ohio's Third Frontier Project provides $500 million for biomedical research. Michigan's Life Sciences Corridor has funded $1 billion over 20 years to boost life sciences projects. Indiana's 21st Century Fund has set aside $80 million to the state's life sciences companies. "It is imperative that we help to nurture, create, and attract more life science businesses," says Wisconsin Gov. Jim Doyle. Wisconsin approved an outlay of $250 million in seed money in 2003.

To find the funding to help biosciences firms, state governments are getting ultra creative, scouring for money in every nook and cranny, and relying on tax rebates to generate more financing for companies.

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