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How to Grow Jobs Through Biotech Industry Development

This is the second in a series of three articles on workforce development and quality jobs - with a focus on state and regional support for bioscience industry development. Read part one. Read part three.

This article represents the accumulation of a decade’s worth of effort by BIO and other partners, including the Battelle Memorial Institute, Ernst and Young, Milken and others. These organizations have been instrumental to defining this growing industry and identifying how policy and education efforts in the states are moving innovation and manufacturing forward.

By Peter M. Pellerito, BIO Interim Vice President, State Government Relations/Alliance Development

Whether we call ourselves biotech, biosciences, or the life science industry, the diversity of the scientific discovery and commercialization efforts are linked by the application of knowledge in the ways plants, animals, and humans function.

The bioscience industry creates products and services through the application of science and commercializes them for a growing world market. The bioscience industry is defined as including the following four subsectors:

  1. Agriculture feedstock provides food for our citizens;
  2. Drugs and pharmaceuticals keep us healthy and productive;
  3. Medical devices and equipment provide a whole variety of ways to improve the delivery of drugs and diagnostics;
  4. Research, testing and medical laboratories augment primary research aimed at commercialization.

We also focus on diverse industry sectors that illustrate the interchangeability of biology applications and convergence of technologies The following emerging fields of study are a few examples of new opportunities not fully comprehended by the general public: Bioinformatics, Contract Research and Manufacturing, Nanotechnologies, Green Energy and Products (Biofuels, Forest Biosciences, Plastics), and Nutraceuticals.

Economic Benefits/Value to the Global Economy

In the U.S. there are also significant economic benefits from great research, development and commercialization that can be illustrated on several levels.

Jobs and salaries in this industry have substantially grown in the past ten years. To date, 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. Even during this deep recession, our industry actually grew between 2009 to 2010, though in uneven numbers depending on the sector. Data provided by the Battelle Memorial Institute demonstrates the exceptional irregularity of employment gain across the four industry subsectors:

While total private sector employment was down by 6.2 percent in 2009, total bioscience employment was actually up by 2.8 percent in that year.

  • Ag feedstocks employment was up by 0.7 percent
  • Drugs and pharmaceuticals employment was down by -4.8 percent
  • Medical Devices employment was down by -0.3 percent
  • Research Testing employment was up by 3.6 percent

And U.S. workers on average earn more than $77,000 per year, significantly higher than the national average of over $45,000 for all private industries in the US in 2009.

Beyond the statistics, the bioscience industry in has come to play in the economic development initiative of states, cities and municipalities for several important strategic reasons:

First, we are a vital component of the durable goods manufacturing sector of the U.S. economy in an environment of increasing and sustained international competition. Many states have strong bioscience-manufacturing presence that produces some of the highest quality products in the marketplace.

Second, these are high-skill, high-wage jobs that diversify the economy and support the creation of improved standard of living and state and local taxes to support K-12 education, public safety, and other budget priorities. This is especially important as states focus on efforts to rebound out of a major recession.

Third, the industry is intertwined with technology transfer efforts of universities, workforce development at community colleges, and inflow of federal and private research grants for invention and innovation and workforce training funds to match employer needs and employee skills.

Every state in 2011 is feeling the effects of the economic downturn and prospects for new funding mechanisms for biosciences industry growth will certainly be challenging in the 2012 state legislative sessions. However, there are four primary strategies that states can employ to retain the industry and grow the size and diversity of all four industry sectors all across the states.

1. Building career pathways for future biosciences talent with constrained budgets.

Attracting and retaining a continuing flow of educated (Ph.D., MS, BS, AA) and technically -proficient worker is essential to a state aspiring to enhance bioscience industry presence. In this global economy, nearly every competitor has access to breakthroughs in technology and to the equipment and capital to produce standardized products. It is those regions that possess the human capital, with its insights and competencies, that experience an enormous competitive advantage.

2. Address the overall supportive regulatory climate in your state to ensure predictable and stable regulatory treatment of biosciences firms

A stable and supportive public policy framework is vital to industry firms, large and small. It impracticable, and ill-advised, for any state, city or municipality to ignore the all-important need for selective incentives to either hold existing bioscience companies or attract new enterprises.

Lawmakers have become increasingly aware of the unique challenges facing bioscience companies, such as the high research costs and the long development timeline involved in bringing a new bioscience product to market. They understand the importance of a stable and supportive business industry climate for small and emerging companies.

Some states are allowing companies to monetize 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.

3. Utilize state dollars for technology-based economic development

There are a number of legislative avenues that the bioscience can tap into to support early-stage companies and the entrepreneurs who manage them by:

Creating a BioEntrepreneur Resource Program that helps connect biotech startups with early-stage capital.

Supporting a permanent state research and development tax credit, targeting it to companies with fewer than 50 employees.

Legislating an Investor Tax Credit to spur more early-stage investment in bioscience companies.

Seeding a Bioscience Product Development Loan Fund to bridge the funding gap for companies going from startup to product launch phases.

4. Encourage universities and research centers to continue efforts in technology transfer.

Thanks to a coalition of industry and university technology transfer groups across the nation that have provided strong support for enhanced federal legislation, including the Bayh-Dole Act of 1980 and the 2011 Patents Act, U.S. colleges and universities continue to be the international leader in funding for cutting-edge basic research.

It is often in university laboratories that exciting discoveries are made. Most of these discoveries are early stage and require lengthy R&D, which requires a massive infusion of private capital. Moving that intellectual property into the marketplace is a continuing challenge. There is, after all, no guarantee that these initial discoveries will ever lead to safe, effective, and commercially viable products.

States must make company formation a high priority in partnership with universities and include entrepreneurship as part of the technology transfer effort. In particular, policies that encourage full funding of basic research, predictability of patents, and flexible technology transfer, and that provide early-stage funding opportunities and incentives, will serve to stimulate biotechnology innovation.