Testimony in Support of Economic Development and Jobs for the Michigan Bioscience Industry

Economic Development and Jobs for the Michigan Bioscience Industry
Michigan House and Senate Standings Committee on the Biosciences

Peter M. Pellerito, Interim Vice President
Biotechnology Industry Organization, Washington, DC

Tuesday, September 13, 2011

Honorable Member of the Michigan Legislature:

I am pleased to be with you here in Lansing to review of ways states and regions are pursuing biosciences industry growth and the jobs and companies that come from commercializing great science.

 In my role at BIO, I focus on public policy support for our industry and therefore want to particularly want to talk about the evolving nature of the industry here in the US and offer suggestions to the committee on ways you can support this important technology sector.

The comments and statistics I will briefly share with you this morning are the accumulation of a decade’s worth of effort by the Biosciences Industry Organization and other partners including the Battelle Memorial Institute, Ernst and Young, Milken and others to both define this growing industry and identify ways that partners in industry, policy, and education in the states are moving innovation and manufacturing forward.

First, whether we call ourselves biotech, biosciences, or life science companies, the industry’s science base and commercialization efforts are diverse and linked by the application of knowledge in the ways plants, animals, and humans function.

We create products and services with that knowledge and commercialize them for a growing world market:

  • Agriculture feedstock provides food for our citizens

  • Drugs and pharmaceuticals keep us healthy and productive

  • Medical devices and equipment provide a whole variety of ways to improve the delivery of drugs and diagnostics

  • Research, testing and medical laboratories augment primary research aimed at commercialization.

We today are also focusing on diverse industry sectors that illustrate the interchangeability of biology applications and convergence of technologies:

Bioinformatics, Contract Research and Manufacturing, Nanotechnologies, Green Energy and Products  (Biofuels, Forest Biosciences, Plastics), and Nutraceuticals are a few examples.

Economic Benefits/Value to Overall Economy
There are also significant economic benefits from all this great research, development and commercialization and can be illustrated on several levels.

Real earnings for workers in this industry have substantially grown in the past ten years. We nationally are more than 47,000 companies and 1.4 million workers and have continually grown an average 5.5% each year during the past decade. Even during this deep recession, our industry actually grew from 2009 to 2010 though in uneven numbers depending on the sector according to the Battelle Memorial Institute:

While total private sector employment was down by 6.2% in 2009, total bioscience employment was actually up by 2.8% in that year according to Battelle Memorial Institute of Columbus, Ohio:

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

And those workers on average earn more than $77,000. This was appreciably higher than the national average of over $45,000 for all private industries in the US in 2009.

Now that I have the statistics behind us, I would like to turn to the second part of my comments and talk about what areas states and regions continue to refine and redesign in support of industry creation, expansion, and retention.

First, we are an important piece of the durable goods manufacturing sector of the economy in an environment of increasing and sustained international competition. Michigan has a strong and growing bioscience-manufacturing presence that produces some of the highest quality products in the marketplace.

Second, as mentioned before these are good jobs that diversity 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 like Michigan 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. The great research engines in Ann Arbor, Detroit, and Lansing continue to retrieve major federal and corporate funding in the biosciences.

Every state is feeling the affects 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 strategies that Michigan and other states can employ to retain the industry and grow the size and diversity of bioscience industry sectors all across the states.

1. Use existing state dollars to better address building career pathways for future biosciences talent .
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 however, that possess the human capital with its insights and competencies, experiencing a competitive advantage.
I will spend a few minutes on this aspect later in my comments.

2.       Address the overall supportive regulatory climate in Michigan to insure predictable and stable regulatory treatment of biosciences firms.
The need for a stable and supportive public policy framework is vital to industry firms large and small. It is almost impossible for any state or region to ignore the 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 cost and the length of time involved in the development of new bioscience products. They understand the importance of a stable and supportive business 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 tech based economic development, including the biosciences, in creative ways 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 Michigan universities to continue efforts in tech transfer.
Thanks to strong support from both state and Federal agencies, Michigan colleges and universities are a national leader in funding for cutting-edge basic research in health, agriculture, and other biology-based inventions. Moving that intellectual property into the marketplace is the continuing challenge. Michigan, like other states, must make company formation a high priority in partnership with universities and include entrepreneurship as part of the tech transfer effort.

Talent Pool Needs:
Our industry is attracted to those states and regions that possess a high quality labor pool.  In this global economy, nearly every competitor has access to big breakthroughs in technology and to the equipment and capital to produce standardized products, but those regions that possess the human capital, with its insights, competencies, and experience will have the competitive advantage.

Increasingly, the creation of two-year associate degree programs, changes in curricula in colleges and universities to better reflect workforce needs, outreach to industry for specialized on-site training have all strengthened the communication for industry development in all areas of company development.

Here then are several examples of what states are doing in the form of initiatives and legislation to support workforce development in this technology sector:

  • Oregon’s legislature provides funding to Portland Community College’s Biotechnology Technician Program that focuses on the techniques of laboratory technicians for QA and QC positions.
  • New Jersey provides a large corporate tax credit for two years to companies that hire qualified community college graduates.
  • Arkansas offers tax credits to employers for expenses incurred in training a biotechnology workforce.
  • The Kansas Economic Growth Act that includes $500 million currently being invested over a period of 15 years in the Emerging Industry Investment Fund, which utilizes the growth of the state tax base associated with the state’s bioscience industry, research institutions and community colleges to provide the major funding source of the Bioscience Initiative Roadmap. The roadmap supports efforts in university research and manufacturing techniques in community colleges.
  • The Illinois Biotechnology/Bioscience Training Investment Program (BioTIP) assists in encouraging graduate students to work part-time in biotech/bioscience positions. BioTIP provides grants to companies to help cover training costs for students who find part-time employment as lab technicians/engineers in the biotech arena and provide essential training to students to enhance their practical skills.
  • The Massachusetts Biotechnology Center’s BioTeach Initiative is designed to provide biotech lab equipment, lab supplies, and recurring teacher training to Massachusetts’s public high schools. 
  • Georgia and North Carolina are emerging as growing states in our industry. The Georgia Research Alliance focuses on investments strategies, and North Carolina’s community colleges through their BTECH effort funded by tobacco settlement funds are focused on biomanufacturing and vaccines production and graduate 2,000-plus students each year.
  • And the State of Washington is increasingly strong with public private funding for bioscience internships sponsored by companies like Amgen, and Dendreon.

Cities and counties are also reaching out to partnerships to encourage company creation, expansion, and attraction with workforce as a central theme of company success.

Here are a couple of examples:
In Georgia, The Innovation Crescent, a 13-county region spanning Atlanta to Athens, receives a grant from the Governor’s Office of Workforce Development Work Ready Regions program to sustain its workforce development strategies for the life sciences industry. The funding assists with continued efforts to enhance life sciences career pathways from high school to technical colleges to universities; eliminate the skills gap using Work Ready Certificates and Work Ready job profiling.

Baltimore’s Bioscience Initiative looks at workforce development structures within larger multi-purpose initiatives. The overall focus of the initiative is three-fold:

  • Grow the Demand
  • Add value to Employers
  • Integrate Bio Education

**The first objective, Grow the Demand, includes venture financing, marketing the region to potential new employers, and building the collaborations to increase synergy among members of the bioscience sector.

  • **The Add Value to Employers objective involves community based workforce development efforts designed to identify and prepare low skill workers and to guide them into employment situations in the bioscience sector. 
  • **The third Integrate Bio Education objective focuses on enhancing the science elements of K-12 education in order to increase the supply of future technicians and scientists needed for their future aspirations.

I will end my written comments this morning with five best practices observations that are present to prepare students for the workplace in our industry:

#1) industry involvement is absolutely essential. This is perhaps the most universally held success factor found across programs in the best practices states. As one program director explained: “Because they work so closely with industry, the students are trained exactly as industry needs them.” The disconnect between bioscience employers and educational institutions in sharing information, setting priorities, and developing needed programs continues to be an issue.

#2 A broad and diverse range of students must be trained.  Building an effective educational pipeline for the biosciences requires both traditional community college to 4 year degree program linkages as well as continuing education courses for those who have already having earned an associate’s degree in the biosciences and looking to advance their careers with additional coursework. In addition, limited awareness by communities-particularly school-age youth and those seeking new careers- of the opportunities to pursue bioscience careers, and a need for proactive steps to increase access to these career opportunities, especially in minority populations needs to be addressed by both industry and educators.

#3) Challenges in developing curricula for bioscience workforce and career development. 
Unlike IT certification, biotech lab technicians, biomanufacturing, agricultural biotech, and biomedical engineering lack national certifications.  Given the lack of standardization in defining skills and techniques, it is important to have resources available to support continual development of curricula.

#4 Difficulties in experiential learning and internships are real.  For bioscience positions, it is often difficult to place students in traditional internship programs because of regulatory requirements and the size of companies.  Other approaches to experiential learning and exposure to industry need to be developed, such as having industry instructors, creating pilot facilities, and focusing on capstone projects. 

#5) Lack of statewide coordination wastes resources.  A patchwork of programmatic efforts with little scale or strategic focus makes it difficult to gain resources to support the growth of needed programs.  Those states that have a roadmap and funding to support efforts will be the place where companies will want to locate.

Thank you for the opportunity to speak before this committee and I look forward to both your questions this morning and continuing discussions on ways to continue Michigan’s efforts to feed, fuel and heal our citizens.