This digest was created to assist biosciences industry partners and their economic development practitioners in identifying key state legislative and administrative efforts needed to create, nurture and retain the bioscience industry. The policies and legislation cited in this document are key examples of state efforts to grow and sustain bioscience industry development.
The recent economic downturn has had a significant impact on the bioscience industry. Venture capital investment in the industry is down more than 50% from the previous year. Of the publicly traded bioscience companies, over 90% have experienced significant losses in their market capitalization. Smaller bioscience companies are more acutely affected, with many companies trading below their cash value and with less than a year's worth of operating capital remaining in their coffers. Due to pressure from investors looking for quick returns, some companies are abandoning research on new products and technologies and only focusing on products that are further along in the development phase.
While the economic climate has been difficult for bioscience companies, it has also had a significant impact on state budgets, causing many states to cut programs and reassess economic priorities. The biosciences continue to be a high growth, high value industry for many states. Almost every state in the country is actively engaged in building bioscience industry infrastructure. State sponsored programs to encourage investment and help bioscience companies leverage existing resources can be instrumental in helping these innovative companies survive this economic cycle. This report chronicles several types of state programs that have been very helpful in helping to form and sustain bioscience industry development.
Until a decade ago, the United States was the undisputed leader in bioscience industry development. However, a variety of factors such as low cost labor, speed of information dissemination, and available risk capital, has rapidly increased global competition for the industry. Europe and Asia, for example, are actively promoting opportunities for bioscience companies.
State governments continue to understand this new dynamic of increased competition for developing the biosciences and are actively working to develop and promote to grow the industry within their states. According to the study "Technology, Talent and Capital: State Bioscience Initiatives 2008¹," the bioscience industry is a growing and vibrant sector of the U.S. economy, with more than 42,000 businesses employing 1.3 million people in all 50 states, Puerto Rico and the District of Columbia. Direct and indirect employment in the biosciences sector accounts for 7.5 million jobs.
Realizing the economic potential, state and regional economic development organizations throughout the nation are much more aware of the industry's needs and have put in place numerous programs and incentives to attract and grow the biosciences industry. These programs include:
Providing business and financial assistance to emerging companies
Creating tax and regulatory environments to support and expand growing companies
Addressing capital needs by providing funding for pre-commercialization activities
Creating seed funds
Implementing policies encouraging private investment in early and later state venture capital
Supplying capital for facilities funding
Working closely with bioscience companies to develop and create a skilled workforce
Economic Impact of the Biosciences Industry
The bioscience industry provides value to the economy in three distinctive ways:
Company jobs, revenues, and wages - In 2006, the average national salary for bioscience jobs was $70,959 compared to $42,272 for the overall private sector, a difference of over $28,000. Since 2001, real (inflation-adjusted) earnings have increased by 6.4 percent for all bioscience workers, compared with a 1.4 percent increase in real earnings for the average U.S. private sector worker.
Purchases made by the company for goods and services-According to the Minnesota IMPLAN model², adapted to gauging the impact of the biosciences industry in the US, researchers from Battelle Memorial Institute note there are 1.2 million direct impact jobs in the US biosciences sector resulting in 5.8 million additional indirect impact jobs.
Purchases made by company employees in the community - Workers use their additional earnings to make purchases and pay taxes resulting in additional economic activity and increased employment.
¹ Battelle, BIO, SSTI, Technology Talent and Capital: State Bioscience Initiatives 2008
² Battelle analysis of Bureau of Labor Statistics (BLS), Quarterly Census of Employment and Wages (QCEW) data from Minnesota IMPLAN Group
Defining the Biosciences
The biosciences are a diverse group of industries and activities with a common link-they apply knowledge of the way in which plants, animals, and humans function. The sector spans different markets and includes manufacturing, services, and research activities. By definition, the biosciences are a unique industry cluster and are constantly changing to incorporate the latest research.
The Four Major Sectors of Biotechnology
The biosciences industry sector is defined as including the following four subsectors: Agricultural Feedstock and Chemicals; Drugs and Pharmaceuticals; Medical Devices and Equipment; and Research, Testing, and Medical Laboratories.