Genetic Engineering & Biotechnology News has published a two-part perspective on the top U.S. biotechnology hubs, exploring how they have weathered the recession and their goals for expansion. The top two biotech clusters are located near San Francisco, San Diego and Boston/Cambridge. Job losses have reportedly amounted to 2 percent of the biotech workforce at the height of the recession in California; top needs identified by industry analysts are workforce training, loosening red tape, curtailing efforts to increase taxes, and turning around a decline in venture capital funding.
Similar challenges face the biotech industry in Massachusetts, where financing in the fourth quarter of 2010 was 40 percent lower than the fourth quarter of the previous year, although the number of deals and total financing for the year overall finished higher in 2010. Tax incentives provided by the Massachusetts Life Sciences Center, which oversees the state’s $1 billion biotech initiative, have apparently not met with universal success in terms of promised job creation, and some companies had to return unused money. Still, at least a dozen companies that received tax credits exceeded their promises by creating more jobs than anticipated and significantly expanding their operations.
The second article in the series focuses on North Carolina and Maryland, which rank third and fourth as U.S. biotech hubs. Both states reportedly understand that growth depends on financing and are considering creating new funds to assist life sciences startups. Cuts in state budgets, however, have reduced available funds for an industry sector that can boast gains in employment. Biotech and pharmaceutical companies are reportedly continuing to expand in North Carolina, although gaps in early-stage and later-stage funding as well as a shortage of executives with commercial life science experience could hamper growth. The industry is apparently working with area academic institutions to educate the next generation of business leaders.
In Maryland, the biotech industry reportedly fared well in the governor’s most recent budget proposal, with stem cell research targeted to receive $12.4 million in grants, $8 million in investor tax credits planned, and just a 1 percent cut in funding to the Maryland Biotechnology Center. Governor Martin O’Malley (D) has proposed that insurance companies doing business in the state pay $99.4 million as part of an “Invest Maryland” program; in return they would receive $142 million in tax credits. The insurance money would help replenish the Maryland Venture Fund or be placed with venture capital firms that also invest in biotech companies. Invest Maryland proponents are apparently hoping that the state will recoup the losses with new taxes and business activity from biotech startups. See Genetic Engineering & Biotechnology News, March 7 and 8, 2011.