Public Policy Institute on How to Boost Biotech in New York: More Jobs, Better Teamwork, Fewer Taxes
In a scintillating report released today, the Public Policy Institute (PPI) of New York blasts the state’s leaders for failing to support the local biotechnology industry. New York ranks fifth in the nation in biotech employment, for example, and sixth in total capital expenditures made by the industry. And despite churning out more college graduates than any other state in the nation, New York’s biotech firms don’t provide enough high-paying jobs to get them excited about working in the industry, the PPI says.
The report’s authors declare that New York’s stance towards biotech is “severely anemic in its care for its people, support for entrepreneurship, and economic development strategies.” Furthermore, they say, because of rapidly growing competition from other states—not to mention China, India, and Brazil—”the biopharmaceutical ecosystem in New York is growing weaker, and Albany and major local governments must act before the equivalent of a climatic cataclysm strikes the state.”
But the PPI’s goal isn’t to bully New York’s leaders. Rather it’s to present a plan of action for turning New York from a perennial also-ran to a world capital of biotech. “Our report makes specific recommendations of how to get us out of 38th place in annual growth,” said Heather Briccetti, the PPI’s acting president, during a panel discussion at the annual meeting of the New York Biotechnology Association (NYBA), just a few days before the report’s release. “We’ve identified this sector as one that the state needs to make a strong commitment to.”
The PPI lays out some compelling and often disturbing numbers to support its thesis, which is reflected in the report’s title: “New York Must Step Up its Game.” For example, every life-science research job that biotech and pharma companies create in New York spawns an additional 3.46 support jobs—double the effect of a new Wall Street position, the PPI says. Every manufacturing hire translates to 9.36 additional jobs. So when 3,000 pharmaceutical manufacturing positions were eliminated from the state in 2010, a staggering 30,000 other New Yorkers lost their jobs.
In virtually every category it tracked, the PPI found New York to be an embarrassing laggard. New York employs 10,320 scientists, far fewer than California (41,200), Pennsylvania (15,920) and Massachusetts (15,300). The average wage in the biopharmaceutical sector in New York is $72,486—30 percent lower than the national mean.
So, what can New York’s legislators do to propel the state into the pantheon of biopharmaceutical powerhouses? First, the PPI suggests, it should create institutions that nurture career development in the sciences, as well as incentives for young people to seek jobs in the industry. The report’s authors argue for the creation of academic incubators equipped with wet labs, and technology parks that foster collaborations between academic scientists and pharmaceutical companies. And they urge the state to offer a personal income tax credit to people that earn a bachelor’s in science or engineering from a New York university.
Speaking of taxes, the PPI lays out a number of strategies that the state could employ to make New York a more hospitable place for biotech entrepreneurs. When you add up personal income tax, sales tax, energy and real estate taxes, New York has the highest tax burden in the country, according to the Fiscal Policy Institute. Among the PPI’s suggested solutions are adopting Governor Andrew Cuomo’s proposal to cap property tax growth at 2 percent; doubling the value of the Excelsior program, which provides tax credits to biopharmaceutical firms that move to New York or expand their presence in the state; and granting tax credits to support capital investments in buildings and research equipment.
Such tax incentives, Briccetti argued during the NYBA gathering, would benefit all industries, because it would send a broad message that “New York is serious about building our tech economy.”
New York should also work harder to market itself as a biotech hotbed, the PPI says. Many people might be surprised to learn that New York hosted 3,267 clinical trials in 2010, putting it in second place behind California. “The state should market its clinical trials,” Briccetti said at the conference. “We need to create a Web site or something that shows where we rank, so we can attract more companies to the state.”
The report also argues for better coordination between the government and universities, economic development councils and other organizations-an idea that’s echoed among people working in those settings. “That’s why biotech hasn’t flourished here-it hasn’t been the focus of the state or local governments,” says Sharon Seiler, senior manager of technology and development at Memorial Sloan-Kettering Cancer Center in New York. “They pay us lip service and focus more on sports teams.”
The lack of robust, coordinated government support hurts biotech startups, too. NYBA executive director Nathan Tinker said during the conference that New York biotech companies rank 7th in the nation for venture capital funding. “As much as you hear about VCs liking to invest in their own backyard, New York venture capitalists like to travel apparently,” he said, clearly annoyed.
In New York City, biotech has been pegged as vital to the growth of the local economy. In his January state of the city address, Mayor Michael Bloomberg said: “We’ll bring together the leaders in ‘eds and meds’—our academic institutions and bioscience firms—to map New York’s course to the top in that growth industry.” The New York City Economic Development Corp. (NYCEDC) has launched a number of initiatives in response to the mayor’s call. For example, it is currently evaluating proposals from universities and other institutions interested in developing and operating an applied sciences research facility in the city. Potential sites include the Brooklyn Navy Yard and the Goldwater Hospital on Roosevelt Island near Manhattan.
The PPI’s Briccetti predicted the report would be well received, even by the people it criticizes. “There’s a real failure to recognize the impact this industry has on our economy,” she said during the NYBA panel discussion. “I’m very encouraged that this report will have a receptive audience.” No doubt the state’s eds and meds will have plenty to say about it.