Some Biotechs Love New York—Hindrances and All
New Yorkers who follow technology trends know our state is losing jobs in life sciences. Many people in the industry believe it’s because New York is inhospitable to biotech. In the words of a recent academic report, “the state taxes too much, regulates too much [and] has fostered a generally risk averse atmosphere…” The exodus includes biotech startups as well as large pharmaceutical companies, according to the report, which was released in April by the nonprofit Public Policy Institute of New York State, Inc. (PPI). Some 3,000 biopharmaceutical manufacturing jobs were lost in New York in 2010 or are now on the block, according to the PPI. The multiplier effect is at least 10 support positions lost for each of these slots.
Given this background, you might wonder why I founded Acorda Therapeutics in New York, and why I have kept it here for the past 15 years.
I won’t deny that Acorda has struggled with this choice at times, reaching a crossroads earlier this year. We had outgrown our headquarters in Hawthorne, NY, and aggressive incentive packages beckoned to us—not just from the usual suspects, like Boston and New Jersey, but from other states that have made recent inroads in fostering biotech hubs. Instead, I chose to move just five miles down the road, to a new life science campus in Ardsley. I hope my reasons for staying in Westchester will provide a counterpoint to the PPI report and encourage other New York biotech entrepreneurs wrestling with the relocation decision to stay in the Empire State.
First of all, I believe the investment environment dissected by the PPI is less brittle than the report implies. Acorda was able to form effective partnerships with Empire State Development Corporation (ESDC), County of Westchester Industrial Development Agency, New York State Energy Research and Development Authority (NYSERDA) and the County of Westchester. Together we crafted an economic incentive package that was competitive with what we might have obtained in New Jersey, Massachusetts or North Carolina.
In return for our 15-year lease of about 138,000 square feet of laboratory and office space, we received tax credits of up to $5.2 million as part of the New York State Excelsior Jobs Program, an employment-creation initiative administered by ESDC. We’re also eligible for tax credits of up to $1.15 million through the County of Westchester and for additional incentives through NYSERDA. These incentives weren’t giveaways. We committed to increasing our footprint in New York. We plan to keep close to 200 jobs here and create up to 190 new positions over the next several years.
Acorda and other companies in Westchester that view the area as a viable biotech hub have joined an initiative called NY BioHud Valley, aimed at nurturing New York’s first biopharmaceutical “hot spot” in the Hudson Valley. Some of the 60 plus members benefit from one of the state’s most forward-looking programs, the Qualified Emerging Technology Company Credit, or QETC. They may also have access to the comptroller’s in-state private equity program, which has almost half a billion dollars available to invest in the region. And there’s $100 million in CAPCO (Certified Capital Company) venture funds. We are also a long-time member of NYBA, the New York Biotech Association, which supports New York biotech companies through legislative lobbying efforts promoting state grants for the industry, as well as providing excellent networking opportunities and a cost-effective purchasing consortium.
In New York City, biotech startups can take advantage of the East River Science Park and the Brooklyn Army Terminal, both located in Empire Zones that provide New York State tax credits and exemptions. There’s a $15 million loan program available to companies headquartered in the science park. And Columbia University has created the Audubon Biomedical Science and Technology Park, housing an important biotech business incubator.
Incentives alone don’t explain why I stayed in New York. I’m also bound by personal ties. I was born and raised in New York City, received my medical degree at Columbia, and learned the ropes in biotech as an executive at Advanced Tissue Sciences, which started out as a New York company.
But beyond these personal bonds, I believe that New York has all the raw materials necessary to launch and grow a successful biotech enterprise: access to the largest concentration of elite biomedical research institutions in the country, the world’s financial center, access to media and publicity and a rich intellectual and entrepreneurial culture.
The life science resources in Manhattan alone are dazzling: Columbia University, Rockefeller University, New York University, the medical affiliates of these schools, along with Cornell, the research labs and clinics at Memorial Sloan Kettering Cancer Center, Albert Einstein College of Medicine, Beth Israel Hospital, Hunter College and more. New York-based institutions have an immense impact on medical research, hosting 3,267 clinical trials in 2010. That’s more than any other state besides California, according to the PPI. New York also ranks third in the U.S. in total NIH research funding.
I’m not glossing over New York’s mixed reputation. I was the fourth person hired by Advanced Tissue Sciences, I grew up with the company, and took part in the decision to relocate the company to San Diego. At the time, California boasted a better business climate, a larger talent pool, and in the eyes of potential investors, a more credible zip code for a biotech startup. Later, running Acorda from a one-room office in Columbus Circle, I was frustrated by the lack of affordable lab space anywhere near New York City. When I was chairman of the New York Biotech Association, I got an earful on high taxes and lack of vision in Albany. Today, as chairman of the Emerging Companies Section of the Biotechnology Industry Organization (BIO), I hear some of the same frustrations.
A common grievance concerns the barriers to capitalizing on discoveries at New York research labs. Based on volume of patent filings and citations in peer-reviewed journals, the state is a wellspring of world-class medical science. But too often, what is discovered in New York is developed and commercialized elsewhere. Sadly, even companies founded on the science of New York-based Nobel Prize winners have moved out of state, some as far as California. That’s because there has been a dearth of affordable combination lab and office space here, the cost of living is among the highest in the country, and the state has failed to create the incentives and publicity that could otherwise have made it one of the great biotech hubs in the world.
In short, New York still has some work to do before it starts to lure biotech startups away from other life science hot spots. You can’t run until you can walk. That said, I have seen stirrings of life in New York in recent years. Under Mayor Bloomberg, one of the great entrepreneurs of our time, New York City has begun to create a more hospitable environment for biotechnology companies, as in its sponsorship of the stunning new East River Science Park. Westchester County, home to some of the most successful biotech companies in the state, has begun to reach out to the industry to help craft new incentives, such as those that helped keep Acorda here. And Governor Cuomo has articulated a new sense of appreciation at the state level for the potential of biotechnology to be a major contributor to the economic success of New York.
Therefore, I believe the environment has improved sufficiently to retain companies that are already established here in New York and to be competitive in incubating new companies spawned by research conducted in the state. Ultimately, New York has great potential also to attract out-of-state companies considering relocation opportunities. For the first time, intellectual and financial resources are being coupled with wise policies, reasonably priced real estate, and an emerging infrastructure for drug development and production. In the case of Acorda, both the state and Westchester County stepped up to make a compelling case. It’s a start.