In a bid to foster life sciences startups, Johnson & Johnson is refurbishing part of its pharmaceutical research and development facility in San Diego to create an “innovation center” for new biotech and health IT companies.
The New Jersey pharmaceutical and healthcare giant anticipates housing from 18 to 20 life sciences startups in the new center, to be called “Janssen Labs at San Diego.” (The name anticipates an internal reorganization that has been consolidating Ortho-McNeil and other J&J pharmaceutical businesses for much of the past year under the Janssen brand.) J&J’s pharmaceutical R&D center, which employs about 300 in San Diego, is slated to officially become part of the Janssen group later this year.
Diego Miralles, who oversees J&J’s 330,000 square-foot R&D center in San Diego, avoids describing the new innovation center as an incubator. He says the landlord agreement does not grant J&J an equity stake in the startup companies that move in—nor will the companies have a guaranteed future affiliation with Johnson & Johnson. Rather, startups that move into the Janssen Labs will pay a monthly “licensing fee” under a renewable, short-term lease.
“It’s a completely ‘no-strings attached’ business model,” says Miralles. He estimates the innovation center will occupy about 35,000 square feet, and consist of “modular and flexible” offices available for startups developing mostly biotech and health IT-related technologies. The companies would share a common space designated for high-end research equipment, such as mass spectrometers and flow cytometers, as well as copy machines, office supplies, and other tools. “There is no quid pro quo. None,” Miralles says. “Entrepreneurs like to be free.”
Life sciences companies moving into the Janssen Labs are expected to range from self-funded, seed-stage startups to venture capital-backed companies, Miralles says. Prescience International, a firm with experience managing a similar life sciences innovation center in San Jose, CA, will help support operational management of the Janssen Labs.
So why is J&J doing this?
“We think the biotech space is in significant trouble right now,” Miralles says. “Everybody says the business model is broken. This is just one of many efforts that should be in place to help the biotech sector develop a better business model.”
Miralles says he’s also committed to the life sciences community in San Diego, and his overall goal is to help new companies succeed. For the past two years, for example, J&J has been hosting monthly meetings of the San Diego Entrepreneurs Exchange (SDEE), a grassroots group of biotech, health IT, and medical device entrepreneurs that regularly draws 200 people to sessions on winning small business innovation grants and other topics. By providing cost-effective business space that is move-in ready, Miralles says the Janssen Labs “address the issue of making the space much more capital-efficient,” enabling the funds raised by each company to go further.
The innovation center is scheduled to open for business sometime in the first three months of 2012. Miralles declined to say if J&J has received any applications yet. “All I can say is that we have talked to a lot of people,” Miralles says. “These are experiments, and with all experiments, you learn, you tweak and you iterate—and then you do that all over again.”
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