Leaders from the region's life science industry gathered in Philadelphia Wednesday to urge state officials to enhance existing programs, and establish new policies and initiatives, to make Pennsylvania more competitive with other states attempting to boost their economies by targeting biopharmaceutical firms and medical device manufacturers.
"Pennsylvania is being out-maneuvered by our competitor states each and every day with more resources committed to attract life sciences companies," said Chris Molineaux, president and CEO of Pennsylvania Bio, an industry trade group based in Wayne, Pennsylvania.
Molineaux's comments were made during a nearly three-hour hearing held by the Joint Democratic and Republican House Policy Committee. He noted Pennsylvania is home to more than 2,300 life sciences companies that employ 77,000 people who make salaries that average about $90,000. In addition, he said, the state attracted $1.5 billion in funding from the National Institutes of Health last year.
Both Molineaux and Stephen S. Tang, president and CEO of the University City Science Center, testified the industry has benefitted from state programs such as tradable research and tax credits, which allow companies still in the product-development stage, to sell credit they would otherwise not be able to use to profitable companies for cash. They also praised the creation of Keystone Innovation Zones, where early-stage companies get tax breaks, and state-supported programs like Pennsylvania's three biotechnology greenhouse programs [one of which is operated in southeastern Pennsylvania by BioAdvance] and the regional Ben Franklin Technology Centers, that help fund and support startups.
Tang and Molineaux noted the appropriation for the innovation funds was cut in this year's budget to $15 million from $25 million, and urged the full amount be restored. Molineaux also recommended raising the cap on the amount of research and development tax credits that can be sold to $100 million from its current cap of $55 million.
"If you take an even cursory look around the nation you will find [what Pennsylvania is doing] pales in comparison to other states," Molineaux said. He said Massachusetts is in the middle of a $1 billion, 10-year commitment to invest in its life sciences industry, while New York launched a $150 million early-stage life sciences funding initiative last year. Maryland and Ohio have also committed larger amounts of funds to grow their life sciences industries, he said.
The speakers all urged the committee to consider providing additional investment capital to support company formation and support, and create an improved "tax system and business climate" that support job growth in life sciences and other technology based companies. One specific suggestion was doing what other states have done – establish programs whereby the state would invest a dollar for every dollar a company attracts from the federal government's competitive Small Business Innovation Research grant program.
"We have wonderful research institutions, but if we do not catch up to other states to create better support for early-stage companies, Pennsylvania is going to lose its competitive advantage, and companies are going to go elsewhere to form, scale and succeed," Tang said. "…We cannot let other states pass us by as we squander the strength in the life sciences industry we built over generations."
Jane Hollingswoth, the co-founder and managing partner of Militia Hill Ventures and CEO of Philadelphia-based Immunome Inc., is a serial biopharmaceutical company entrepreneur who also testified during the hearing. She said that over the years she has had conversations with many people who have struggled with the idea of leaving this region, or have left, to join Boston's flourishing biotech industry — where more companies are hiring and more investment capital is available to launch new companies.
"I was not interested in moving to Boston," Hollingsorth said. So, she and former Merck scientist Joan Lau established Militia Hill Ventures to invest in and support early stage biopharmaceutical companies.
Hollingsworth said one of Boston's strengths is it has built a "strong physical core" in Cambridge so that investors, company founders and employees, academic founders and service provides would "see each other, get to know each other and interact with each other in a formal and informal basis."
She said they established Militia Hill Ventures in University City to help the Philadelphia region build its own core community. "It starting to happen," she said.
Hollingsworth said a major advantage that Boston has had over Philadelphia is that the Massachusetts has provided "a lot of money to the industry in various forms." She said Pennsylvania programs like the greenhouse initiate have helped, but more assistance is needed.
She said the state needs to find ways to allow for a better working relationship between industry and academic institutions to make its easier to transfer technology and create startup companies. "Any incentives that could be put in place for universities to translate their research out into companies would be helpful in this process," Hollingsworth said.