Life Sciences Entrepreneurship: How to Keep Pennsylvania Competitive
Posted by | September 20, 2012
A recent article in Harvard Business Review pointed to the human genome as the next focus for diagnosing and treating diseases. The authors call for a Silicon Valley of life sciences, which would cluster producers, suppliers, and training centers to advance genetic research and treatments. At this point the question isn’t if, but where this cluster will grow.
The Philadelphia region, among others, has the potential to be among the top two or three cities for healthcare IT startups like those discussed in the Harvard Business Review, but if the city—and the state of Pennsylvania—hope to draw VCs and entrepreneurs to the area in droves, more work needs to be done.
Cutbacks at the state level have hampered organizations like the Ben Franklin Technology Partners of Pennsylvania, which has created thousands of jobs through hundreds of companies that have made great returns.
At the same time, other states are being aggressive in attracting talent. For example, Texas offers $2 for every $1 in funding to start-ups with an oncology product or focus. Maryland matches funding dollar for dollar. Minnesota offers a 25 percent tax credit for angel investors.
Despite Pennsylvania’s cutbacks, there are several tactics that will help the state remain competitive in attracting life sciences entrepreneurs to the region. Here are four ways Pennsylvania can become a mecca for life sciences startups.
- Expand tax incentives. Like Texas, Maryland, and Minnesota, Pennsylvania could create more incentives for startups, angel investors, and VCs. At the very least, we need to make sure they’re not double taxed or disincentivized. It would be easy enough for a Pennsylvania company to move to Maryland, where they can get matching dollars or pay no taxes on a lot of these deployments. And Pennsylvania tax incentives have already been successful: One company moved from California to Pennsylvania (you don’t see that very often) because of tax incentives, support, and local funding the state was willing to provide.
- Provide more space for startups to work and grow. The University City Science Center in Philadelphia is a great example of the kind of environment Pennsylvania can provide startups. There, entrepreneurs can grow and work at a reasonable rate with their peers. This center has had a big economic impact on the region. Current and former companies that developed at the Science Center have created more than 40,000 jobs, generated $64.5 million in tax revenue, and created $9.4 billion in annual regional economic output.
- Allocate state capital to startups. Pennsylvania still has a large amount of capital left to be allocated from the tobacco settlement funds that the state could direct to life sciences companies in the region. This too can have positive economic outcomes. One example is Cephalon, which benefited from state capital, created thousands of jobs, and was then acquired by Teva USA, another company headquartered in the Philadelphia region.
- Leverage existing infrastructure. The Philadelphia region in particular exists in a unique pocket of life sciences companies along the east coast. Philadelphia has a thriving life sciences community, including the top manufacturers in the country. A Milken report ranked the greater Philadelphia region as one of the top areas for life sciences opportunities and future growth. Each of these aspects presents opportunities that entrepreneurs would struggle to find elsewhere.
The region has the potential to be a leader in life sciences and healthcare IT if it takes a proactive approach to creating that value. By supporting startups and those who fund these companies’ growth, Pennsylvania and Philadelphia can add jobs and grow revenues as well as have a hand in building innovations that will improve healthcare and save lives. The time to start is now.
