Across the nation, biotech companies are faced with many challenges, most significantly the continuing arduous economic climate and increasing difficulty accessing capital. While companies in New Jersey are not immune to these factors, the state’s companies, supporting organizations, and government entities are finding some success in addressing these issues by developing creative strategies to support continued innovation and growth in what Ernst & Young has termed the “new normal” in its 2010 analysis of the industry.
Collaboration and partnerships within the biotech community and between biotech companies and pharmaceutical companies are, and will continue to be, a critical component of the evolving biotech landscape. But what is becoming increasingly clear is that state, regional and national lines are no longer relevant.
Nowhere is this more apparent than in New Jersey, where the industry has increased four-fold in 10 years and where we have noticed a trend which indicates that much of the industry’s future growth will be coming from international opportunities — be it overseas-based companies establishing a presence in the state or New Jersey companies reaching out to international partners.
For biotechnology to continue to move forward in New Jersey and elsewhere, it will be important to capitalize on these opportunities and work diligently to expand these early steps into an expansive network of international opportunities and partnerships. Fortunately, there are a number of actions taking place at the state level – both independently and in a variety of collaborations — to do just this.
While BioNJ has long been committed to looking beyond its own borders, the association has recently enhanced its efforts to assist its members by expanding and diversifying its international outreach. In the past two years BioNJ has signed Memoranda of Understanding (MOU) with organizations ranging from the Korean city of Daeguto to Flanders to Bordeaux and the independent company CHA Bio / Diostech. In addition, the Korea Trade-Investment Promotion Agency (KOTRA) was the first organization in our new and growing International Members category. Mutually beneficial agreements such as these can help a state position itself as a leader when companies are exploring potential locations, and to seek potential collaborations.
The industry also needs to recognize that it cannot sit and wait for opportunities to come to it — that expending time and energy in going beyond normal borders will result in important returns on the investment. BioNJ’s first trip outside the U.S. was to China in 2006, and recently the association represented New Jersey at the Knowledge for Growth 2011 Conference in Ghent, Belgium — the largest regional biotech conference in Europe — and at the Russian Pharmaceutical Forum. Even in the age of the Internet and instant communications, events such as these provide states, state associations and companies unparalleled opportunities to get the message out.
Policy Matters
Despite the budget challenges that all states are facing, states must also always be looking at new ways of doing business with business. New Jersey has restructured the Business Action Center to simplify the process of starting or expanding a business in the Garden State. It offers companies a portal with information on financing and incentives; licenses and permits; tax information; business records; and work-force training needs. This new portal furthers Lt. Gov. Kim Guadagno’s vision of a “one-stop shopping” experience for doing business in New Jersey.
Additionally, Gov. Chris Christie has proposed changes in the New Jersey state budget that would reinstate the full funding for the Technology Business Tax Certificate Transfer program after a 50 percent cut in 2010. This innovative program allows New Jersey-based biotechnology or technology companies that have not yet achieved profitability to sell their net operating losses (NOL) and research and development (R&D) tax credits to unrelated profitable corporations for working capital to fund other research.
A study conducted earlier this year by the New Jersey Institute of Technology on behalf of the New Jersey Economic development Authority (EDA) on the effectiveness of the Technology Business Tax Certificate Transfer program found that investments in the biotech industry were delivering a more significant return on investment, including high-wage, high-quality jobs, than other technological areas, and recommended refocusing the program entirely on the biotech industry.
If enacted beginning with the budgeting process that is set to conclude on June 30, each of these proposals will go a long way in attracting further companies, both domestic and international, to choose New Jersey for their base of operations as well as to encourage companies that are already here to stay and grow here.
The EDA also successfully sought permission from the Legislature to utilize monies sitting idle in other state programs and re-channel these funds for programs supportive of the biotech industry.
New efforts to support the industry must also continue to come at the federal level. Legislation was recently introduced in Congress that would set another round of funding for the Qualifying Therapeutic Discovery Project Credit. Championed last year by New Jersey Sen. Robert Menendez, the program provided $1 billion in a competitive process to early-stage companies conducting research into critical areas of unmet need. Confirming its strength as a biotech hub, New Jersey was among the top states receiving funding under the program, with 33 New Jersey companies awarded tax credits and grants totaling $53 million.
To build off of state and federal efforts to provide supportive programs and financial incentives, BioNJ recently held its second annual International BioPartnering Conference, with innumerable offerings for strategic partnership and collaboration opportunities with New Jersey’s biotech industry. Nine states and seven countries were represented among the attendees.
If there is one thing I have learned during my nearly 20 years with BioNJ, it is that even in the roughest of times there is always an underlying spirit of optimism, which we at BioNJ believe will continue long into the future and will help to ensure the continued growth of the industry in New Jersey.
Debbie Hart is the president of BioNJ, the state association focused on the growth and prosperity of New Jersey’s biotechnology cluster.