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New York's Next Big Industry: Commercial Life Sciences New York’s Next Big Industry: Commercial Life Sciences a New York’s Next Big Industry: Commercial Life Sciences JUNE 2016 Partnership Fund for New York City a Table of Contents 1 Executive Summary 3 Introduction 8 New York City Biomedical Assets 14 Timeline of Life Sciences Development 17 Key Findings 26 Appendix 32 Endnotes 35 Partnership Fund Board of Directors 36 Acknowledgments Online Complete data sets and analysis at fund.pfnyc.org Partnership Fund for New York City c New York’s Next Big Industry: Commercial Life Sciences 1 Executive Summary Life sciences is an industry that is entering a period of • Growing collaboration among institutions, govern- rapid growth, driven by scientific advances happening in ment, and the private sector, to develop a life sciences a handful of premiere research centers around the world, ecosystem in New York City and State that is far stron- including New York City. Historically, New York has been ger and more connected than in the past. a leader in life science discoveries and patents, but has In order to fully take advantage of these assets, the lagged thriving commercial hubs like those in Massachu- Partnership Fund for New York City, with support from setts and California when it comes to capturing life science Dr. Susan Windham-Bannister and KPMG, identified four jobs and attracting capital investment to build companies. key areas where there is a need for investment: Today, New York has an opportunity to build a significant • Space: Affordable and appropriately located commer- life sciences industry cluster, thanks to the pace and qual- cial lab space; ity of the scientific and clinical work that is increasingly concentrated in the metropolitan region and to a new set • Talent: Development of entrepreneurial life sciences of factors, including: talent within the universities; • Capital: Additional early stage capital willing to take • Exceptional leadership and scientific talent at medical high risk; and, research institutions and universities across the state; • Promotion: Overall better connectivity within and • Convergence between life sciences and information promotion of the life sciences ecosystem. technology sectors, with New York having developed significant assets in relevant IT sectors; New York’s life sciences assets, if aggregated and support- ed by strong leadership from the public and private sectors • Increased interest of global pharmaceutical compa- and aggressive public policy and marketing initiatives, po- nies and risk capital investors in partnering with local sition the region for explosive growth. This is the moment institutions and making high profile investments here; for New York State to move forward with a full-scale pub- • Expanded real estate industry interest in development lic-private initiative to create a world class life sciences in- of wet lab space, incubators and accelerators dedicated dustry cluster. to life sciences; and, Partnership Fund for New York City 2 In 2015, Massachusetts generated $1.32 of venture capital for the life sciences industry for every $1.00 of federal NIH funding it received. New York State generated only $0.06 of venture capital for every $1.00 of NIH grants. New York’s Next Big Industry: Commercial Life Sciences 3 Introduction The life sciences industry is a rapidly New York has the talent and institu- academic medical institutions. Many growing sector of the U.S. economy, tional resources to be at the forefront of the deficits of earlier decades have currently generating $316 billion in of this explosion of scientific ad- been substantially eliminated, with annual economic output or 2 percent vancement and commercial activity. support of city and state government of the nation’s GDP.1,2 The industry— and institutional leadership. which includes biotechnology, phar- Fifteen years ago, a study conduct- maceuticals, medical diagnostics, ge- ed by the Partnership Fund for New Today, the New York metropolitan re- nomics, bioinformatics and medical York City identified why New York gion is attracting unprecedented in- devices—pays good salaries (average had failed to develop a life sciences terest from venture capitalists, phar- of $104,000), generates a high eco- industry cluster, despite its academ- maceutical companies, real estate nomic multiplier, and is a magnet for ic pre-eminence in the field. The key developers and leading life sciences private investment capital. In 2015, missing ingredients were found to entrepreneurs. A serious industry life sciences companies in the U.S. at- be a shortage of commercial wet lab cluster is finally emerging. However, tracted $10 billion in venture capital space, the absence of an entrepre- New York is facing growing compe- and added a net 37,000 jobs.3,4 neurial culture within New York’s tition from established centers like academic medical centers, and lack London, California and Massachu- Life sciences is expected to experi- of early stage venture capital. This setts as well as from the emerging ence a new round of explosive growth work helped spur development of the ones like Atlanta, Cleveland, Flori- in the near term. Advances in genom- Alexandria Center, New York’s first da, Kentucky, Singapore, Texas and ics are enabling the discovery and de- life sciences park on the East River the Netherlands. In just the past few velopment of highly targeted drugs, medical corridor. It also encouraged months, two of the city’s most im- therapies and diagnostic tests—re- transformative changes in leadership portant institutional leaders—Dr. ferred to as “personalized medicine.” and technology transfer capacity at Marc Tessier-Lavigne of Rockefeller Partnership Fund for New York City 4 University and Dr. Laurie Glimch- She identified key building blocks Status of Commercial er of Weill Cornell Medicine—have that underpin innovation capacity: a Life Sciences in New York been recruited to lead Stanford Uni- pipeline of translational research; en- The academic medical institutions versity in California and the Dana trepreneurial culture; qualified work- and world-class scientists of New Farber Cancer Institute in Boston, force; enabling infrastructure; and a York contribute heavily to the re- respectively. well-coalesced life sciences ecosys- search and discovery that make the tem. Cities with high innovation ca- U.S. the world leader in life sciences. In 2008, then Massachusetts Gov- pacity promote the creation of viable But New York still is punching far ernor Deval Patrick committed new life sciences companies, compete below its weight when it comes to $1 billion to support the development more successfully for risk investment translating public, private and phil- of that state’s life sciences industry. capital to grow these companies, and anthropic investment in scientific Over seven years, the state, through attract and sustain a high volume of and clinical research into local jobs the Massachusetts Life Sciences commercial life sciences activity. and commercial activity. New York Center (MLSC), has invested or com- City and New York State generate 4 mitted $595 million, which has been The conclusion of this review is that percent and 8 percent of nationwide matched by over $2 billion in private New York is poised to become a glob- GDP, respectively, but account for and federal funds.5 MLSC’s Job Cre- al commercial hub of life sciences. just 1 percent and 5 percent of the na- ation Tax Incentive Program award- Realizing this objective, however, tion’s economic output in life scienc- ed more than $140 million to 90 life will require strategic public and pri- es. Many of the world’s largest biotech sciences companies over six years vate programs and investments to companies—Amgen, Progenics, and and created over 4,500 jobs at a cost strengthen New York’s innovation Millennium, to name a few—are built of roughly $30,000 per job.6 Addi- capacity over the next several years. on discoveries made at New York in- tionally, infrastructure investments State and city government, institu- stitutions, yet their operations and in research and manufacturing space, tional leadership—especially trustees employees are located elsewhere.8 which account for half of MLSC’s of major medical research institu- committed resources, have created tions—as well as the city’s investment The states of California, Massachu- more than 4,300 jobs.7 and philanthropic communities, all setts and New York rank numbers have essential roles in capturing this one, two and three in awards of annu- The Partnership Fund determined it opportunity to build a significant new al research grants from the Nation- was time to review the status of the industry in New York. al Institutes of Health (NIH), a key regional industry and New York’s measure of the quality and quantity competitive position. Dr. Susan of life sciences research. The majority Windham-Bannister, who led the (78 percent) of New York State’s NIH development of Massachusetts’ life funding comes to the Downstate met- sciences ecosystem as CEO of MLSC, ropolitan region, which ranks second was commissioned to lead this review. in total funding behind Boston/Cam- KPMG provided pro bono expertise bridge and ahead of Silicon Valley.9 to survey the assets and status of the However, Boston/Cambridge and Sil- local industry. icon Valley each have 3.9 to 4.4 times more life sciences jobs than New York Dr. Windham-Bannister’s assessment City (Exhibits 1 and 2). of New York focused on “innovation capacity”—the ability to translate New York also has been comparative- academic
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