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While U.S. biotech leadership is recognized as essential for national security, states also understand the industry’s local benefits and are implementing policies designed to attract and support their own biotech innovation ecosystems.
State-level pro-biotech policies are detailed in a new report, The U.S. Bioscience Industry: A Powerful Engine for State Economies, released Dec. 2 by the Biotechnology Innovation Organization (BIO), in partnership with the Council of State Bioscience Associations (CSBA).
BIO’s seventh biennial report on best practices in bioscience economic development initiatives details diverse strategies states use to strengthen their own bioscience ecosystem while supporting America’s global leadership in biotechnology.
“There’s encouraging progress, with a lot of legislation doing a good job of using public backing to leverage private support,” says Peter Pellerito, the author of the report. “Some 39 states have R&D tax credits. In our early reports several years ago, we had maybe 20 states with R&D tax credits. Clearly there is greater recognition of what the life sciences industry brings.”
Along with tax credits, governors and state legislatures are using many other creative initiatives to attract biotech firms and help those companies grow.
Why and how states support biotech
The benefits states receive from the bioeconomy include millions of jobs and a large economic impact for local communities.
“In 2023-2024, bioscience companies employed 2.3 million Americans across nearly 150,000 individual business establishments with a footprint in every U.S. state”, the report notes.
The total economic output of the biosciences industry was $3.2 trillion and the industry’s growth of nearly 15% since 2019 cited in the report is much greater than overall private sector job growth, which is closer to 4%.
States seeking to tap into these benefits can help with policies that support biotech companies during the four stages of company growth.
“In the report, we break down the different types of policies that can benefit companies at different stages of their growth,” explains Pellerito. Just some of the examples listed in the report include:
- Seed-stage companies can take advantage of state grants that match federal grants.
- Early stage companies benefit from angel investor credits that encourage funders.
- Firms that are scaling up can use economic development incentives.
- More mature companies can use infrastructure grants.
Tax incentives and grants
The report outlines many other types of supportive policies and gives detailed descriptions of programs that states have put in place.
In all, 48 states and Puerto Rico had at least one of the following types of incentives: Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) matching grants; angel investor tax credits; manufacturing sales and use tax exemptions; and R&D tax credits.
The report pulls out specific interesting programs and recent developments. For example, when it comes to R&D tax credits:
- Connecticut has increased its biotechnology R&D tax credit from 65% to 90% for companies making less than $70 million a year in sales.
- Massachusetts increased its R&D credit cap as part of a new $500 million life sciences bill.
- Michigan provides an extra $200,000 bonus for firms collaborating with in-state universities.
- Puerto Rico’s research and development investment credit includes a 50% credit granted for eligible investment in R&D activities.
- Virginia has revamped its R&D credit in 2024, providing refundable credits up to $45,000 per year for smaller firms.
When it comes to encouraging investment, several states use angel investor tax credits, giving tax breaks that encourage private investors to fund early-stage companies. Other types of investment tax credits help companies that are improving their equipment and capital. Thirty-two states and Puerto Rico provide matching grants for startups and other firms that receive federal SBIR/STTR seed funding.
The report also details efforts to support biomanufacturing, noting “There is a full spectrum of state and regional economic development measures now in place to support location siting of a manufacturing facility, including offering tax incentives, streamlining permitting processes and investing in workforce development.”
Supporting job creation
As the report notes, comparatively well-paying biotech jobs boost the local economy, but there are further advantages to attracting biotech workers: “The industry’s skilled workforce continues to drive innovation and create value which is reflected through the sector’s economic impacts,” the report says.
State financial incentives to encourage jobs include:
- Alabama provides a refund of up to 4% of the previous year’s gross payroll for new jobs, for up to 10 years.
- Georgia and South Carolina offer similar job credit programs over a five-year period, with credits ranging from $1,250 to $4,000 per net new job annually.
- North Carolina provides a cash refund of up to 80% of personal income taxes generated by new jobs for up to 12 years.
- Virginia offers a jobs credit of $1,000 per net new job and an annual job creation grant for companies in Enterprise Zones.
States also seek to encourage development through initiatives to support training, often in conjunction with members of CSBA. Notable initiatives of this type include:
- Georgia: The Georgia Biotech Teacher Training Initiative (BTTI) involves a public-private partnership between Georgia Life Sciences and the Georgia Department of Education. It offers hands-on professional development for middle and high school teachers.
- Ohio: The Ohio Life Sciences Association and JobsOhio announced plans to invest $30 million over five years to develop the state’s biomanufacturing workforce. JobsOhio will work with industry to build a new state of the art training center, while Ohio Life Sciences will oversee operations and collaborate with Ohio higher education institutions to deliver curricula, creating a statewide training network.
- North Carolina has several life science specific workforce development programs. For example, the Biomanufacturing Research Institute and Technology Enterprise (BRITE) offers training in drug discovery, biomanufacturing, pharmaceutical sciences, and clinical research sciences.
- Wisconsin: The Wisconsin Biohealth Tech Hub received designation from the U.S. Economic Development Administration, including funding for a specific workforce project led by Madison College and Milwaukee Area Technical College that establishes apprenticeships and creates a talent pipelines aligned with employer demands. The state is providing additional matching funds to support the project.
Through these and other initiatives, states are helping build a strong biotech industry in their communities, according to BIO President & CEO John Crowley. “This report underscores how deeply biotechnology is woven into our nation’s fabric and serves as a roadmap for how states can help maintain America’s global biotechnology leadership,” he says.
