TESTIMONY
by Kathryn Wylde, President & CEO
PARTNERSHIP FOR NEW YORK CITY

New York, New York
January 29, 2004

PDF 98K

Select Senate Task Force on Economic Development and Emerging Industries

Good morning Senator Skelos, Senator Golden and other members of the committee. Thank you for giving me the opportunity to talk about the future of the bioscience industry in New York State. If our state is to grow, we need to create new jobs and diversify our economy. The commercial bioscience industry presents one of our greatest opportunities to accomplish these goals.

I want to express our appreciation to Senator Bruno for establishing this Task Force and also for his early and sustained understanding of the economic development potential of the life sciences industry for all of New York – including the five boroughs of New York City. It was the Gen*NY*sis program that inspired the Partnership for New York City to bring together our business leaders, investors and major medical research institutions to fully participate in the creation of a statewide bioscience industry. For too long, our city institutions were a great incubator of ideas that were exported and commercialized outside New York. Gen*NY*sis has begun to provide the incentives required to change that orientation and to translate the city’s tremendous intellectual and clinical assets into jobs and revenues for New York State.

New York City has all the assets required to be a world leader in the life sciences industry. We have great medical and academic research institutions, plenty of venture capital and relevant business expertise. We are home to Pfizer, the world’s largest pharmaceutical company. It has taken awhile to recognize how we can harness these assets to contribute to and collaborate with regional and statewide life science industry clusters that are, frankly, well ahead of us in terms of job generation.

There are many examples of ideas incubated here and commercialized elsewhere. Memory Pharmaceuticals was spun out of a Nobel Prize-winning lab at Columbia University in 1998. Because the company couldn’t find space here, we lost it to New Jersey. More recently, Chromocell was spun out of a Nobel Prize-winning lab at Rockefeller University and moved to New Jersey because the company could not find lab space here. Management still lives in the city and the firm maintains ties to Rockefeller. If this firm could find reasonably priced space in the city, they would move back immediately to be close to Rockefeller.

[continued] During the past year, much has been accomplished to raise New York City’s profile as a bioscience center:

• Pfizer announced an expansion plan that will bring 1,000 new jobs to the city.
• Six appropriate sites have been identified in the City for construction of new commercial bioscience centers. Most are near academic institutions and have proper zoning and could be brought on-line within three or four years.
• The New York City Economic Development Corporation and our New York City Investment Fund have created a marketing program that has engaged more than 30 pharmaceutical and bioscience companies from around the world in discussions about locating or expanding operations here. This marketing initiative is targeted at finding anchor tenants for projects across the five boroughs, several of which have commitments of Gen*NY*sis funding.
• SUNY Downstate in Brooklyn is about to open a new bioscience incubator, thanks in large part to a state investment of $4.5 million, as the first phase of what is planned to be a much larger biotech park in Central Brooklyn.
• Columbia University, which launched the city’s first and only biotech incubator more than a decade ago, is moving forward with expansion plans based on the tremendous demand for their existing facility.
• There are nearly a dozen bioscience companies in the region on the verge of launching major new drugs.
• And with state and federal funding, the New York Structural Biology Center--the largest and most advanced cluster of high-field research magnets in the United States--has opened on the City College campus.

While we are encouraged by this progress, more needs to be done. States and cities across the country are investing in competitive efforts to attract the companies that are spawned by New York science.

Three years ago, we carried out a market study to determine what it would take to create a strong biotech industry in the city. We concluded that a public investment on the order of $300 million would leverage construction of one million square feet of commercial biotech space and that this would establish the critical mass required to anchor an industry cluster in the five boroughs. We have identified private developers from around the country with track records and capacity to develop major biotech parks in the city. Government capital dollars are needed as part of the incentive package to get the first projects started, after which the private sector will take over.

We would recommend that the “next generation” of Gen*NY*sis encourage private developers to assume the risk and the initiative for commercialization, rather than continuing to look to nonprofit academic institutions to take on a task that is really not their core competence. Institutions are necessary magnets and can often be useful partners, but the history of their developments turning into commercial success stories – here or elsewhere -- is not great.

One problem is that new construction of major biotech centers will take two or three years and we are losing companies right now. Financing the renovation of existing properties to create commercial lab and office space for biotech use offers an immediate opportunity to capture jobs that are leaving New York today. One possibility is the creation of a revolving loan fund that would provide matching funds to companies and property owners investing in laboratory space construction. The New York City Investment Fund would be willing to generate private participation in such a Bioscience Facilities Fund to invest alongside New York State and City. Our Fund would also to help identify companies and properties that could quickly result in new economic activity.

We enthusiastically support Governor Pataki’s proposal for a tax incentive program that will allow small biotechnology firms to sell their operating losses in return for working capital financing. This program will allow New York to better compete with neighboring New Jersey and Connecticut, which have similar tax incentives.

We would also suggest that the SONYMA loan guarantee program might, on a demonstration basis, be used to induce private investment in a few key bioscience real estate projects. This type of risk sharing would allow construction to get underway on projects that will otherwise be delayed.

The bioscience industry could experience double-digit growth over the next few decades. We should be part of that growth. This industry is creating good paying jobs. Its vitality will strengthen both our existing academic research institutions and our health care system. And, probably most important, its growth will lead to the development of groundbreaking drugs that can treat diseases and ease suffering.

It is also important that the State work to develop a bioscience industry here in New York City, where the state’s academic research and clinical resources are concentrated. A significant investment in New York City will ultimately drive growth elsewhere in the state as the industry matures and moves from early research to large- scale drug development and manufacturing.

New York City is ripe for a major expansion of our bioscience sector. Our cluster of top-ranked academic research centers and health care institutions make us a natural for this new and emerging industry. But for that to happen, both the public and private sectors must work together to leverage our resources, our knowledge and our skills. New York’s business community stands ready to help and work with you to make that happen.

The Partnership for New York City (www.pfnyc.org) is a network of business leaders dedicated to enhancing the economy of the five boroughs of New York City and maintaining the city’s position as the global center of commerce, culture and innovation.