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Jade Khatib
2021-08-26T16:33:00Z
- The biotech industry grew rapidly in 2020.
- California and Massachusetts are home to the most biotech firms in the country.
- The top 10 states for biotech firms offer a variety of tax and funding incentives.
As the biotech industry grows, it remains concentrated in a few states.
Life-sciences employment reached new heights in 2021, growing by 15.6% from April 2017 to April 2021, according to a report from the real-estate company CBRE. Venture-capital investors are helping fuel the growth, pouring about $10 billion into the industry in the first three months of 2021 alone, the report shows.
As with many other industries, states are trying to woo biotech firms using incentives that include tax credits and exemptions as well as direct investment in startups.
This strategy has had mixed results in the past. Research published in 2017 in The American Economic Reviewshowed that when states increased or introduced investment tax credits and research-and-development tax credits, the number of star scientists there increased, but changes in personal and corporate tax rates had a much bigger effect on the number of top scientists in those states.
These are the 10 states with the most biotech firms in the country, according to the Biotechnology Innovation Organization's membership records, and the incentives that they offer.
California
Number of firms: 255
Number of jobs: About 481,000 in life sciences
Incentives: The top state for biotech companies also offers the highest R&D tax credit, at 15%. The state also offers firms engaged in R&D a sales and use tax exemption.
California doesn't offer any biotech investment funding at the state level, but it offers proximity to some of the nation's largest venture-capital funds. Some cities like Los Angeles offer their own investment funds.
Key areas: San Francisco Bay Area, San Diego area, Los Angeles area
Massachusetts
Number of firms: 175
Number of jobs: 84,296 in biopharma
Incentives: Massachusetts offers life-sciences startups access to hundreds of thousands of college graduates and the opportunity to apply for up to $1 million in investment. The state also offers grants to companies analyzing healthcare data and innovating in biomanufacturing.
Massachusetts offers R&D tax credits of up to 10% and investment tax credits of up to 3% as well as additional tax incentives for companies located in "economic target areas."
Key areas: Metropolitan Boston, especially Cambridge
New Jersey, New York, and Connecticut
Number of firms: 55 in New Jersey, 46 in New York and 20 in Connecticut
New Jersey incentives: New Jersey offers biotech companies up to $1 million in funding, depending on their size.
New Jersey offers science startups up to $1.25 million in payroll-tax cash rebates and a 5-8% R&D tax credit. New Jersey offers a 20% angel-investment tax credit.
New York incentives: New York offers up to $4 million in funding for companies developing solutions to infectious-disease threats. The state also offers tax credits of up to about 7% of employee wages, up to 2% of investments, and up to 50% of R&D costs through its Excelsior Jobs Program.
New York lets startups near eligible universities operate tax-free for up to 10 years and offers a tax credit of up to 15% for biotech R&D.
Connecticut incentives: Connecticut offers biotech companies up to $500,000 in funding through its Connecticut Bioscience Innovation Fund. The state also offers companies up to $5 million to build labs.
Connecticut offers a five-year 80% property-tax abatement to companies that acquire or renovate existing bioscience facilities in certain areas. Connecticut's other tax incentives include a 6% tax credit for R&D expenses and a 25% angel-investment tax credit.
Key areas: New York City area, Albany area, Rochester area, Syracuse area, Hartford area
Pennsylvania
Number of firms: 58
Incentives: Pennsylvania will match companies' funding by up to 50% through its Ben Franklin Technology Development Authority Technology Development Grant. Pennsylvania biotech companies can also apply for additional funding through local Life Science Greenhouses. The state offers loan guarantees for later-stage companies.
Pennsylvania touts a 10% tax credit for R&D expenses as well as additional benefits for companies in its Keystone Innovation Zones.
Key areas: Philadelphia area
Maryland
Number of firms: 36
Number of jobs: 41,322
Incentives: Maryland offers some early-stage biomedical and medical-tech companies up to $1 million in funding. Maryland also offersfunding for stem-cell research and ventures born out of university partnerships.
Maryland has a 10% R&D tax credit for biotech companies. The state offers investors a tax credit of up to 33% (or 50% in specific counties) of their investment in a Maryland biotech company. In addition to the state funding, popular counties for biotech companies like Montgomery County and Prince George's County offer their own funding.
Key areas: Washington, DC, area
North Carolina
Number of jobs: More than 64,500 workers in life sciences
Incentives: North Carolina offers its biotech companies, mostly located in the Research Triangle area, access to thousands of college graduates as well as up to $500,000 in funding for innovative startups.
Key cities: Raleigh-Durham-Chapel Hill area
Texas
Number of firms: 27
Number of jobs: 106,017 in life sciences and research
Incentives: Texas offers existing companies as much as $1.5 millionfrom its Texas Enterprise Fund to move to Texas and as much as $4 millionto startups through its Texas Emerging Technology Fund. Texas also has a program to give smaller firms loans of up to $5 million.
Texas offers taxpayers an R&D tax credit of up to 5%.
Key areas: Dallas-Fort Worth area, Austin, San Antonio, Houston
Washington
Number of firms: 22
Number of jobs: About 40,000 researchers and support staff
Incentives: Washington let its manufacturing sales and use tax deferral and R&D tax credits expire in 2017 and 2015. Its Life Sciences Discovery Fund ran out of money between 2015 and 2017.
Key areas: Seattle area
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