A nonpartisan task force made up of state lawmakers and experts from the biotechnology industry is recommending several policy changes for New Jersey so the state can reclaim its standing as a national leader when it comes to innovation.
The recommendations, put forward in a new report made public yesterday, include revamping existing tax-credit programs and creating new ones to help foster more breakthroughs. The task force is also calling for more emphasis on so-called translational research that leads to the creation of new medicines and medical devices, and better marketing of the state as a key location for life-sciences firms.
The report culminates more than a year of work by the nine-member panel, overlapping the tenures of two different governors. Some of its proposals, like re-establishing a commission on science and technology within state government, are already being pursued by lawmakers.
“By leveraging our strengths, we believe that New Jersey can achieve its goal of revitalization and enhancement of the life-sciences industry through strengthening of the state’s innovation capacity,” said Debbie Hart, who chaired the task force and is president and chief executive of the group BioNJ.
While New Jersey is no slouch when it comes to biotechnology — 13 of the world’s 20 largest pharmaceutical companies call the Garden State home — it is no longer a national leader, according to research conducted by Bloomberg that was cited in the report. States like Massachusetts and California have a higher ranking than New Jersey when it comes to fostering innovation.
How New Jersey lags
The report, by the New Jersey Biotechnology Task Force, identifies several possible reasons for the state’s fall from the top spot — including economic recession, corporate mergers, and patent expirations that have influenced sales figures. The report also suggests the state itself has played a role.
“New Jersey lags its competitor states in several key areas, including funding for early-stage companies and non-monetary support, such as technical and professional business assistance for academic spin-offs,” the report said.
But it also takes an optimistic view that, with certain policy changes, New Jersey can get moving in the right direction again, something that has already been an area of heavy emphasis for Gov. Phil Murphy since he took office earlier this year.
“By addressing the issues that are most severely hampering our innovation capacity, New Jersey can become a state where a high volume of new companies start, grow and thrive, and where mature companies that rely on innovation want to have a significant presence,” the report said.
One focus of the report is tax credits, and other ways the state currently tries to encourage innovation in the biotechnology sector. Among the task force’s recommendations is a call to expand the state’s Angel Investor Tax Credit program which provides refundable tax incentives for state corporate-business or gross-income tax liabilities to an emerging technology company that is physically located in New Jersey. The credit is currently worth 10 percent of a qualified investment, totaling up to $500,000, but the task force is calling for it to be increased to 25 percent of an investment.
Better tax credits elsewhere
The report cites similar credits offered by regional competitors that are more generous, including Maryland’s up to 50 percent credit and Massachusetts’ up to 30 percent credit.
“The enhancement would increase the existing incentive to the angel investor, and the refundable nature of the tax credit would provide an asset that could be monetized for early-stage life sciences and technology companies that are in need of growth capital but are operating at a stage where it is difficult to obtain working capital by conventional means,” the report said.
Also among the recommendations is a call to create an altogether new tax-credit program to incentivize more private investment in what are known as advancement funds run by universities and colleges. The funds support students and faculty working to advance new technologies that can be commercialized. The tax credit would be provided to private investors, both individuals and corporations, the report said.
Another of task force’s proposals is to encourage universities and colleges to do more to foster a culture of translational or applied research, which it defines as work that leads to the development of new ways to prevent, diagnose, and treat disease.
As part of that effort, the report recommends the state re-establish the Commission on Science, Technology and Innovation as a part of the executive branch; the commission had operated for over two decades before being defunded in 2010. State lawmakers have already introduced a bill to do so, and it was recently approved by the full Assembly.
NJ in a ‘dog fight with other states’
The report also recommends more coordination of the state’s marketing efforts to increase awareness in the innovation sector of what New Jersey has to offer and to establish a general “sense of unity and importance” concerning innovation and entrepreneurship in the state. “An initial and clear step that New Jersey can take to better position itself relative to its competition is to fully catalogue the resources available in New Jersey and reposition the State’s marketing focus to take a more aggressive and organized approach in mark,” the report said.
Assemblyman Andrew Zwicker, a physicist who served on the task force, said the group’s work provides a “road map” that policymakers can use to build on the state’s existing life-sciences resources.
“The report also confirms what many of us have known for a while: that the state must make strategic investments in the life-sciences industry in New Jersey in order to regain our place as the nation’s life sciences leader,” said Zwicker (D-Somerset).
Assemblyman Christopher DePhillips, another task force member, suggested the recommendations, if followed, could help keep more investors and entrepreneurs in New Jersey instead of having them go elsewhere.
“New Jersey is in a dog fight with other states, which are rolling out the red carpet to take our biotech executives and jobs away from us,” said DePhillips (R-Bergen).