TESTIMONY
by Maria Gotsch, Co-CEO and Co-President
New York City Investment Fund, The Economic Development Arm of the Partnership for New York City

New York, New York
February 27, 2006

PDF 177K

NYS Assembly Task Force on University-Industry Cooperation Legislative Commission on Science and Technology Assembly Sub-Committee on Manufacturing Translating Research into Jobs in the New York Metro Area

On behalf of the Partnership for New York City and New York City Investment Fund, I would like to thank the Task Force for the opportunity to speak about how New York can do a better job of creating new industries that build upon the world-renowned research of our academic research institutions. My testimony will principally focus on activities in New York City and the surrounding metropolitan region. In particular I will speak about a project that we believe can establish New York City and State as one of the world’s foremost life science industry centers.

New York State is home to world-class academic institutions that are strong in a number of disciplines—from computer science and engineering to environmental sciences to life sciences. The New York City Metro region has particular strength in life sciences and consistently ranks among the top three metropolitan areas in most metrics that measure academic strength. Some of these rankings include:

• Biotechnology-related Patents: In the last decade, NY Metro ranked #1 in the U.S. in the total number of biotechnology-related patents issued, with 6,800 in New York versus 3,991 in San Francisco and 3,007 in Boston.
• NIH funding: NYC ranked #2 in total NIH grant funding from 1999 through 2004
• Howard Hughes Medical Institute Investigators: NY Metro ranks #2 in total number of HHMI Investigators
• National Medal of Science Recipients: NY Metro ranks #1 in number of National Medal of Science recipients with almost twice the number of recipients than in Boston Metro, DC Metro and the Bay Area.
• Members of the National Academy of Science: New York State ranks #3 in total number of National Academy of Science members.

In addition to academic strength, the city also has great clinical assets: 25 academic medical research institutions, more than 70 hospitals and clinics, over 46,000 physicians and over 53,000 registered and licensed practical nurses. Moreover, the City has a well-developed venture capital and finance industry and business management expertise to support commercialization of the products discovered through local research. However, the size of our commercial bioscience industry is small compared to the magnitude of our academic assets. It was recently estimated that the New York Metro area was home to approximately 140 biotechnology companies versus approximately 600 in San Francisco and over 250 in Boston. Many of these New York-based companies are small.

For the last twenty years, New York State has been supporting and funding biomedical research at our city’s academic institutions. Companies based on the intellectual capital of those academic institutions have been formed, venture capital has been raised and management has been hired—just not in New York State. A number of these companies have gone on to become successful, employing thousands of people. Companies, such as Amgen, Amicus, Memory Pharmaceutical, Pharmacopeia, and Sugen, were all initially started with technology from New York City academic institutions, but moved elsewhere to grow.

One exception is Regeneron Pharmaceuticals, which was started by a researcher at Weill Cornell Medical Center in New York City. The company moved to the Landmark at Eastview in Westchester County and eventually opened a manufacturing facility in Rensselaer. Regeneron currently has a market capitalization of $860 million and employs 565 people.

Why has the State's investment in biomedical research resulted in this net export of life science jobs rather than the development of a strong commercial industry? In New York City at least, the primary reason today is lack of reasonably priced space for commercial companies. As shown in this chart, while the New York Metro region is the second highest recipient of NIH funding, there is virtually no commercial space in the metropolitan area:

Source: National Institute of Health; Colliers International, Annual Review and Analysis of Real Estate Trends in the Life Science Industry, Summer 2005

The City’s two incubators—Columbia’s Audubon Business and Technology Center and SUNY Downstate’s Advanced Biotechnology Incubator—both have limited space for new tenants. More importantly, when a company “graduates” from these incubators, there is no space that can accommodate these mid-stage companies within the five boroughs of New York City, and limited space within the region. As a result, we lose these companies that are expanding and adding good paying jobs to other states, such as New Jersey, Pennsylvania, California and Massachusetts.

The positive news, however, is that New York City is on the cusp of reversing this historical trend of exporting life science jobs with the development of the East River Science Park. The City of New York is negotiating a ground lease with a private developer, Alexandria Real Estate Equities, Inc., which will develop close to one million square feet of commercial office and laboratory space for life science companies. This East River Science Park (ERSP) will be located at 29 th Street and First Avenue in Manhattan and is designed to accommodate early, mid and later stage companies. Alexandria Real Estate, which was selected to develop ERSP after a competitive Request for Proposals process last year, is the largest developer of life science properties in the U.S. and is active in all the domestic major life science markets.

Alexandria expects to invest over $750 million to build ERSP, and the City of New York will be providing approximately $110 million of tax incentives. In addition, the New York City Investment Fund has committed to invest up to $10 million in the form of favorable loans to tenant companies to help build out their laboratory space. However, unexpected site conditions have resulted in a capital funding gap of about $30 million that a grant from New York State is needed to fill. Without this state funding, there is a risk that the developer will not move forward with this project.

By anchoring a commercial bioscience industry in New York City near the State’s largest concentration of academic research assets, this industry can then become a driver of economic development in the metropolitan region and elsewhere in the State. In the City, there are several existing sites that have as-of-right zoning to accommodate expansion beyond ERSP:

• Brooklyn Army Terminal (Brooklyn) — The City and SUNY Downstate are working to bring on line approximately 450,000 square feet to accommodate biomedical research and biomanufacturing uses.
• Expansion of Audubon Center (Upper Manhattan) — There are plans for a new facility that would expand the Audubon Center by approximately 240,000 square feet.
• SUNY Downstate (Brooklyn) — There is appropriately zoned land surrounding SUNY Downstate’s incubator which can accommodate upwards of 500,000 square feet of commercial bioscience lab and office space.
• Hutchinson Metro Center (Bronx) — Simone Development controls vacant land that can accommodate up to an additional 540,000 square feet of commercial bioscience space.

While the City will be able to accommodate the growth of some of the companies that need to expand beyond ERSP, locations outside the City and in Upstate will also be logical locations to which these companies can expand, particularly with respect to manufacturing operations. The Regeneron example of headquarters and research in the Metro Area and manufacturing in the Hudson River valley is one model. Bristol-Myers Squibb, which has its headquarters in New York City and some manufacturing operations in Syracuse, is another example of how the entire state can benefit from investing in a cluster center in NYC.

While other parts of New York State need to develop a range of technical assistance and financing sources to achieve a higher level of commercialization of university-based R&D, New York City’s primary impediment is a lack of commercial real estate to retain and attract commercial companies. We believe that an investment in East River Science Park is the single most important action that New York State could undertake to position the City, and therefore the State, as a leading commercial bioscience center for the 21 st century. It will help build important infrastructure for the commercial life science industry so that the City and State can maximize the commercial jobs that spin out of our academic institutions.

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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.