Accelerating New York’s Bio/Med Ecosystem
Survey presents opportunities for growing Bio/Med ecosystem in New York State.
Life science market research specialists KJT Group Inc. surveyed 21 bioscience and medical technology (Bio/Med) executives and interviewed 10 MedTech member executives to help provide a snapshot of the industry nationally and in New York, which employs nearly 75,000 – 28,000 in upstate alone. Their findings presented many opportunities for Bio/Med business in New York, where numerous companies are finding advantages in critical areas like workforce development.
Participants ranging from start-ups to global operations were questioned about the state of the Bio/Med industry in general, workforce and talent development and economic impact. The results show a tempered optimism about the industry and opportunities for growth in New York State, which sits on the cusp of developing a robust ecosystem on par with some of the country’s hottest Bio/Med locales.
Executives were positive about the pieces of New York’s Bio/Med ecosystem already in place, namely the academic pipeline, a burgeoning medical device specialty ideal for clustering and the entrepreneurial spirit of New York.
“A balanced ecosystem brings universities that are interested in developing people for them. It brings investment into the community because you get start-ups and you find that you have venture capital coming into the market,” said Nelson Patterson, vice president of Baxter in Medina. “You have that alliance between venture capital, entrepreneurs and academics that really creates the hotbed for innovation that you want.”
Workforce and Talent Development
The wealth of academic institutions topped many lists as a major positive for New York. Universities produce first-class research and the highly-trained employees key to supporting the Bio/Med industry’s future workforce. Nearly 60 percent of respondents identified academia as a top strength in the survey, which also indicated about two-thirds of a company’s Bio/Med talent come from within the state.
While a more formalized statewide system of academic partnerships was preferred by respondents, more than 70 percent said they have their own internship/co-ops, mentoring/ coaching or internal training programs. Rochester Institute of Technology, University of Rochester, SUNY Buffalo and Cornell University were identified as the colleges most partnered with in New York State. The Bio/Med representatives taking part in the survey said product development and research engineers, research scientists and quality assurance/control/validation were the greatest skillset needs now and for at least the next five years. Positions in quality assurance/control/validation are the most difficult to recruit for, respondents said.
“New York State has an educational system second to none. There is an abundance of highly-qualified young people who are energetic, enthusiastic and looking for stimulating opportunities,” said Tony Eisenhut, president of molecular diagnostics producer Rheonix in Ithaca. “From a team standpoint, we are well positioned to compete. We just need to make sure we have equally talented leadership and appropriately resourced companies, so success can be achieved. This will serve to build the foundation for the economic success of the region for the next generation.”
About 71 percent of respondents identified the state tax burden as a disadvantage of doing business in New York while existing talent leaving the state and difficulty attracting new business to the state were each considered a disadvantage by 62 percent.
While businesses often find taxes a burden, employees often enjoy a much lower cost of living and much higher quality of life compared to other Bio/Med areas in the nation. Respondents identified New York State quality of life (71 percent), low cost of living (62 percent) and proximity to industry “hotbeds” (33 percent) as top advantages.
The academic pipeline within the state is strong on the whole, however, recruiting mid-career and executive talent presents a “significant challenge,” according to about 40 percent of answers. That dwarfs concerns about early career talent. Only 14 percent considered that a significant challenge.
The study indicates the senior-level shortage could be alleviated by taking advantage of two major strengths: the quality of life and lower cost of living in New York State.
State of the Industry
Federal regulations make it difficult for New York’s innovative products to get to market, executives said. The Food and Drug Administration’s (FDA) rigorous, multi-step process costs Bio/Med businesses time and money. About 67 percent considered regulations an “extremely significant” issue. The respondents, who included Chief Executive Officers, Chief Operating Officers, Chief Strategy Officers, Presidents, Vice Presidents and General Managers, helped identify challenges as well.
Respondents indicated the medical device excise tax is a disadvantage on the national level, though they were essentially split on the impact of the Patient Accountability and Affordable Care Act of 2010, also known as Obamacare. The time and money that goes into the process keeps new and better products from getting out to the global market. So, while innovation is alive and well, it can take many years before a medical device or drug becomes available to the public.
Many are waiting to see exactly how the legislation will change the landscape of investment and reimbursement in healthcare before forming a strong opinion. Respondents acknowledged its true impact on Bio/Med is currently unknown.
Most were neutral about the national Bio/Med business climate and only 10 percent were “extremely positive” about the current bioscience industry nationally.
Conversely, state regulations and New York health laws registered much lower with 24 and 10 percent, respectively, naming those items as disadvantages. Executives were somewhat disappointed with the venture capital climate with 32 percent classifying it as an extreme weakness. At the same time, 32 percent identified it as an extreme strength.
The aging population puts healthcare on the forefront for policymakers, which bodes well for the industry, a few survey-takers noted in open-ended responses.
KJT Group points out that the support of New York policymakers is critical to future growth, concluding that New York is “clearly poised to take advantage of these opportunities.” The workforce is here, companies are eager to grow, the industry needs innovation and cost-effective solutions.
Top opportunities in the state included the ability to improve healthcare quality, reduce healthcare costs, grow the economy, increase healthcare access and expand into foreign markets.
Bio/Med leaders feel the potential economic impact of Bio/Med growth on the state would be significant by virtue of high-paying jobs, highly-skilled employees and expansion of its tax base.
The average Bio/Med job pays nearly $72,000, roughly $30,000 more than the average private sector position, according to a recent study by Battelle’s Technology Partnership Practice.
“I think that I’d be remiss if I didn’t say that it’s a vibrant healthy industry that is a great source of high-paying jobs in our state. There are also opportunities to improve,” said Scott Gucciardi, senior vice president and general manager at global medical device maker Welch Allyn in Skaneateles. “The opportunities in New York State are many. And, really, they’re rooted in the opportunity to grow jobs in the industry and in the state. That can be done through a number of different programs.”
Executives look to the state for lowering the cost of doing business, pro-start-up programs and general promotion of the industry. Programs like START-UP NY, for example, offer new companies 10 years tax-free.
The KJT Group report concluded the overall outlook of future growth of the Bio/Med industry in New York State is very positive, provided policy leaders rally around the growing industry.
“An aging population, increased complexity and limited resources have required both national, as well as local policymakers to tackle these issues head-on,” the study states. “Whereas the ‘technology boom’ of the ’90s was such a substantial part of the growing economy, it could be expected that ‘healthcare,’ both the innovation and delivery aspects, will be key to economic growth for the future.”
A solid workforce, aggressive companies, the need to innovate and create cost-effective solutions for healthcare, as well as public/private partnership possibilities create a “perfect storm” for enabling growth. The survey acknowledged industry groups like MedTech are critical for facilitating collaboration and sharing of information among Bio/Med companies across the state.
A greater role for already-strong academia and more incentives from the state will result in more businesses starting in or moving to New York.