November 2nd marked a huge vote of confidence for the biosciences—voters in California approved Proposition 71, the California Stem Cell Research and Cures Initiative. Through this initiative, California will sell $3 billion in bonds, which will fuel an investment of $300 million a year for 10 years in stem cell and regenerative medicine research.  Proposition 71 was put to popular vote and was passed by nearly 60% of the people—in a tough budget climate and in a year that saw a record turnout at the polls. Californians seem to understand the promise this industry holds for the future of healthcare globally and for their state’s economic future.

While this is a great event for the development of this science, since the vote, questions have been raised continually as to what this means for other states. It is clear that California is taking an aggressive stance to maintain its position as a global research center. The end result is to find new cures and provide the base for future growth in the industry, creating new jobs and new tax revenues for California.

While other states have rushed out of the gate with proposals in response to California, we must remember that Pennsylvania already has made a $2.3 billion commitment to the growth of the biosciences, the second largest commitment in the country next to California’s recent investment. But we must ensure this current commitment is working to keep our researchers and companies in Pennsylvania.

Pennsylvania—a Recognized Leader

In 2001, then Pennsylvania Governor Ridge and the Pennsylvania legislature took the bold policy step of investing its entire share of the tobacco settlement into health-related programs. As part of this effort, the state took a hard look at where we excelled and where we were falling behind in the biosciences. Our strength in research wasn’t translating into funding for start-up companies. Our patent creation was on par with or outpaced many of our competitor regions, yet our state’s share of venture capital lagged dramatically behind. Pennsylvania responded by creating innovative programs to fuel growth in the industry:

• The Life Sciences Greenhouse Initiative that provides a flexible, innovative mechanism for the commercialization of biotechnology and other Life Science business opportunities
• An investment of $60 million into privately managed venture funds to leverage increased venture capital for life sciences companies
• Creation of the Commonwealth Universal Research Enhancement program to fund promising health research, providing $1.6 billion (approximately $70 million annually for ongoing investment)

These programs were ground-breaking, and the Greenhouse Initiative has since been hailed as a national model for state funding of early-stage risk capital in the biosciences. Successes are already evident, even though all of the tobacco funding hasn’t been spent, with dollars allocated over longer periods of time for annual investment. But with the beginning of a new administration in January 2003, Pennsylvania could have lost its edge. Yet Governor Rendell and the state legislature continued to support the industry, with programs that will continue Pennsylvania’s leadership:

• Expansion of the R&D tax credit to $30 million, with the addition a tradability provision
• Creation of the Keystone Innovation Zones that will strengthen growth around Pennsylvania’s colleges and universities by encouraging industry-academic partnerships and entrepreneurial development
• New venture capital programs

California Steps Up

But California upped the ante in November with its $3 billion investment in the stem cell initiative. Other states have legislation pending, including Massachusetts, Illinois, Maryland, New York, Rhode Island, to name a few. In Wisconsin, Gov. Jim Doyle this month announced plans for a $750 million investment in stem cell research, and New Jersey already has launched its stem cell initiative.

The concern that California’s plan raises for Pennsylvania in particular is that this new initiative isn’t just about stem cells—it’s about regenerative medicine as well. California wrapped its proposition around the politically timely issue of stem cell research, assuring international press coverage that has catapulted the awareness of the state’s plan to the forefront of researchers’ attention globally. But currently one of the world’s premier centers for regenerative medicine is located in Pittsburgh—the McGowan Center for Regenerative Medicine. California is taking direct aim at attracting the top research talent from around the world, and Pennsylvania is well recognized for its research excellence at institutions and companies across the Commonwealth. We need to reaffirm for these researchers and these companies Pennsylvania’s commitment to growing the biosciences here.

Pennsylvania took a balanced approach in its plan: funding for basic research, programs to grow small companies, improvements to the state’s business climate for mature industry. This plan was put in place with the understanding that Pennsylvania is one of the few places that is home to the continuum of the biosciences: world-class research; emerging biotechnology, medical device and diagnostic companies; mature industry; and global pharmaceuticals. We need to maximize this strength and move forward in a way that is most meaningful for the researchers and companies here.

So what should Pennsylvania do to maintain its global leadership position in the biosciences?

Pennsylvania’s Next Step

People in our industry, in response to California’s move, say that Pennsylvania needs to do something or risk losing out. The question is, what is that something? Is it our own stem cell institute? Is it something else? Pennsylvania does have a lot to lose in this race, but that’s because we already have so much here—more than 2,000 bioscience related companies employing nearly 84,000 Pennsylvanians. Creating the right policy that will support research and company growth must be a priority for us all.

We believe that it is Pennsylvania Bio’s role as the statewide association representing the interests of the biosciences industry to be the catalyst to convene a group of stakeholders, including state government, to assess the current state expenditures to grow the biosciences, and, in what will likely be another tight budget year, propose the projects that will best support researchers and companies in the Commonwealth. It is important that, while moving quickly, we take a look at the effectiveness of the programs we have already funded to ensure we stay on the right path. And it is equally important that we think creatively about how to best serve the industry here—how to support research, how to help young companies grow and move therapies and devices to patients.

Pennsylvania has been a national leader in the development of policies and programs to grow the industry. While calling for a group of stakeholders to assess our next steps may seem like short-term inaction, it is in the long-term the best initial action to take. The important thing for us is to react, not over-react. We have a strong and vibrant industry here and we must first ensure that our policy goals meet the long-term needs of this community of world-class research talent. We need our researchers and companies to understand and feel invested in our strategy. Again, we need to reaffirm to them that Pennsylvania is committed to their success and their growth. There is no better way to do this than to include them in the discussion and policy development.