Recently, PULSE had a conversation with Joan Koerber-Walker, president and CEO of AZBio, which recently celebrated 20 years of supporting the growth of Arizona’s life science industry. Joan, who has led AZBio since 2011, has a vested interest in making Arizona a place where bioscience organizations can thrive and find success, while supporting economic growth at the local and state level. PULSE asked Joan for her perspective on how mergers and acquisitions (M&A) have impacted and benefited Arizona’s economic outlook and contributions to the state.
Q1. How has the industry grown over the last decade and what are some distinguishing characteristics?
A1: Arizona’s bioscience industry has undergone incredible growth in the last twenty years, growing from a nascent industry to one of the top emerging bioscience clusters in the United States, generating $38.54 billion in economic impact in 2021 alone. This growth is driven in part by our seminal bioscience roadmap and the Arizonans across the life sciences, health care, business, academia and policy who have helped shape it. Over a two-decade period since the early 2000s, Arizona’s bioscience jobs have nearly doubled; our universities’ bioscience R&D investment has nearly tripled and venture capital investment in the Arizona biosciences has increased seven times over. We even reached a record high for venture capital funding in 2021, when we achieved $240 million in investments in bioscience firms.
Q2: Have mergers and acquisitions (M&A) played a role in Arizona’s life science industry growth?
A2: M&A has been an essential part of the development of Arizona’s bioscience sector and employment growth. Global leaders including BD, Exact Sciences, Medtronic and Roche grew their operations in Arizona after acquiring smaller Arizona companies and are now some of our largest life science employers. For the early investors in our young companies, these examples are a crucial investment incentive as well as a practical way for Arizona’s companies to take advantage of the synergies and capabilities that other larger, more established life science markets have at their disposal. I’ve seen companies across the state combine and utilize new technologies, research capabilities and expertise, leading to many breakthrough innovations for patients. Over the last fifteen years in particular, Arizona has seen a series of successful mergers and acquisitions that significantly impacted our cities and local communities. These companies are more than manufacturing powerhouses. They are strong community partners that support our patient organizations, provide mentoring opportunities for our students and work closely with our universities.
Q3: Can you provide insights into the economic benefits of these acquisitions for the communities involved?
A3: In 2021, Arizona’s bioscience industry is growing rapidly and reached more than 36,000 jobs spanning 2,912 business establishments in 2021. Industry employment has grown by nearly 22 percent since 2018—twice the growth rate of the nation—with each of the five major subsectors adding jobs during the period. Arizona’s universities conducted $602 million in R&D activities in bioscience-related fields in 2020, fueled in part by steadily increasing NIH awards to Arizona institutions since 2018. Venture capital investments in Arizona bioscience companies increased significantly in 2021, and during the 2018-21 period totaled $565 million. Arizona inventors have been awarded 2,283 bioscience related patents since 2018, among the second quintile of states in patent activity. Read the Report: AZBIO 2022 – State Profile
When thinking of significant local economic growth resulting from M&A, two distinct examples in two different cities come to mind.
In Tucson, a tissue diagnostics-focused biopharma organization called Ventana Medical Systems was acquired by Roche in 2008. Since that acquisition, the employment at the Tucson site has continued to grow, making Roche Tissue Diagnostics the largest private sector life science employer in southern Arizona. Roche hosts its annual Tucson Symposium which brings thought leaders and cancer experts around the future of cancer medicine to our state to share ideas and collaborate. This means that every year, Roche’s Tucson team and the city of Tucson play host to the world’s leading experts in diagnostics and oncology advancements, ultimately placing Arizona at the forefront of improving patients’ lives.
In Phoenix, the 2010 acquisition of Abraxis by Celgene has also caused transformative growth in the area. The deal included Abraxis’ $70 million biologics manufacturing plant in Phoenix. When Celgene acquired Abraxis for $2.9 billion in 2010, the Phoenix plant grew further, added even more jobs and, by 2013, was named Manufacturer of the Year by the Arizona Manufacturer’s Council. In 2019, Bristol Myers Squibb (BMS) acquired Celgene. BMS has continued to invest in the Phoenix facility, creating more jobs and, most importantly, manufacturing and delivering an important cancer treatment that is extending the lives of cancer patients worldwide.
Q4: Are there specific examples of advances that emerged post-M&A in Arizona?
A4: Through M&A, we see that companies are often able to utilize new technologies, research capabilities and expertise, all of which build up to the development of innovative health care breakthroughs. When innovative smaller companies are acquired by larger firms, they bring together their resources, expertise and research capabilities for the development of new therapeutics along with a global reach that delivers lifesaving treatments and cures to more patients. Examples of Arizona health innovations that are benefiting patients today include heart valves, pacemakers, insulin pumps, peripheral vascular devices, cancer medicines, and a wide range of diagnostic tests that provide patients and their physicians with critical health information.
Q5: If the proposed changes to antitrust policy move forward, what impact do you anticipate them having on your members?
A5: The ability for our companies to engage in M&A has been crucial to the life sciences and economic boom in Arizona. The diversity of our industry is one of our biggest strengths, and one that allows everyone to excel in their respective areas. If regulatory agencies were to begin applying undue scrutiny to these partnerships, it would stunt Arizona’s job and economic growth for our residents and risk shelving potential breakthrough innovation originating in our state. AZBio’s vision is for Arizona to be a top-ten life science state, and M&A will continue to be a core driver of our progress.
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Republished with permission