On Thursday, December 9, 2021, over 160 life science executives, patient advocates, and business leaders gathered to honor the policy makers who are blazing the trail for the growth of Arizona’s life science sector at the annual AZBio Trailblazers Luncheon and learned why investing in innovation is an Arizona opportunity.
Economist Jim Rounds chats with AZBio’s Joan Koerber-Walker about why investing in innovation is an Arizona opportunity.
An organization’s strategic vision sets forth the future state it works to ultimately achieve and gives the people who make up the organization a shared purpose. An organization’s mission statement describes what the team does to turn its vision into reality. In 2021, AZBio’s Board of Directors came together to review and refine our vision and mission. The result is clear, easy to remember, and something we are committed to as an organization and as a community.
Vision of the Future: Arizona is a top-ten life science state.
Mission: AZBio supports the needs of Arizona’s growing Life Science Ecosystem.
How far do we have to go?
Arizona is not a top-10 life science state today. By the most accepted national metrics, Arizona ranks 17th in the number of firms, 23rd in the number of life science employees, 29th in the average wage per employee, 24th in Academic R&D investments, and 25th in venture capital investments into companies in their state.[i]
While these rankings demonstrate that we have a lot to work towards, they reflect significant progress from where we started. Over the last 20 years, Arizona governments, philanthropists, and private interests have invested over $23 billion dollars in building our academic, research, and healthcare systems. These investments are paying off. Research and healthcare assets have been instrumental in Arizona’s COVID-19 response and breakthroughs are in development to address a wide range of health challenges that impact Arizonans today and in the future. In addition, from an economic perspective, there is also a considerable return on investment with an economic impact of $32.67 billion dollars in 2018 which is up from 23.16 billion in 2016.[ii]
Other states, and countries too, recognize the importance of a thriving life science sector and are investing accordingly to build their biotech and medtech industries or to maintain their leadership positions.
Realizing our vision of Arizona as a top-10 life science state will require ongoing investment and a suite of strategic actions, along with the combined efforts of our researchers, innovators, business leaders, and government partners.
Investing in Innovation is a strategic imperative if Arizona is to become a Life Science Leader
Arizona is making progress. The 2021 CBRE Life Science Trends Report for Q3 reported that Phoenix emerging market segment in job growth in the last 12 months and, with 22,000 jobs, made the top 20 for life science employment, sharing the 18th, 19th , and 20th positions with Dallas and Indianapolis. Making it to the top 10 will take a focused effort. The current city holding the number 10 position is Minneapolis-St. Paul with 44,000 jobs. The top market positions are held by the San Francisco Bay Area (129K jobs) and Boston-Cambridge (104K jobs).
Life science companies depend on capital investments for growth. According to CBRE, the 1 year period ending on Q3 2021 marked a high point for venture capital investment at over $32.1 billion dollars. Over 70% deployed in three markets, Boston-Cambridge ($10.7B), San Francisco-Bay Area ($6.1B), and San Diego ($5.1B). The balance of $9.6 billion was spread across the rest of the country. Of the top 20 markets, no city in Arizona made the list.
Venture Capital is an essential component in any top-tier life science market. Without capital early-stage and emerging-growth companies are not able to attract and retain talent, establish operations, launch clinical trials, or perform other functions necessary for success. Unfortunately, Arizona does not have enough.
Bridging Arizona’s Venture Capital Gap
In 2017, AZBio with support from a New York-based family office, began the process of studying best in class life science clusters across the country and around the world. In 2019, based on the results from the best practices study and a series of interviews with leaders across Arizona, AZBio partnered with the Opportunity Through Entrepreneurship Foundation (OTEF) to create AZAdvances. Once capitalized, AZAdvances will provide a steady stream of early-stage life science capital in Arizona, forever. AZBio is currently leading the $200 million capital campaign for the evergreen endowment and raising an additional $50 million for a current use fund for immediate use while the endowment is maturing and, once the endowment has matured, as the vehicle to deploy the 5% distributions each year into early-stage investments in Arizonna-based life science companies. Learn more at www.AZAdvances.org.
AZBio’s Strategic Actions Build on Our Strengths
In addition to refining our mission and vision, AZBio’s leaders identified six areas of focus where strategic actions will move us closer to our goal.
As the voice of Arizona’s life science industry, AZBio works to raise awareness of the great work being done today and our potential for the future. Our industry focused communications celebrate the successes within our community and share important information that community members can use to move forward faster. Sharing information with each other is not enough. The annual AZBio special supplement in AZ Business Magazine reaches over 25,000 business leaders in print and over 122,000 readers online. In addition, through our partnership with ABC15 we expect to reach over 1.6 million viewers on ABC15 and CW61 in 2021 alone through the Sonoran Living Health Innovation Spotlights campaign. By providing valuable information on how Arizona’s life science and healthcare sectors, is making life better, we can develop more support for our growing industry.
State and local governments are a vital partner in any successful life science and healthcare ecosystem. Arizona is known for its business-friendly environment and that is one Arizona advantage. AZBio works with our elected leaders to identify best practices and policy strategies that will move Arizona forward economically. At the same time, we never forget that our life science and healthcare industries exist to make life better for people. This includes working with our elected leaders and patient advocacy partners to ensure that people have access to the innovative treatments and services our industry delivers.
Another Arizona advantage is TRIF, the Technology & Research Initiative Fund that was created in 2000 as part of Prop. 301. Total TRIF investments since the inception of the program in June 2001 is over $1.4 billion. Arizona’s public universities leveraged that investment to attract outside research funding. The legislature extended this essential funding through 2041, but it is no longer voter protected. To ensure long term certainty to this essential program, a new proposition will need to be presented to the voters. Learn more about TRIF and the impact it is making for people in Arizona.
Protecting this essential research funding is just half of the capital equation. Research must be developed into innovative products and services by companies, and this requires a different kind of capital investment. Today, the early-stage funding needed to move discoveries onto development and progress them to the stage where private investors will step in is very limited in Arizona. To address this need AZBio has partnered with the Opportunity Though Entrepreneurship Foundation to create AZAdvances (AZAdvances.org) and is working to build an endowment that, once funded, will provide this needed resource in Arizona forever.
A growing company base will require a growing workforce. Life science companies and our healthcare delivery systems generate an increasing need for talent at all levels. Arizona’s universities, community colleges, and K-12 systems require industry input to ensure that what they are preparing tomorrow’s workforce and AZBio members can provide it. In addition, today’s students are looking for on-the-job training in the form of paid internships. Top-ten life science states like Massachusetts have successful programs that Arizona can emulate.
Companies created in Arizona and companies looking to come here have a shared need for places they can grow into. Top-ten life science states have an inventory of facilities ranging from shared incubator facilities to large scale manufacturing sites. AZBio is in a unique position to support developers and investors with the information they need to tap into Arizona’s growing life science sector.
Bringing our community together to form connections, build partnerships, and make investments is why AZBio created Arizona Bioscience Week in 2015 and the AZBioPEERS program in 2020. These programs provide opportunities for educators, researchers, companies, investors, and others to come together and create future opportunities that can Arizona rise in the ranks as it moves towards the top-ten.
[i] AZBio analysis of national data at https://www.bio.org/value-bioscience-innovation-growing-jobs-and-improving-quality-life
[ii] AZBio analysis of Arizona’s share of the national data reported on the BIO/TEConomy 2020 Report – TEConomy Partners analysis of Bureau of Labor Statistics, QCEW data; enhanced file from iMPLAN.