‘Gradually, And Then All Of A Sudden': Propelled By Lake County, Chicago Life Sciences Are Ready For Liftoff
Chicagoland economic development pros say the region is on the precipice of becoming the sector’s third coast after leapfrogging rivals as a nationally recognized life sciences cluster and scoring the $250M Chan Zuckerberg Biohub Chicago all in the same month.
From the metro’s “South Pole” in Hyde Park, where the $225M 14-story Hyde Park Labs got underway in February to points north, “we're starting to see that inflection point,” said Lisa Dziekan, senior vice president of business development with World Business Chicago.
In the city proper, a half-dozen lab projects are creating geographic nodes, including Farpoint’s Bronzeville Lakefront Development, Sterling Bay’s Lincoln Yards and two Trammell Crow projects in Fulton Market.
Skokie’s Illinois Science and Technology Park marks the western edge of Chicago’s life sciences boom, Dziekan said. But much of the region’s potential likely lies in its northern suburbs in Lake County, home to 80% of Illinois’ life sciences jobs and headquarters for companies like Abbott, AbbVie, Baxter, Horizon Therapeutics and Walgreens as well as a number of startups and spin-offs.
The city saw a 556% increase in venture capital funding in 2021 and reported a record-breaking $10B-plus in investment last year, according to World Business Chicago. That was largely driven by healthtech and life sciences companies and fuels the creation of life sciences startups that stay in the area to scale up.
“You've probably all heard the saying that a lot of change happens gradually and then all of a sudden, and I think that's what we're starting to see here,” Kevin Considine, president and CEO of Lake County Partners, the county’s economic development nonprofit, said at Bisnow’s Lake County Life Sciences Real Estate Summit held April 18 at Rosalind Franklin University’s Innovation and Research Park.
After hovering between 10th and 12th place in CBRE’s annual list of the top 25 largest life sciences employment clusters, Chicago leapt to No. 7 last month, surpassing Philadelphia, Los Angeles and Minneapolis-St. Paul and becoming the highest-ranked noncoastal city on the 2023 list.
Lake County and its major league pharmaceutical and biotech companies, which also include Pfizer, Takeda, Amgen and Fresenius Kabi, were behind much of the jump, powering the city to No. 2 nationally for pharmaceutical and medicine manufacturing behind only Indianapolis. Lake County's life sciences job market has been growing steadily at 10% per year.
Considine said Chicago is poised to quickly rise into the top four national markets, turbocharged by projects like Rosalind Franklin’s 100K SF of labs and offices in Lake County’s North Chicago and the prestige of landing the Chan-Zuckerberg project over fellow finalists San Diego and New York City.
A joint research effort between the University of Chicago, Northwestern University and the University of Illinois Urbana-Champaign will operate the lab facility, only the second of its kind globally to be funded by a group led by Facebook founder Mark Zuckerberg and his wife, Dr. Priscilla Chan.
“We’re at [No.] 7, and that might sound small, but that's a pretty good climb. There's a ton of really exciting, energetic growth that's going to happen on the path from seven to five and four, and that's what we're gonna see in the next couple of years,” Considine said, pointing to the coming biohub as one engine, the region’s strong universities and medical science centers as another, and the natural evolution of a healthy ecosystem as a third, à la former executives of AveXis forming startup Jaguar Gene Therapy in 2021.
“There are people who've put things together several times … and bands will get put back together again,” he said. “It'll be interesting to see what happens from the Horizon founding team and things that happen from there. There's a lot of really exciting both established growth and entrepreneurial growth that I think is gonna happen across Chicagoland and in life sciences.”
Aptinyx President and CEO Norbert Riedel has seen those bands disassemble and reform several times. After beginning his U.S. career at Deerfield-based multinational healthcare company Baxter International as chief science and innovation officer, he helped lead corporate sponsorship of academic labs in the area before leaving to lead drug startup Naurex, with Baxter as chief investor. After drug and medical device manufacturer Allergan acquired Naurex, its technology was spun out into Evanston-based biopharmaceutical firm Aptinyx.
Riedel said a nurturing environment for academic excellence and a critical mass of large companies hungry to pick up innovations and shepherd them through clinical development have established the city as “a fully mature ecosystem” that has produced a compelling number of new company formations in the past few years.
“When you think about the fact that [Deerfield-based] Baxalta, a division of Baxter, was acquired by [Irish pharmaceutical company] Shire, and then Shire was acquired by [Japanese multinational] Takeda, those trends also show you that the work that is being done here, in Chicagoland, in Lake County, catches the attention of global players,” Riedel said. “And that's why we have companies look here, want to be here, because there's a lot happening here at a fraction of the cost of what you would find on the East Coast or West Coast.”
Michael Rosen, managing director of Rosalind Franklin University’s Innovation and Research Park, is seeing similar synergies play out at the $50M facility, which opened in 2021 and offers research labs and incubator space for industries and startups.
A spinout, Inspirotec, led by executives from nearby Abbott, was the first tenant and has expanded from a 1.5K SF incubator space to 7K SF today. Rosen expects further shuffling of the decks at Lake County companies like AbVie and Baxter to keep the park humming and the county’s life sciences engine growing.
“They all throw off talent, experienced talent, that wants to stay in the region and start up companies,” Rosen said.
Illinois has seen a 30% increase in labs and life sciences spaces taken up since the turn of the decade, much of that in Chicago and its suburbs. Cost of real estate is one major reason why.
“If you operate a startup, if you operate a small company and you depend on venture funds, and venture money, whether or not you spend $30 on a square foot of laboratory space or $120 makes a really big difference,” Riedel said.
“When you think about what real estate or infrastructure costs are here for wet lab space versus what they are on the East or West Coast, where it's going so crazy that it becomes very difficult to afford, I could go on and on. But [it’s one of] the key ingredients as to why this is such a highly, highly advantageous location and opportunity to do the kinds of things we want to do in therapeutics, medical devices and diagnostics.”
To fuel Chicago’s life sciences fire — or as moderator Illinois Biotechnology Innovation Organization CEO John Conrad put it, “blow the top off this community” — state incentives are key. An Illinois Small Business Innovation Research and Small Business Technology Transfer Matching Funds Program that offered a 50% state match for companies qualified for SBIR/STTR grants two years ago helped unlock venture capital for companies to scale and stem the tide of startups departing for the coasts.
But panelists said the state needs to step on the gas harder, doubling the state’s angel tax credit budget from its current $10M and leaning into federal Advanced Research Projects Agency for Health funding, a $2.5B Biden administration initiative to fund innovative projects aimed at advancing the health sector.
“Why stop at Chan-Zuckerberg?” Intersect Illinois CEO Dan Seals said. “Let's get more than our fair share of federal dollars so that we can invest in growth here in Illinois.”
Bisnow will host its Chicago Life Sciences Summit further exploring the city's emergence as a national hub on July 11.