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Life Sciences Markets Eye 'Transformative' New Federal Investments

Arriving in Washington in the midst of a pandemic, the Biden administration has been laser-focused on funding life sciences, announcing support for the onshoring of crucial manufacturing and proposing vast increases in National Institutes of Health funding and the creation of ARPA-H, a new multibillion-dollar applied research center for the health sciences. 

But that may be just the beginning of increased federal investment in life sciences this year, adding more fuel to a market that saw $10B of venture funding in the first three months of 2021 alone.

Congress has passed a series of bills that may send billions of dollars of funding to life sciences clusters across the country.

In recent weeks, Congress has passed a series of bills focused on research and international competition — the Senate-passed U.S. Innovation and Competition Act and a pair of House bills, the National Science Foundation Science for the Future act and the Department of Energy Science for the Future Act — widely expected to be reconciled sometime later this fall.

While the aims, rules and spending limits vary, the overall picture painted by life sciences and economic development analysts is one of increased support for an already burgeoning sector. 

“I think this will be transformative in many ways,” Association of University Research Parks CEO Brian Darmody said. 

Much of the focus has been on the $250B U.S. Innovation and Competition Act passed by the Senate, especially after President Joe Biden signaled his intention to sign the bill. While it funds a broad array of high-tech research, it includes funding for life sciences and biomanufacturing, especially when it comes to preparation for a future pandemic, and currently includes a $10B proposal to establish a series of tech hubs across the country, each focused on a certain area of research, and $29B for National Science Foundation Research in key areas including biotechnology.

Even funding for the Department of Energy may end up benefiting the life sciences, Darmody said. DOE, which focuses in part on advanced computing, played a large role in unlocking the human genome.

The investment means regional innovation centers would get more capital to expand, JLL Life Sciences National Practice Leader Travis McCready said. The measures would also renew the Manufacturing USA program, which supports a number of life sciences communities and allows them to incorporate more advanced manufacturing technologies.  

Darmody said that since the funding will be overwhelmingly directed toward research, and not facilities, it is imperative that local and state governments and institutions that want to compete for this money “should think and strategize now” and figure out if they have the space needed for this new research. 

“You can’t say, 'We’re going to build something in four years,'” he said. “You need some kind of facilities either authorized or commissioned and through zoning.” 

A rendering of King Street Properties' 45-acre biomanufacturing campus in Devens, Massachusetts

The response from some up-and-coming life sciences markets has been cautious excitement, since without a finalized set of rules and regulations around how this funding will be spread out around the country, local officials say it is early to start strategizing. 

North Carolina Bioscience Organization Executive Vice President Laura Gunter said her organization is keeping an eye on the bills because she feels the state is well-positioned, due to recent development news, a track record of success attracting research dollars for universities, and a significant biomanufacturing industry.  

Pete Briskman, an executive managing director and the co-lead for JLL's Mid-Atlantic life sciences practice compared the proposals to “the Chance card in Monopoly”; a slightly open-ended opportunity.

The life sciences portion of the Senate bill is small, but a small part of a huge investment can still make a significant difference, especially in Maryland, a region where he’s particularly active. It’s a market that he said has the space ready or fully entitled to build, along with an ecosystem in place. 

“Given the region’s recent history in establishing itself as a leader for fighting Covid, due to Operation Warp Speed funding in the region, and the fact that Maryland has one of the largest concentrations of federal agencies and workforces, lends itself well to supply chain and biomanufacturing investment,” he said. “There are only a handful of hubs across the U.S. that have both life sciences manufacturing and innovation potential.”

Central Indiana Corporate Partnership President and CEO David Johnson said it is hard to know what the final shape of the bill will look like, and how a hub is defined — whether it’s more based on a region or a university.

But if the competition focuses on bringing new parts of the country into 21st-century technology, historically, Indiana has a manufacturing background and is the home of pharma giant Eli Lilly and Co., which Johnson feels will make the state a leading candidate. Catalent bought a manufacturing center last year in Bloomington, Indiana, and landed a deal to manufacture both Moderna and Johnson & Johnson Covid-19 vaccines.

Others feel the bill may not have as wide-ranging an impact on smaller markets as many expect. The situation is fluid, due to differences between the House and Senate versions of the bills. The House versions of these bills, the National Science Foundation Science for the Future act and the Department of Energy Science for the Future Act, are more narrowly tailored, support a smaller amount of R&D funding, focus on more traditional funding streams, and lack the regional hub language of the Senate bill.

Brookings Metropolitan Policy Program Senior Fellow and Policy Director Mark Muro, who specializes in economic development policy, said that despite these differences, there’s “a general assumption” that many House members look favorably on the hub concept, and supporters of the Senate measure “aren’t particularly worried” that it will be left out of final legislation. 

Muro, who has written a report with his Brookings colleagues about the great potential of a regional hub's tech strategy, believes that the rules governing whatever final act is approved should offer variety. By allowing for smaller grants to smaller regions, the funding can be transformative to places with little-to-no current investment, and also be useful for midsized metros or markets that need a slight push to make it to the next level. 

While congressional negotiations are by their nature unpredictable, Muro said the passage of these bills underscores a new bipartisan agreement around investment in research that can help life sciences and other industries in the long run. 

“There’s significant bipartisan convergence around the idea that our research flows are far too concentrated in coastal places, leaving talent and ideas on the table, and that we can do things that will unleash them,” Muro said.