Oct. 16, 2006 | For life sciences companies both young and old, location is one of the critical success factors. A local network and company venue frequently lead to commercialization opportunities, investment dollars, and key employee recruitment. Where a business is located helps determine who it knows and has relationships with - who executives bump into at the coffee shop, who their neighbors are - and what skills and knowledge they possess, as well as what businesses are down or across the street. In short, where a business is located might just be the most critical success factor.
With that in mind, here are eight essential considerations for life sciences executives when they are thinking of starting a business or opening a new location:
1. Find a research-rich region
The life sciences industry is one of the most knowledge-intensive and research-rich sectors of the U.S. economy, encompassing biotechnology, pharmaceuticals, medical devices, associated research and development activities, and life sciences support infrastructure. Locating a life sciences company in a region with a strong research base allows the company to have access to medical and bioscience research institutions, enhancing research and development capabilities and expertise.
2. Join the crowd
Locating a company in an "industry cluster" - a significant grouping of other life sciences companies - puts a business in an environment that is attuned to its specific needs. Well-established clusters are home to world-renowned medical research institutions, a highly educated and skilled life sciences workforce, drug discovery and development expertise, and sophisticated service providers and suppliers with high technology, intellectual property, financing, licensing, and other specialty expertise. The best clusters allow respective companies to draw from a pool of resources that have a collective interest in fostering the growth and development of the local biotech and pharma industries. U.S. regions with large, successful biotech clusters include San Francisco, Boston, San Diego, and Greater Philadelphia. These regions possess a solid base of bioscience companies that constantly generate new industry activity, create new synergies, and attract further investment and development.
3. Geographic access to key markets
When companies look to deliver products, it helps to have easy access to customers. Smart life sciences executives look to regions that provide close proximity to multiple markets. Typically, it's more convenient to fully participate in the global marketplace when there is easy access to an international airport.
Smaller companies should situate themselves in proximity to major pharmaceutical companies - this can yield alliances that pave the way for optimizing commercialization prospects. Additionally, it's good business to be close to key capital markets in order to create more funding opportunities.
4. A rich talent pool
To grow a business, companies must find the right people. In the site selection process, always pay attention to the available talent. Regions with an abundance of colleges and universities provide talent. They also typically provide workforce development to keep workers on top of the latest discoveries and trends in their field.
5. Entrepreneurial culture
Look for a region that has a demonstrated commitment to innovation. Typically a region that produces a good number of innovative new products has developed a "regional mindset" that favors entrepreneurs. A key indicator of this attitude is the strength of bio-related trade and industry groups - these typically indicate strong networks of entrepreneurs and scientists. When making the site selection decision, search for a location that holds risk-takers in high esteem.
6. The right legislative and policy environment
Life sciences companies must seek out regions with the right legislative/policy situation. Many regions in the United States claim they are perfect for biotech firms, but very few have governments that demonstrate a commitment to the industry. Look for a region that has progressive policies in regards to life sciences and a business-friendly attitude. Typically these regions also feature an array of organizations dedicated to accelerating the growth of the life sciences industry by supporting research, facilitating technology transfer,and creating potential funding streams. Many jurisdictions offer programs that are tailored specifically with life sciences companies in mind, such as tax credit sale programs.
7. Multiple finance options
Consider several key questions of any given region's venture capital and private equity communities: How much of the region's annual venture capital investment goes to bioscience operations? How much is spent per capita in life sciences industry-funded research and development versus government-funded research? Regions that spend close to half of their annual investment in venture capital towards this sector and devote a large portion of their budgets to research and development capabilities have substantial life sciences clusters and attract high-level companies. Additionally, both public and private partnerships, coupled with early-stage investments and regional university research and development, can create a thriving environment for venture capital funding.
8. Strong support infrastructure
It is critical to have access to support services such as legal counseling, marketing support, and other non-core services. Look for a location that has demonstrated proficiency in supporting life sciences companies all along the business lifecycle, from concept to start-up, into growth and maturity. For instance, intellectual property attorneys are a key component of support infrastructure, and they are invaluable to the life sciences industry. For many organizations in this sector, especially young start-up companies, intellectual property is essential to their business. Marketing support is also critical in the hyper-competitive life sciences industry.
The biosciences industry is one of the 21st century's economic drivers. Regions throughout the world are trying to attract companies to set up shop, hoping to attract employees and tax revenues to support their local economies. Deciding where to locate a headquarters or a new office can be daunting in the face of all this marketing clutter. The key is to bring a smart approach to the decision-making process - making the right decision will be a critical factor in ultimately realizing commercial success.
Thomas G. Morr is president and CEO of Select Greater Philadelphia, a non-profit organization that specializes in promoting trade, corporate expansions and locations to the Greater Philadelphia region.
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