Arizona bioscience sector sees record-high venture capital funding, strong gains in jobs
Arizona’s bioscience sector is performing at its highest level since data tracking began nearly two decades ago, helping to position universities, research institutes, companies, and clinicians to play an instrumental role in Arizona’s response to the new coronavirus.
Bioscience firms received nearly $200 million in venture-capital funding, and National Institutes of Health grants to universities, research institutes, and firms totaled $263 million in 2019. Meanwhile, university research and development increased 25% between 2016 and 2018 to exceed $600 million.
All these figures are record highs for Arizona since data collection began nearly 20 years ago at the start of Arizona’s Bioscience Roadmap, the state’s long-term strategy to guide the biosciences through 2025.
The April 15 report, the latest performance analysis commissioned by the Phoenix-based Flinn Foundation, also showed nearly 10,000 new bioscience jobs were created over a two-year span and wages increased nearly 9%, far exceeding the state’s average private-sector wage.
“As we all adjust to these unprecedented times and unknown future, we can take comfort in knowing Arizona’s past policy decisions have had such positive outcomes,” Flinn Foundation President and CEO Tammy McLeod said. “The state’s sustained dedication to the goals and strategies of the Bioscience Roadmap has created a bioscience community prepared to play an instrumental role in the tracking and treatment of COVID-19 and assist in the state’s economic recovery.”
The data suggests recent renewals by the Arizona Legislature of the Technology and Research Initiative Fund—which has funded state-university bioscience research since 2001—and the angel investment tax credit, are paying off, said Mitch Horowitz, principal and managing director of TEConomy Partners, a global leader in research, analysis and strategy for innovation-based economic development that provided the data performance analysis.
“Arizona has earned an outstanding report card with robust growth outpacing the nation across nearly all bioscience performance metrics,” Horowitz said. “We are seeing record-high dollars in venture capital, university research and development, and NIH grants, plus sustained increases in bioscience jobs and wages with growth rates outperforming the national average and state’s private sector.”
The most recent data show:
• Arizona added 9,696 bioscience industry jobs between 2016 and 2018, an 8.3% growth rate, which outpaces the state’s overall job growth rate of 6.2% and the national bioscience job growth rate of 3.6%. There were 126,139 bioscience jobs in Arizona as of 2018, including 29,569 non-hospital bioscience jobs. The non-hospital bioscience job growth rate was 15% between 2016 and 2018 in Arizona, compared to 7.2% nationally. Job growth was seen in all industry subsectors with especially strong gains in drugs and pharmaceuticals and medical devices and equipment.
• Wages increased 8.8% for bioscience workers in Arizona between 2016 and 2018. The $69,412 annual salary average is 35% higher than the average private sector job in the state. For non-hospital bio workers, a 10% wage increase pushed their average annual salary to $85,518.
• Venture-capital funding for bioscience firms in 2019 reached a state record high of $198 million. The yearly average over the previous four years was $66.5 million. The 2019 figure represents 0.63% of bio venture capital in the United States—the highest percentage since 2014. Bioscience IT and medical devices each received 32% of venture-capital investments.
• Arizona is at its highest level of NIH funding as a share of the U.S. total since Roadmap tracking began in 2002. The $263 million in research funding in 2019 also set a record high for the state for the second year in a row. The public universities received $214 million, with hospitals and research institutes at $32 million and bioscience companies at $17 million.
• University bioscience research and development grew to $628 million at Arizona’s three public universities in 2018, a 25% increase between 2016 and 2018 and the highest in the state’s history. That is double the U.S. growth rate of 12% for the same time period and double Arizona’s growth rate from 2014-16.
• Technology transfer saw a 51% growth in the number of U.S. patents issued. Of the 180 issued patents in 2018-19, nearly half were in bioscience. There were small declines in the number of bioscience startups from university technology (32), invention disclosures (531), and licenses (129).
One major reason for the bioscience sector’s success today is the Technology and Research Initiative Fund, or TRIF, according to an April 15 report commissioned by the Flinn Foundation.
The Milken Institute, a nonprofit, nonpartisan think tank, analyzed the impact of TRIF since it was approved by Arizona voters in 2000 as part of Proposition 301. Arizona State University, Northern Arizona University, and the University of Arizona have received 12% of the sales tax collections, $1.12 billion to date, for scientific research.
Milken concluded that TRIF “laid the groundwork for developing a strong technology transfer and innovation infrastructure within Arizona” and that its existence today “is an essential component of Arizona’s innovation economy.” Arizona’s high-tech and life science GDP grew by 27.16% in the five years ending in 2018, and by 6.83% in 2018 alone, the report states.
The growth of startups, patents, and license income, the creation of new bioscience institutes, the retention and recruitment of faculty, as well as the growing return on investment, can also be attributed to TRIF, the report states. In 2019, an $83.6 million TRIF expenditure led to $433.6 million in additional investment.
Proposition 301, including TRIF, was renewed by the Arizona Legislature through 2041, but no longer has voter-approved protections.
The Roadmap’s vision is for Arizona to become globally competitive and a national leader in the biosciences in such fields as precision medicine, cancer, neurosciences, and bioengineering. The Roadmap is guided by Arizona’s Bioscience Roadmap Steering Committee, comprised of more than 100 leaders in science, health care, business, academia, and policy.
The next data report is scheduled to be released in 2022.
The Flinn Foundation was established in 1965 by Dr. Robert S. and Irene P. Flinn to improve the quality of life in Arizona to benefit future generations. In addition to advancing the biosciences, the foundation supports the Flinn Scholarship, a merit-based college scholarship program, arts and culture, and the Flinn-Brown Fellowship civic leadership program.