Private incubators are a relatively new addition. They can be a boon of innovation for pharmaceutical firms and help ensure early sales for young companies. The catch is that the sponsoring company has the right of first refusal regarding the output from companies in the incubators. The question then is whether the young company can become viable.
“Pfizer has an incubator here in San Diego,” Panetta says. Likewise, according to Johnson, “Biogen Idec is establishing an incubator in New York.” With an anchor tenant and emerging companies, the initiative helps Biogen Idec develop projects at lower costs and with less risk, integrate promising projects into its pipeline, and benefit from the cross-fertilization of ideas.
Very good companies can acquire capital regardless of where they are located. That said, it’s easier when the company is near the money because venture capital companies tend to concentrate on the dominant industries. Firms in biotech hubs like Cambridge, San Diego, or San Francisco can access local venture funds. Biotech companies starting in less biotech-intensive locations such as Oregon and Oklahoma will find that local firms are focused on other industries, so venture capital will be harder to attract.
Colorado is succeeding in this endeavor. Since committing the state to bioscience in 2003, bioscience investments through 2008 totaled $1.3 billion, ranking Colorado number 11 in the U.S. for bioscience venture capital investments, according to the just-released Colorado BioScience Association study. This was accomplished through state funding for proof-of-concept activities and through proceedings to strengthen bioscience infrastructure with increased university competency and business networks.