Pharmaceutical Research and Manufacturers of America's Annual Meeting
Good morning, ladies and gentlemen. Thank you for inviting me to be a part of your annual meeting. I am delighted to be here.
As leaders in advancing biopharmaceutical research, the work that you do is critically important.
It is important to our nation, and it is important to the Commonwealth of Virginia. This industry supports nearly 3.4 million jobs nationwide. You account for $800 billion in economic output every year, and make up the largest share of all domestic R&D funded by businesses across the country.
In Virginia, we know this well. We are proud to be home to R&D and manufacturing facilities for multinational leaders such as Merck and Pfizer, as well as about 200 biotech companies. We have outstanding university research parks all over the Commonwealth – George Mason in northern Virginia, the Virginia Biotechnology Research Park in Richmond, UVA in Charlottesville, and Virginia Tech Carilion Research Institute in Roanoke, to name a few. We also have private research institutions such as the Janelia Farm Howard Hughes Medical Institute in Ashburn and the Center for Advanced Drug Research in Harrisonburg.
In all, the biopharmaceutical industry supports more than 36,000 jobs and generates $8 billion in total economic output for the Commonwealth of Virginia.
Your industry is clearly a pillar of strength in our economy. Your achievements not only maintain America’s standing as a global leader in biomedical science, they allow millions of Americans to live longer, healthier, and more productive lives, which in turn can decrease the cost to our health system.
For all these reasons, it is vital that we continue to invest in biopharmaceutical research and maintain our global preeminence in biomedical science.
As a businessman and entrepreneur, I understand that for this sector to continue to thrive and grow, we must foster an environment that encourages innovation, and in turn, we must promote access to the life-changing discoveries that result from our investments.
Virginia is rated the best state in America to do business. In fact, next month, I’ll be in Chicago to accept the Forbes Award recognizing Virginia as the Best State for Business. I’ll share with you why Virginia is the best state in America for the pharmaceutical industry to do business and how we are at the forefront of research in bioscience.
First, Virginia’s policies incentivize innovation. I understand that innovation doesn’t come without taking risks. I started my first business when I was 14. I was paving neighborhood driveways and quickly expanded to commercial parking lots. It wasn’t the kind of cutting edge or high tech businesses you lead but the experience of trying to start something new was the same. That’s why I support initiatives that encourage investors and companies to take risks.
For example, our state has a research and development tax credit. In Virginia this is a refundable tax credit. So if a company is not profitable or otherwise owes no tax in a year, the credit is refundable in cash. Just this year our General Assembly raised the cap of available credits from $5 million to $6 million.
Virginia has Angel Investor Tax Credits to promote investment in new businesses with innovative technologies that provide the angel investor with an immediate return on their money. Other states have credits, but ours is among the best with a 50% leverage of the first $50,000 an investor puts into a qualified Virginia startup.
We have a 100% Capital Gains Tax Exclusion for investors and founders in early stage biotech start-up companies that are located in Virginia. If their investments are successful, those entrepreneurs and investors are exempt from paying state income tax on their long-term capital gains throughout the life of the investment.
Well, is what we’re doing working? Are we creating an inviting environment for innovation?
You can ask leaders at Merck, with its Stonewall plant in Elkton, Virginia in the Shenandoah Valley. For years, this was an outstanding facility for the manufacturing of traditional pharmaceuticals. Over the last several years, Merck has made large investments to transform that facility into an even better state-of-the-art vaccine and biologics manufacturing plant- as you know these are the drugs of the future.
Then, there is Health Diagnostic Laboratory, based in Richmond, led by CEO Tonya Mallory, Ernst and Young’s Entrepreneur of the Year in 2012. HDL began in 2009 with only 3 employees and has grown to over 840 in just 5 years. They offer a comprehensive panel of novel biomarkers that allow early detection of cardiovascular disease, diabetes, and liver disease. They are the largest cardiovascular and diabetes testing lab of its type in the world. They just completed a $100M headquarters expansion in Richmond which will open next week.
HDL happens to also be the official health and wellness partner of the Washington Redskins.
Second, in Virginia, we understand that nothing moves forward without investment. In Virginia, we are willing to make investments that unleash and leverage private dollars to promote innovation. We put our money where our mouth is and demonstrate our commitment to innovation. Let me tell you about a few of our programs.
We have the “Gap” funding program that invest in companies with high potential for achieving rapid growth and economic return. The program is for pre-venture companies in the capital “gap” who are headquartered in Virginia or want to grow in Virginia. The investments are meant to trigger larger angel or V.C. investments.
We have what we call the Commonwealth Research Commercialization Fund which advances R&D and commercialization in Virginia by awarding grants and giving loans. This fund supports a number of programs, including a matching funds program that helps universities, research institutes and federal labs leverage federal and private funds to commercialize research or technologies. There is also the Facilities Enhancement Loan program to help finance or upgrade facilities used to commercialize research or technologies. And finally there is the Small Business Innovation Research program which provides matching funds for young Virginia-based businesses who are ready to take their discoveries to market.
Our General Assembly appropriated $4.8 million to the fund for FY 2014. Last year, the Fund gave out $3 million in awards. We invested in projects to develop groundbreaking diagnostics and treatment options for some of the most challenging cancers, including brain cancer, kidney and pancreatic cancer. Other projects focused on parasitic diseases and research to treat and prevent diabetes. These innovative solutions were helping to solve important state, national, and international problems through research, development, and commercialization.
Hemoshear, based in Charlottesville, has taken advantage of some great Virginia incentives to develop an extraordinary technology that could revolutionize drug development. Developed by researchers at UVA, Hemoshear has tissue culture technology that accurately replicates the biology of human organ systems and diseases in the lab. It would allow new life-saving drug therapies to get to patients faster by streamlining the testing of drugs and turning the traditional drug development cycle on its head.
Not surprisingly, NIH has been very interested in this technology. In addition, to taking advantage of several of our state grant and loan programs I mentioned, the company has received support by four separate divisions of the NIH and has received the largest ever small business innovation research grant from NHLBI.
In Virginia, we recognize that finding innovative solutions often happens through collaboration.
We also know that one of our greatest strengths are our academic research centers and universities, like UVA, Virginia Tech, ODU, and George Mason. We have top-rated universities in literally every part of the state. They are each research leaders in their own right, but working together, we recognize that these research centers and universities have the potential for innovation and economic growth that is much greater than any of them working alone.
That is why we are deliberately incentivizing collaboration through our Virginia Biosciences Health Research Corporation, also known as “the Catalyst.” The Catalyst is a nonprofit entity funded at $5 million from the state’s general funds that has also received contributions from each of five (soon to be six) schools and universities in the state. The Catalyst gives out grants of up to $800K per year for significant bioscience projects that addresses areas of unmet need. The best thing about these grants is that they can only be awarded to collaborations between at least two Virginia research institutions and at least one industry partner. The objective is to create stronger working partnerships that lead to greater collaboration, more movement of ideas & technology from academia to industry and to our health care delivery systems.
In just a few days, the Catalyst will be announcing its first round of grantees – over $3 million in state and private dollars.
We know that our efforts to promote productive collaboration are working.
Our Virginia Tech Carilion Research Institute in Roanoke is a great example of collaboration. The Commonwealth, Virginia Tech and Carilion health care system all co-funded the creation of a new medical school and hospital and moved the research institute to same location. This research institute is driving Virginia to fast becoming a world leader in brain research.
VTCRI is the hub of the world’s only network of over one dozen MRI machines used to perform functional brain scanning. This network is used to perform hyperscanning, scanning multiple individuals at sites across the world simultaneously. Developed by Professor Read Montague, this invention is providing unprecedented insight into how the human brain functions. It will change the way we understand and diagnose conditions such as autism, Alzheimer’s and addiction.
This is just one exciting example of what happens when institutions come together in Virginia to collaborate.
Now, we know in Virginia, that when we talk about collaboration we are not just talking about providing direct support or incentives to our researchers and private partners. We are also talking about investing in the STEM-H workforce of the future. Because if we do not have the workforce to power these innovations, they simply won’t happen.
Virginia is already a leader when it comes to workforce. Virginia’s tech industry ranks fourth in the nation employing over 285,000 people. In fact, Virginia leads the nation with the highest concentration of tech workers – one in every 10 private sector workers in Virginia.
But we must continue to strengthen the pipeline of our science and tech workforce. We must support our universities in attracting the best and brightest researchers and scientists.
I have placed an enormous emphasis on community colleges. I am the first Governor to have visited all 23 community colleges throughout the Commonwealth. They are on the front lines in our economy to prepare our workers for jobs and retrain them for new jobs.
We are also increasing on-site collaboration with our high schools through our science academies and internships to get students into the higher education and STEM-H pipeline who would not otherwise have pursued these careers
Finally, in Virginia, I am committed to supporting access to lifesaving pharmaceuticals and therapies.
I believe the first and foremost way we can do that in Virginia is to close the Medicaid coverage gap. I have made this the priority of my Administration.
We have over 1 million uninsured individuals in Virginia and over 400,000 of them could potentially gain health coverage if we close the coverage gap. That means over 400,000 people would gain access to pharmaceuticals and therapeutics that can improve and save their lives. We know that closing the gap will bring back state money that we are paying in new taxes and fees everyday. And that access to the technologies and therapies that expand your customer base can ultimately save health care costs in the future by keeping people healthier.
Our push to expand coverage also comes at a time when we recognize the need to address health disparities in Virginia. The annual cost of health disparities for stroke, heart disease, cancer, injury and low birth weight cost Virginia $917 million per year. Widening access to care will increase diversity in clinical trials, which will ultimately reduce health disparities while ensuring the safety and effectiveness of potential new therapies.
To conclude, I hope it is clear that in Virginia, and in my office, you will find a business-friendly partner. We have a reputation for keeping taxes low and regulations light, in an effort to support the businesses that drive economic growth and prosperity for the Commonwealth. It doesn’t help your industry grow when you have to navigate the complex regulatory landscape of 50 different states.
When it comes to biopharmaceuticals, Virginia has even more to offer. We recognize this is a time of dramatic change and incredible opportunity in the industry. Now is the time to come together, to leverage federal, state, and private resources to invest in growth and innovation in the biopharmaceutical industry. I am committed to doing my part in the Commonwealth of Virginia to ensure continued innovation, as well as access to the discoveries that can do so much for so many.