In the decade after the founding of the BioCrossroads initiative, money spent on life sciences research and companies more than doubled, to more than $25 billion, according to a new report released Thursday by the Indianapolis-based life sciences business development group.
That infusion of money—much of which came from out of state—has helped Indiana companies and universities increase the number of life sciences patents, technology licenses, startups and venture capital deals faster than the rest of the nation, according to the report.
But Indiana continues to lag other states, particularly in funding to its universities and its early-stage companies, the report stated, so continued investments and new strategies will be required to sustain Indiana’s pace.
“These numbers and the trend are certainly promising, and we’re seeing good traction, but there is still a significant gap, particularly in the early funding stages,” said BioCrossroads CEO David Johnson, in a prepared statement.
The 76-page report, prepared by Ohio-based consulting firm Battelle, listed what it called “innovation capital” from eight different kinds of sources for the past 20 years: the decade from 1993 to 2002, the year BioCrossroads was founded, and then from 2003 to 2012.
Those categories are university life science research expenditures, including funding from the National Institutes of Health; funding from Indiana-based philanthropic foundations; spending on research and development by life sciences companies in operating in Indiana; life sciences grants from the state-funded 21st Century fund; life sciences investments by Indiana’s universities; angel investors and venture capital funds.
When added together, those sources totaled $10.1 billion in funding for life sciences research and businesses from 1993 to 2002, Battelle's analysis showed. But from 2003 to 2012, those same sources plowed $25.7 billion into life sciences.
Significantly, venture capital skyrocketed to $349 million invested in 39 life sciences companies in the most recent decade, up from $80 million invested in 14 companies in the prior decade.
Indiana accounted for 1 percent of all life sciences companies receiving venture capital in the most recent decade—about double its proportion in the prior decade.
Funding for universities trended less favorably compared with the rest of the nation. Indiana’s funding from the National Institutes of Health—which goes to universities for research and to companies to commercialize new technologies—rose from $167 million in 2002 to $214 million in 2011—rising just slightly slower than the rest of the nation. But then NIH funding plunged to $187 million in 2013—a decline that was twice as fast as the rest of the country.
Indiana’s universities spent a total of $578 million on life sciences research in 2012, which was 53 percent higher than in 2002. But that rate of growth was still slightly off the national average of 58 percent during that period.
Indiana’s institutions have been able to turn the increased funding into some impressive accomplishments. For example, from 2009 to 2013, Indiana generated 3,420 patents, ranking the state 12th nationally.
The state has also been able to grow its number of life sciences jobs by nearly 10 percent, to nearly 58,000—which pay handsome average wages of nearly $88,000 per year. Nationally, life sciences employment grew 7.4 percent from 2001 to 2012, the period Battelle measured for employment.
But the BioCrossroads report said more will need to be done. It suggested the creation of a third fund of funds, like the $73 million Indiana Future Fund BioCrossroads raised in 2003 and the $58 million INext Fund raised in 2009.
It also suggested the expansion of R&D tax credits from the state government.
“This look back is important for reminding current decision-makers and stakeholders of the types of public-private partnership efforts required to catalyze and sustain Indiana’s life science innovation ecosystem for the future,” the Battelle report stated.