The Biotechnology Innovation Organization (BIO) and Council of State Bioscience Associations recently released Driving the Bioscience Economy Forward During the COVID-19 Pandemic: Best Practices in State and Regional Bioscience Economic Development Initiatives. The biennial report provides a summary of state programs serving the bioscience industry.

This year’s report devotes substantial attention to incentives. Many of the incentive policies are intended to support the leading trends in state bioscience support (see below). These include incentives to provide funding for companies coming out of university partnerships, industry workforce training and development, and facility development. Others are intended to provide capital to bioscience companies at the early-stage, mid-stage, and manufacturing stage of development, such as angel investor and seed capital tax credits, R&D and innovation investment tax incentives, and tax exemptions, abatements or discounts.   

The report also notes that states are increasingly allowing companies to monetize a variety of tax credits and sales tax exemptions. We generally do not consider this a best practice since monetizing tax incentives often means selling tax credits to another taxpayer at a discount. The tax broker may also take a fee. These practices reduce the amount of the incentive that goes to the intended recipient while the state is on the hook for the full value of the tax break. 

It is almost impossible for any state to ignore the need for selective infrastructure and development incentives to either hold existing companies or attract new enterprises. 

Driving the Bioscience Economy Forward During the COVID-19 Pandemic: Best Practices in State and Regional Bioscience Economic Development Initiatives

State Incentive Offerings

  • 28 states and Puerto Rico offer matching grants for Phase I and II Small Business Innovation Research (SBIR) grants to accelerate early stage development
  • 28 states and Puerto Rico offer tax credits to angel investors or other early-stage fund investors who invest in technology companies including the biosciences
  • 33 states and Puerto Rico offer a manufacturing sales tax exemption on equipment 
  • 30 states and Puerto Rico offer R&D tax credits for product development


The report describes seven national trends for state bioscience company creation and expansion:

States are building career pathways for future biosciences talent: State workforce programs, community colleges, and universities are expanding programs to expand the supply of qualified workers across the educational spectrum. 

States and regions are implementing an overall supportive regulatory climate to ensure predictable and stable regulatory treatment of bioscience firms.

States and regions are focusing on developing their agricultural, industrial, and environmental bioscience sectors in addition to their biomedical and health sectors.

Physical infrastructure and facilities remain a priority. A variety of public and private partners are coming together in many states to invest in state-of-the-art university research facilities as well as innovation centers that leverage public-private partnerships for early-stage commercialization.

Universities and other research centers’ technology transfer efforts are better understood by public agencies. States are making company formation a high priority in partnerships with universities, and include entrepreneurship as part of the technology transfer effort. 

Proximity to academic innovation is a driving influence. Innovation partnership models among industry, academia and state government are taking many forms, with the hope that that they will generate new products and companies and develop into successful bioscience clusters.

Increased focus on biomanufacturing is the future. There is growing interest in adding to the US advanced manufacturing presence using biological systems to produce biomaterials and bio molecules for a variety of applications.