Out of approximately 60 bills affecting biopharma and the life sciences proposed in the 2015 legislative session, 33 remain alive. These include positive measures which the Connecticut Bioscience Growth Council is promoting, and negative ones which should be tabled.
How has Connecticut’s bioscience sector fared?
At the micro level—bills targeting certain aspects or practices of the industry—it has been a quiet year. When it comes to bills that target certain industry practices or aspects, fewer proposals than usual have the potential to undermine Connecticut as a location favorable to biopharma.
At the macro level, however, state budget discussions are putting biopharma and the life sciences at greater risk.
And that matters greatly in the effort to propel Connecticut into the top 20 states for economic competitiveness—which is what the CT20x17 campaign is all about.
Current proposals would further complicate Connecticut’s tax code by weakening research and development tax credits and limiting the losses companies may carry forward to use against future income.
It takes a long time (approximately 15 years) and a huge investment—upwards of $1.7 billion—to bring a new medicine or device from “proof of concept” to FDA-approved product.
That’s why it’s not surprising that life sciences research projects and biopharma companies are drawn to states that recognize their unique business model and provide tax strategies to nurture them.
In order for a state to attract the laboratories, offices, and jobs of the life sciences, its tax policy must take into account both the income generated when a project is successful and begins to bring in revenue, and a company’s long stretches of raising and spending research and development (R&D) funds without income.
The budget proposal now before state lawmakers changes tax policies on which companies have based R&D plans, disregards the huge contribution biopharma companies make to state coffers through the income taxes paid by their employees, and seems not to recognize that companies use R&D tax credits and past losses against future income only after making an investment—a cash outlay—in Connecticut.
Others more stable
Not all states are the same. Our chief competitors, Massachusetts and California, have maintained a remarkably favorable and stable set of biopharma tax incentives.
But the changing nature of Connecticut’s budget process is proving less than stable or favorable.
As Mary Kay Fenton, executive vice president and chief financial officer of Achillion Pharmaceuticals, noted in her comments on the budget tax proposals at the recent Connecticut Business Day at the Legislative Office Building, “Given the huge amounts of capital we need to raise and spend to bring our hepatitis C medicine to the finish line, I have to assure my management team, my board and Achillion’s investors that it’s wise for us to be in Connecticut. As proposed, this Connecticut budget makes that case a hard sell.”
CBIA and the Bioscience Growth Council urge lawmakers to preserve the tax strategies—including tax credits and net loss carryforward—that have helped to grow Connecticut’s biopharma industry.