Why Philly's Biotech Startup Scene Is Booming
Philadelphia: the land of of cheesesteaks, Rocky, the Liberty Bell, and... biotech startups?
It's true. Boston, San Francisco, and Research Triangle Park (at the intersection of Raleigh, Durham, and Chapel Hill, North Carolina) may have earned their startup cred first, but Philadelphia is quickly becoming the go-to place if you want to launch a medical or health tech company. Thanks to Philadelphia's University City Science Center, which started as an urban revitalization project, the City of Brotherly Love is now churning out innovative startups at an impressive clip, developing everything from technology to detect foodborne illnesses to therapeutics for diseases like hemophilia and Alzheimer's.
Back in 1963, the city of Philadelphia condemned a blighted area in West Philadelphia and distributed it between The University of Pennsylvania, Drexel University, and what would become the Science Center. "Originally, it was a new space for researchers who the campuses couldn't accommodate," says Steve Tang, CEO of the Science Center. But little by little, those researchers and the surrounding universities began to see how the Science Center could drive innovation and create jobs in the city. Soon, says Tang, "It became our mission to gather those innovators together and give them space and resources to create new ventures."
Unlike most incubators, the Science Center accepts entrepreneurs innovating in the life science and health tech space on a rolling basis and allows them to stay as long as they want. Though the entrepreneurs do pay rent, it's heavily subsidized, Tang says, by the other tenants who rent out part of the one million square feet of office and laboratory space the Center owns. "That land has appreciated considerably and allows us to fund our non-profit mission," he says.
In joining the Science Center, entrepreneurs get to attend seminars and meet with investors in the area. In 2009, the center also launched its QED proof of concept program, which is a contest involving 22 universities that submit spinoff business ideas once a year. The top 10 winners get paired with an adviser from the business world, because, says Tang, "You can't expect a brilliant university based researcher to be a business person and have the same skills as a startup CEO."
Of that group, about four companies each year receive anywhere from $50,000 to $200,000 to get started.
The Success Stories
Over the years, the Science Center has birthed some major successes, including Avid Radiopharmaceuticals, a company that developed a radioactive tracer that can detect plaques in the brain that cause Alzheimer's disease. In 2010, it was acquired by Eli Lilly for $800 million. Another company, BioRexis, which made experimental treatments for Type 2 diabetes, later sold to Pfizer. Since 2006, residents of the incubator have raised $14 million in government funing and $116 million in private capital.
While the Science Center hasn't totally revitalized Philadelphia, a city that's been blighted by high crime and unemployment rates, it has made a significant contribution. According to a 2009 study put together by the Center, its companies have collectively brought $9 billion to the Philadelphia area, and have created 15,000 jobs. Meanwhile, the low cost of living and comparatively low rate of competition give Philly's entrepreneurs the benefit of being big fish in a somewhat smaller pond.
"We're trying to create better density of all the players in the innovation ecosystem, including big companies, small companies, universities, medical schools, researchers, the full gamut," Tang says. "We are believers in scalable innovation. That's why Philadelphia is going through a renaissance."