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Focus on Life Sciences: Revisiting Missouri's Strategic Initiative for Economic Growth

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In 2010, the state of Missouri initiated a strategic planning process to assist in mapping the direction of, and investment in, the economic future of the state.
August 8, 2012

In 2010, the state of Missouri initiated a strategic planning process to assist in mapping the direction of, and investment in, the economic future of the state.

The “Final Report of the Strategic Initiative for Economic Growth” was published in 2011. Contained within the report were eight new or existing strategic objectives designed to enhance Missouri’s economic competitiveness. The report also identified seven target industry “clusters” within Missouri that provide the best outlook for job creation and economic growth. Biosciences was one of the target industry clusters identified.

A cluster is defined as a geographically bounded concentration of similar, related or complementary businesses, with active channels for business transactions, communications and dialogue, that share specialized infrastructure, labor markets and services, and that are faced with common opportunities and threats.

By targeting identified clusters, regional economies can focus efforts on high-value opportunities and maximize beneficial job creation, investment, and economic activity. The benefits of being a firm or institution operating and competing within an industry cluster are enhanced economies of scale (e.g., sharing common labor pools), proximity to upstream suppliers and downstream buyers, and network effects.

Within Missouri, the seven target clusters identified were:

  • Advanced Manufacturing
  • Biosciences
  • Energy Solutions
  • Financial and Professional Services
  • Health Sciences and Services
  • Information Technology
  • Transportation and Logistics

Biosciences was identified as a target cluster based upon:

  • The industry’s five-year employment and wage gains (even during the recession)
  • Missouri’s position as a top-tier state in crop production and animal farming
  • Biosciences’ high average wage
  • The extensive network of public and private research and workforce development resources supporting Biosciences
  • 80% of Biosciences companies stay in the location where they begin

However, challenges have also been identified, including:

  • The contraction in pharmaceutical manufacturing in Missouri
  • Coordination among, and aggressiveness of, the State’s economic development programs
  • The ability to pass and implement MOSIRA (the Missouri Science and Innovation Reinvestment Act)
  • Increasing the expenditures on academic research and development, increasing business formation, and capturing more venture capital for in-state firms

Within Biosciences, three distinct “niche” segments were identified as the core of the industry:

  • Plant and Agricultural Technology which includes biochemical research, chemical manufacturing, ecotechnology, and agriculture and crop production
  • Companion and Feed Animal Sciences which includes biological research, animal farming, and animal food manufacturing
  • Biomedical which includes research and development, pharmaceutical discovery and manufacturing, genomics, medical devices, and diagnostics and imaging

The state of Missouri was not the only region identified as a center for biosciences. Missouri competes with Boston, Northern New Jersey, Philadelphia, Raleigh-Durham, San Diego, San Francisco, Seattle, and Washington DC / Baltimore for Biosciences jobs and investment.

However, the identification of, and competitive advantages in, the niche segments enable Missouri to successfully compete with the other regions. For example, the Plant and Agricultural Technology segment (Plant Sciences) is extremely well positioned to compete and thrive. Missouri already has an extensive network of public and private institutions supporting this industry segment.

Monsanto Company, a global leader in plant and seed technology, is headquartered in St. Louis County, Missouri. Also in St. Louis County, the Danforth Plant Science Center, a not-for-profit research facility engaged in a variety of plant science research, is recognized internationally as one of the premier institutions of its kind. Missouri also has numerous higher education facilities supporting Plant Sciences.

Going forward, the Strategic Initiative for Economic Growth identified key opportunities to focus on, leverage, and invest in:

  • Missouri has an existing network of employers, research institutions, and industry associations operating within the Biosciences cluster providing a base to build upon and expand from
  • Optimizing the use and creation of incentive and R&D funds. Missouri has a variety of incentive programs and other funds designed to spur private investment and job creation
  • Capturing an increased proportion of Missouri-originated venture capital funds by Missouri-based firms

RubinBrown has a dedicated group focused on the Life Sciences Industry to provide assurance, tax, and business advisory services for entities participating in the Life Sciences industry or supporting those that do. Specialized segments include Animal Health, Plant Sciences, Human Health, and Renewable Energy.

Sources: National Governors Association, Missouri Department of Economic Development, Market Street Services, Inc.

 

Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.

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