Saturday, May 27, 2006

Looking at Legislation to Aid Biotech Biz

"Investors' disinterest" in California biotechnology came up for examination in a recent piece in the Vacaville Reporter, the daily newspaper for the community that lies between San Francisco and Sacramento.

The article by business writer Amanda Janis focused on the "realities of the manufacturing side of biotech." It was of interest to Vacaville readers because of the area's efforts to land biotech manufacturing facilities. But the piece also has interest to California as a whole.

Janis wrote:
"Industry leader Genentech chose to build its new $250 million facility in Oregon, where corporate income tax structures are more favorable. Then there was the start-up firm that passed on Vacaville in order to capitalize on biotech tax breaks offered in Washington. And most recently Chiron parent Novartis announced it would build a $400 million vaccine plant in the United States, but not in California."
She touched on state legislation aimed at helping the biotech business.
"Proposed bills include changing the corporate income tax structure with a four-year phase-in of single sales apportionment tax (an issue Genentech calls its primary legislative concern); sales and use tax exemption on manufacturing equipment; extension of research and development tax credits; and the allowance for companies to sell their net operating losses to other companies, which would gain a tax credit.

"The latter proposal, which has found success in states like New Jersey, has some of the greatest potential impact because of the loss-operating nature of the biotech industry, according to Matt Gardner, president of trade organization BayBio.

"'It takes 15 years for us to get a product,' he noted.

"Another proposed bill in California would help level the playing field, he said, because it would allow for designated "shovel-ready" land, or land that has been pre-zoned, with environmental impact reviews completed."
Legislation to help out the biotech industry has received little notice. But it is likely to become increasingly important to the industry as the CIRM investments ramp up.

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