BioBuzz by Workforce Genetics
I-270 Innovation Labs Hosts MD Commerce Secretary Mike Gill and Panel of Industry Leaders to Discuss Economic Outlook for the Biohealth Capital Region
It’s no secret that a recession could hit the United States before the year ends. No one knows for sure yet, and many economists believe that the current record high inflation and capital markets distress are symptoms of what could be a substantial economic downturn,
Possible effects have already hit the biotech and life sciences. To discuss how the Biohealth Capital Region would fare out in a potential recession, and whether it can actually avoid one, the I-270 Innovation Labs brought together an outstanding group of regional experts from across key sectors connected to both industries.
Luis Rugeles, CEO of the I-270 Innovation Labs, moderated the panel discussion, which was hosted at their Frederick, MD facility on September 27th, and sponsored by BioBuzz, Workforce Genetics, St. John Properties, BaneBio, and 1UP IT Consulting.
Attendees were a mix of executives and leaders from across the Biohealth Capital Region. Some of the notable guests included Mike Gill, Maryland’s Secretary of Commerce, who also served as a panelist; Heather Gramm, Assistant Secretary for Business and Industry Development; and Jessica Fitzwater, Frederick County Council Member and candidate for Frederick County Executive.
Delivering welcome remarks, Fitzwater thanked the I-270 Innovation Labs for organizing the important and timely discussion and noted the region’s rapid ascendency in biotech and life sciences, as well as Frederick’s unique success in anchoring the north end of the I-270 corridor. She went on to emphasize her commitment to continue fostering well-paid jobs and the industry’s growth, should she be elected as the next County Executive in November, and her desire to engage and work with both large and key emerging industry groups such as the I-270 Innovation Labs.
Rugeles kicked off the discussion by framing the current state of affairs in the economy both globally and regionally while noting that even as the stock market has declined significantly in value, biotechs have come down even more, sometimes being worth less than their cash at hand. From there, he went on to ask the panelists questions ranging from their current and future outlook for the region, to what they are seeing in each of their sectors, and what advice they’d provide executives and entrepreneurs with regards to navigating these uncertain times.
All in all, the panel was largely optimistic about the region’s future, particularly in the long run even if somewhat less so in the coming months.
Workforce development was one of the topics the panel covered. Fitzwater had mentioned the ongoing efforts to collaborate across educational institutions in order to strengthen the talent pipeline that the region’s projected growth requires, and many panelists pointed to employment and job openings as good indicators of both a possible recession and the subsequent recovery.
“The compelling indicator for us is employment data because employment translates into headcount which translates into square footage, and need for space. And when you look at how we compare right here in Maryland to other regions, we look great,” said Pete Briskman, Executive Managing Director at JLL, and the Co-Lead for their Life Sciences Practice. He also mentioned that vacancies for lab space have been very low, reflecting a steady demand.
Chris Frew, CEO of Workforce Genetics and BioBuzz Founder, said there haven’t been many layoffs in the region yet. While job seekers may now have more sway over companies than in the past, the BHCR is still well-positioned to draw new talent into the area as needed. Additionally, the biotech industry’s mission-oriented purpose won’t disappear in a recession.
“In 2009 we saw a recession of high unemployment, but I see the factors impacting our industry vastly differently now in 2022-23. This will more likely produce a potential recession with continued employment levels in life sciences. It’s going to be more of an economic recession than a workforce recession,” Frew commented. For his part, Rugeles asked whether this was the result of pandemic-induced changes in the labor market as reported elsewhere, and Frew said he definitely sees that dynamic at play.
Doug Bane, CEO of BaneBio and co-founder of the I-270 Innovation Labs, also said that the current landscape reminds him of when he started his company in 2009. Coming out of a major recession, companies were scrambling for any inventory of equipment they could get their hands on. One difference, he said, is that companies aren’t going out of business right now, and entrepreneurism is still rampant.
Sarah Miller, the Vice President of Economic Development at BioHealth Innovation, also commented on entrepreneurism. According to Miller, supporting entrepreneurs, especially through a recession, can help the region build pathways for continued growth after it ends. She pointed to Boston as one example of a city that continued to spur entrepreneurism during the 2009 recession.
“I was working in Montgomery County during the last, the big recession, and one of the things that we did not do well was that we were too nervous as an administration to really think of this as an opportunity to spur entrepreneurship,” she commented.
Panelists also pointed to the presence of federal agencies in the region as a firm assurance that funding will continue to roll into companies in the BioHealth Capital Region, even if not to the same extent that it did during the peak of the COVID-19 pandemic.
“Uncle Sam is likely to want to increase spending if the economy goes into recession, and the way they do that is through giving more money to government contractors doing good work. A lot of that money gets deployed here in the Capital Region,” said Matt Holbrook, Regional Partner with St. John’s Properties. “So, I think, even if the storm clouds are dark in the future, they’re softened for us here as proven by previous recessions that we’ve all lived through.”
Of course, most experts do not expect the upcoming fiscal year to be as successful for companies as it was in the last two years. Michael Caspani, Managing Director of BroadOak Capital Partners, questioned if companies will be able to sustain the growth they’ve had during the pandemic and if they’ll be able to find new applications for their newfound capacity.
However, he pointed to the growing need for innovation in the biotech space combined with increased NIH funding and lots of liquidity in investment funds –aka “dry powder”— in the region as evidence for why biotech companies, new and old, will continue to find support locally.
After the panel, Rugeles said it was reassuring to hear from somebody like Caspini about substantial dry powder being available in the region. “There are definite challenges, such as how to convince such people to invest in you, particularly if there is a recession,” he said. “But at least the money is out there.”
Rugeles also noted how the region is fortunate to have high-quality resources, such as the Maryland Tech Council’s Business Continuity Task Force, available to help executives and entrepreneurs navigate these complex dynamics. Brad Fackler, their VP of Life Sciences and a member of the Task Force, explained how it all came together when the pandemic hit, and how it is still helping many organizations in the region. He also pointed out some of the recommendations made by the Milken Institute, which would be instrumental in preparing the region for better performance and future crises.
Secretary of Commerce Mike Gill, a self-proclaimed optimist, said that he doesn’t expect things to continue on the trend they have been. But he doesn’t see business trending flat as the worst outcome, either.
“I think things are going to be flat. I think everyone should anticipate they’re going to be flat and if they’re better, good for you,” Gill commented. “So pay attention to the details. Don’t stretch beyond what’s reasonable and we’ll get through 2023.”
Rugeles ended the panel remarking how the region’s resiliency seemed to be the common factor connecting most of the panelist’s answers, and then asked each of them to share which are going to be the indicators they will be looking at in order to identify the beginning of the next growth phase.
“Capitalizing on opportunity requires being ready, and also a keen sense for when the tide has turned,” he added.
Watch the entire panel discussion on our YouTube channel: https://www.youtube.com/watch?v=BSTApkHDjBg