Feb 27, 2024
Biotechnology is seen by many in Louisville as a sector filled with opportunity for the region.
But I would posit “Hey, slow down there, old friend.”
Render—a Certified B Corporation—is half venture firm, half innovation studio. The team has years of experience building innovative companies, programs, and initiatives. And, in realistically evaluating markets and data.
In general, I disagree that biotechnology is a high-growth sector for Metro Louisville. And in this article, I will support my opinion with data.
Let’s start with this—outside of Louisville, people do not recognize Louisville as a current biotech hub or life sciences cluster.
As an exhibit, from Jones Lang LaSalle’s 2023 US Life Sciences Industry and Real Estate Perspective:
Nor are we in national conversations about emerging hubs. Middle-of-the-pack markets, according to JLL, include cities like Houston, Minneapolis-St. Paul and Pittsburgh. Houston is home to the Texas Medical Center, the largest medical center in the world, and it doesn’t rank in the top 10.
I last did a deep dive on the “bioscience” industry in Louisville Metro in 2013. Some things have changed. But much has not. What is constant is bioscience-related distribution.
For context—and comparison—I’ll use the term “bioscience” as defined by TEConomy/BIO:
- agricultural feedstock and industrial biosciences
- bioscience-related distribution
- pharmaceuticals
- medical devices and equipment
- research, testing, and medical laboratories.
As third-party data I reference The U.S. Bioscience Industry: Fostering Innovation and Driving America’s Economy Forward 2022 by TEConomy/BIO.
If Louisville has any claim to fame in the bioscience industry, it is logistics and distribution.
However, while our location quotient in bioscience-related distribution is relatively high (but not the highest—that is Des Moines), in terms of actual employment level Louisville is not in the top 25 Metropolitan Statistical Areas.
Eurofins Genomics has a sequencing facility in Louisville because of the presence of the UPS Worldport. Worldport has likely been a draw for other companies, too.
Kentucky has a high employment concentration in bioscience-related distribution relative to the national average. By employment, in 2013 Louisville’s largest bioscience industry sub-sector was bioscience-related distribution. That remains a constant. Amgen’s Louisville Distribution Center is the single distribution site for all Amgen commercial products in the US. Genentech’s Louisville facility is the primary distribution center for the US. Biotech is in Louisville for bioscience-related distribution.
Louisville is also home to UPS Worldport, the company's largest air hub. In 2005, UPS built the Louisville Healthcare Campus, expanding its largest dedicated healthcare space to provide third-party logistics services. UPS Healthcare was launched in 2020 as a dedicated healthcare and life sciences vertical. Louisville is home to several UPS Healthcare facilities. Other bioscience companies have distribution facilities in town, as well. Kentucky has a concentration of jobs in the bioscience-related distribution
Almost every ranking of biotechnology hubs or life sciences clusters use some combination of factors in their assessment, most often including NIH funding, VC investments, patent activity, employment levels and lab space. On most of those measures, Louisville—and Kentucky—lags.
For example, NIH funding. According to the Blue Ridge Institute for Medical Research, the University of Louisville School of Medicine ranked 72nd nationally in total NIH awards to medical schools in 2022. UofL had total awards of approximately $54 million. By comparison, UCSF, the top ranked medical school, had awards of just over $751 million.
Massachusetts hospitals received 51% of all NIH funding to independent hospitals in 2022. No hospital in the Commonwealth of Kentucky ranks in the top 20 according to MassBio’s 2023 Industry Snapshot.
Ultimately, Louisville struggles due to a people issue.
Apellis Pharmaceuticals, Inc. was organized in 2009. According to Crunchbase, Apellis raised just over $168 million before its IPO in November 2017. Apellis moved its headquarters from Crestwood to Waltham, MA in January 2020. Why?
“Bottom line is that we couldn’t hire the right people fast enough [in Louisville],” Cedric Francois, Co-Founder and CEO of Apellis, told me. “[We] were lucky to attract out of town capital but did not have the human resources (experienced biotech/pharmaceutical drug developers).”
CBRE’s Life Sciences Research Talent 2022 report focused on jobs central to the bioscience industry’s research functions, noting that “much of the innovation that drives new products and solutions emanate from life sciences research functions.” Louisville did not make the top 25.
“The mass and density of talent available leads to these markets’ success,” stated CBRE. I would argue that—bottom line—talent/people drive all the metrics. And that is where Louisville struggles overall in the bioscience industry.
Greater Louisville is not positioned to be the next global leader in biotechnology. Double-down on bioscience-related distribution in Louisville, and remain focused on the healthcare industries and sub sectors where Louisville can remain competitive.
What are those subsectors? For now, to learn more about that you should reach out to the Render team!
