Life Sciences CEOs Applaud Governor’s R&D Tax Incentive Restoration in Proposed State BudgetBack
SACRAMENTO—Today, Governor Gavin Newsom released his January 2022-23 budget proposal, which included critical research and development (R&D) investment by the state to help support California’s world-leading life sciences ecosystem. Specifically, the Governor’s budget reinstates the R&D tax credit and net operating loss deductions that were capped in 2020 in response to an anticipated state budget deficit.
California Life Sciences’ members believe that investment in life sciences R&D is foundational to the well-being of the human condition and our diverse communities. As we have seen in this pandemic, science and innovation is vital for public health and keeping our economy going and our workforce growing.
According to a recent Milken Institute study, R&D tax incentives made a significant impact on life sciences companies’ investment decisions in California. California’s life sciences industry is not only a cornerstone of California economy, but of life-saving medicines as well. Currently, 3,766 California life sciences companies produce new technologies to improve patient care (California companies represent nearly one-quarter of the entire nation’s clinical trials). Public and private financial support – including tax incentives—is critical for expanding the number and reach of clinical trials and medical research. Millions of people around the world look to California life sciences companies for hope in the fight against the diseases and illnesses affecting them and their loved ones.
“The life sciences ecosystem understands the importance of R&D investment—our scientists and researchers are the engine that allow our companies to meet the health challenges of people around the world. There is no greater example than the world-leading innovation our member companies have demonstrated to the world during this pandemic. California Life Sciences applauds Governor’s Newsom’s commitment to invest in life sciences R&D in his proposed budget.” – Mike Guerra, CEO, California Life Sciences
The CEOs of Pfizer, Amgen, and Genentech issued the following statement in response to the Governor’s proposed R&D tax incentive restoration:
“The Governor’s proposal to restore the state’s investment in R&D for California’s life sciences ecosystem is an investment in California’s leadership in innovation and cures around the globe. Our long-time and ongoing investment in R&D–the lifeblood of innovation–has allowed us to help lead the global response to the pandemic. I applaud the move by Governor Newsom to include R&D investment in his budget for California.’” –Albert Bourla, CEO, Pfizer
“California-based companies like Amgen have long been pioneers in research and development in biotechnology, helping the state become one of the largest biopharmaceutical innovation hubs in the world. Today, the Governor proposed a wise R&D investment in his budget to maintain our historical leadership status in the biotechnology sector.” Robert Bradway, CEO, Amgen
“The COVID19 pandemic is a testament to the value of the life sciences in providing solutions to major global challenges. Governor Newsom’s proposal to invest in R&D sends a strong message that California is committed and will continue to be an innovation hub for cures around the world. We applaud the R&D tax incentive restoration and what it means for biopharmaceutical companies that continue to invest heavily in California.” Alexander Hardy, CEO, Genentech
Background: California placed a cap on R&D tax credits and net operating loss deductions (AB 85) during the 2019-20 legislative session in preparation for the anticipated budget shortfall resulting from the COVID-19 pandemic. However, California experienced a historic budget surplus upwards of $75 billion in 2021 and the non-partisan Legislative Analyst Office projects at $31 billion surplus in 2022.