The recent opinion piece – "Remember the JOBS Act?" [August 13] – questioned the impact that the law has had on initial public offering activity and job creation. The Biotechnology Industry Organization's member companies, and the biotechnology industry overall, have seen a surge in IPOs thanks in large part to the reforms in the JOBS Act, and I would like to provide an alternate perspective.
The benefits of the JOBS Act are many, and the recent increase in biotechs going public is clear evidence that the new law is working.
From April 2012 (when the JOBS Act was signed into law) to July 2013, 33 domestic biotechs used the JOBS Act to go public. In the 16 months prior to last April, there were only 19 U.S. biotech IPOs – barely one per month. The change has been even more pronounced for early-stage companies that have been, until recently, entirely shut out of the public market. Since the JOBS Act was enacted, five preclinical or Phase I biotechs have initiated IPOs to fund their innovative research. In the four years between the financial crisis and the JOBS Act, there was just one preclinical biotech IPO.
These newly-public companies are small businesses, job creators and vital supporters of an R&D-based, 21st century American economy. Biotech companies are leading the search for breakthrough medicines, advanced biofuels and other innovative technologies – and the JOBS Act has helped many of them secure the capital necessary to fund the decade-long, billion-dollar scientific development process.
In addition to the groundbreaking R&D being conducted by these companies, they are also supporting American job creation. The Kauffman Foundation found that emerging growth-sized issuers grew employment by 135 percent in the five years following their IPO – the length of the IPO On-Ramp in the new law. Overall, 92 percent of a company's total job growth occurs after its IPO.
Though the JOBS Act is only a little more than a year old, its impact is already being felt in the biotech industry. As growing biotechs and small companies in other innovative industries continue to use the IPO On-Ramp to access investment capital on the public market, we can expect further job creation, funding for research, and technological advances that benefit all Americans.
President and CEO
Biotechnology Industry Organization