JLABS by Johnson & Johnson: A Decade of Transforming Healthcare Innovation with 700 Startups and $50+ Billion in Deal Value

The healthcare industry is relatively insular, so even companies that have achieved excellence in this field often struggle to truly “break out” into the broader market. However, there is one notable exception: a company that has been in existence for nearly 130 years.Johnson & Johnson。

Why is Johnson & Johnson able to become an “exception”? There are certainly reasons for this. In addition to its rich product pipeline and strong marketing capabilities, we can also observe some particularly noteworthy “labels” associated with the world’s largest and most diversified healthcare company.

The first "label" isGlobal Influence. In January this year, Johnson & Johnson was named by the renowned business magazine Fortune as2022 World’s Most Admired Companies, marking its 20th consecutive year receiving this honor; additionally, on the pharmaceutical industry ranking list,Johnson & Johnson Ranks First Again, marking its ninth consecutive year at the top.

Another "label" is "Revenue-Generating Capacity”. According to Johnson & Johnson’s full-year financial report, the company’s total sales in 2021 reached$93.8 billion, with earnings per share (EPS) for the stock market at $7.81; after adjustments in 2022, these figures are projected to grow by 7.7% and 9.2%, respectively. It is worth noting that any one of these metrics can be described as “unrivaled at the summit” within the entire pharmaceutical industry.

However, these are not the focus of this article. As a service platform dedicated to incubating early-stage healthcare projects, VCBeat Orange Bureau will present readers with another side of Johnson & Johnson—namely, its commitment to the innovative incubation of early-stage healthcare projects.JLABS Incubator。

Melinda Richter, founder of JLABS, once publicly stated in an interview, “JLABS is advancing at a pace akin to a ferocious “beast.”。”

Why is this the case? There are actually reasons for it.

Melinda Richter has long worked at tech companies in Silicon Valley. Due to her personal experiences, she gradually realized thatCompared with the technology sector, innovation in the life sciences sector faces numerous barriers.For instance, the substantial costs required before launching the first experiment, and the repeated dilution of equity that entrepreneurs must endure to secure financing, are among the “adverse factors” that cause many startups to fail during the proof-of-concept stage, folding before they can even develop a product prototype.

It was precisely these repeated brushes with “death” that inspired Melinda Richter’s mission to “figure out how to make the life sciences industry operate like tech startups.”

In 2004, Melinda Richter stepped out of her “comfort zone” and founded Prescience International, a company specializing in the design of life science incubators, providing services to multiple innovation centers in California, USA.

But it was not as easy as imagined; during the actual implementation process, Melinda Richter gradually realized thatTo achieve tangible results in the field of medical innovation translation, a sense of mission and passion alone are far from sufficient; it is also essential to have corresponding R&D resources, talent resources, and market resources., this indicatesPrescience InternationalA “strategic partner” is required.

Just as Melinda Richter was feeling anxious, Johnson & Johnson proactively reached out. This was because J&J had just begun establishing its incubator in San Diego and sought the assistance of Prescience International.

Soon, the two parties reached an immediate agreement. After nearly two years of integration and adjustment, Johnson & Johnson officially launched its incubator brand in January 2012, naming it “JLABS by Johnson & Johnson”, with Melinda Richter at the helm. Thus, “JLABS @ Johnson & Johnson” completed its transition from an “outsider” to an “insider.”

A Decade in the Making: This Year Marks JLABS’ 10th Anniversary

Although JLABS appears very “young” compared to Johnson & Johnson’s “age,” it has in fact become a pillar of Johnson & Johnson’s core business and is gradually becoming Johnson & Johnson’s “"Second Growth Curve"。

According to the latest data, JLABS has successfully incubated651 Startups, including 439 pharmaceutical companies, 142 medical device companies, and 70 medical consumer goods companies, with 13 locations worldwide. In addition, regarding the growth of incubated enterprises, JLABS has completed a total value of to date$58 billiontransactions, and also includes44 IPOsand35 Acquisitions。

This is a remarkable achievement, especially given that it was accomplished in just ten years, so JLABS has clearly done some things right. The two most critical factors lie in itsEarly-Stage CultivationandLate-Stage Incubation。

“We believe this will help“Fill the gaps in critical resources needed for biomedical innovators to thrive and reduce barriers to the growth of New York City’s ecosystem”, Melinda Richter once commentedJLABS@NCY(New York JLABS Incubator).

In fact, this is precisely what JLABS@NYC does. Although New York City boasts the largest bioscience workforce in the United States and nine major academic medical centers, it still lacks the resources to help researchers translate their discoveries into impactful products. The primary reasons for this are exorbitant real estate costs and the fact that most properties are predominantly allocated to other business purposes.

In response, Johnson & Johnson invested heavily in constructing a 30,000-square-foot facility in the heart of New York. Beyond establishing a presence in this “prime location” in New York, JLABS typically selects sites in hubs with vibrant life sciences innovation, such asSan Diego, San Francisco, Bostonetc., and will be integrated with local resources. Because in these areas,It can directly align with physicians' innovative needs, offering entrepreneurs countless opportunities to connect with investors.

According to Johnson & Johnson’s annual financial reports, the company has consistently allocated more than 10% of its revenue to research and development (R&D), regardless of the establishment of JLABS. This demonstrates that its commitment to innovation is not a recent development but rather a long-standing strategic priority. Following the official launch of JLABS, Johnson & Johnson further increased its R&D investment, with the proportion even exceeding 15%.

What Does “Unconditional” Mean? That Is, “No strings attached”, JLABS does not require equity stakes in incubated companies, nor does it demand preferential investment rights.Incubated companies can access office and laboratory spaces, along with various experimental equipment, by paying a fixed monthly fee., you can rent a laboratory bench for a monthly fee of $3,000 and gain access to JLABS team’s operational management services in areas such as human resources and finance.

In such a free, relaxed, and no-strings-attached environment, the process by which JLABS creates and incubates companies can be simply divided into three steps:

Step 1: Become a Resident

During the application submission stage, scientists are required to submit the following five items to demonstrate the market potential of their invention: first, a description of their scientific and technological innovation, with an emphasis on key focus areas; second, details regarding invention licensing or intellectual property (IP) coverage; third, a user analysis that identifies the target audience and existing competitors; fourth, a team introduction, including a 12–18-month project plan; and fifth, information on funding sources and partnerships.

Following this, JLABS will, based on"Four Criteria"to select innovative companies for incubation. These “four criteria” are: whether the invention is transformative, whether it addresses significant unmet market needs, whether the team has financial solvency, and whether it aligns with strategic areas or adjacent fields of interest to Johnson & Johnson.

Notably, scientists applying for admission are not always required to have already designed and tested products; sometimes, all that is needed for approval is a clever concept backed by a passionate team. This is also a key distinguishing feature that sets JLABS apart from many other incubators.

Upon successful application, scientists become residents of JLABS, gaining access to laboratory units, office space, shared core laboratory equipment, and business facilities. The program also connects entrepreneurs with the full spectrum of Johnson & Johnson Innovation resources, including funding opportunities, third-party services, educational programs, and introductions to R&D experts across its medical technology, consumer health, and pharmaceutical teams.

Step 2: Internal Guidance and Leveraging Innovation

"Internal Guidance"The ultimate goal is to foster the robust growth of startups. To this end, JLABS pairs each incubated company with a relevant subject matter expert from Johnson & Johnson. These experts, boasting extensive industry experience, provide ongoing guidance and feedback. In addition to regular communications, incubated companies can engage with their entrepreneurial mentors at any time to gain insights and advice on product development and business ventures. The program also provides access to industry resources, such as materials and suppliers, thereby reducing the risk of startup failure.

And“Leveraging Innovation”pairs some incubated companies with participants in Johnson & Johnson’s Talent Accelerator Program, which is designed for emerging

The four- to five-month leadership program is, in fact, a way for Johnson & Johnson to expose its internal colleagues to entrepreneurial experiences outside the company.

In addition to entrepreneurship support and guidance from medical experts, Johnson & Johnson also provides startups with subject-matter experts across nearly all health technology-related fields, enablingGuidance from Interdisciplinary Expertise. As founder Melinda Richter promised, “No matter what expertise you require, from immunology to artificial intelligence and robotics, we will do our best to provide it.”

Step 3: Securing Funding

In the final stage of incubating companies at JLABS, namely the financing stage, Johnson & Johnson’s capabilities become even more prominent. First, in terms of partners, the Investor Center is supported by JJDC, the strategic venture capital arm of Johnson & Johnson. Currently,JLABS has partnered with more than 100 investment funds worldwide., with the core focus being on facilitating communication between fund organizations and incubated enterprises, and providing potential investment opportunities for the incubated enterprises.

Secondly, from the perspective of competitions, JLABS irregularly organizes events to foster enthusiasm for innovation.Quick Fire Challenge, soliciting innovative solutions for specific themes. Winners of the challenge can receive various rewards, including project funding support and opportunities to join JLABS.

For example, to find solutions for improving the detection of neurotoxicity in immunotherapy, winners can receive up to $200,000 in grants ($125,000 and an incremental $75,000). In addition to the Quick Fire Challenge, JLABS also organizes various competitions such as the WiSTE2D Scholars program and the Boston Pediatric Device Consortium Challenge.

Finally, in terms of transaction amount and volume, since its establishment in 2012, companies incubated by JLABS have collectively secured over$30 billiontransaction funds, which also include44 IPOsand35 Acquisitions, which serves as strong evidence of JLABS’ capability in incubating early-stage healthcare projects.

Currently, JLABS has established operations in San Diego, San Francisco, Boston, Lowell (Massachusetts), Houston, Toronto, Beerse (Belgium), and New York City, achieving remarkable results in each location. Building on these impressive accomplishments, a key question becomes increasingly clear: Why has JLABS been consistently successful across diverse global regions?

In response to this issue,VCBeat Orange BureauSummarize into three points.

First, Johnson & Johnson’s robust resourcesJLABS has become a critical component of Johnson & Johnson’s innovation ecosystem. It operates with relative autonomy while integrating the upstream and downstream segments of life sciences innovation, thereby establishing a robust innovation ecosystem. In essence, this ecosystem features JLABS’ advanced and self-reinforcing configuration of hardware, software, and capital resources.

Taking the incubated company Arcturus as an example, after the founders’ application was approved, JLABS provided them with space and resources, including office space, laboratory bench space, freezers and refrigeration units, and specialized equipment, to facilitate their early-stage experiments. Furthermore, JLABS assigned experienced mentors from Johnson & Johnson to help them address challenges in research and development.

Under the guidance of JLABS, Arcturus secured $13 million in funding from external angel investors in September 2013. Since then, Arcturus has entered into collaboration and licensing agreements with Janssen Pharmaceuticals, Ultragenyx Pharmaceutical, and Takeda Pharmaceutical, totaling nearly $2 billion.

Second, it has high market adaptability.As a globally renowned healthcare company, Johnson & Johnson has continually undergone market validation since its inception. Over time, this has endowed JLABS with greater market acumen compared to university-affiliated or independently operated incubators, resulting in incubated companies that achieve higher market fit.

For example, Acuvue Oasys® with Transitions™ Light Intelligent Technology™ contact lenses were named one of TIME’s Best Inventions of 2018, and the company’s COVID-19 vaccine was selected as one of TIME magazine’s Best Inventions of 2021.JLABS’ choices have always kept pace with the times.

Third is a free environment without additional conditions.JLABS never forces incubated companies to enter into agreements with it; instead, it builds relationships through genuinely formed partnerships, primarily demonstrated by its sincere commitment to serving incubated companies. For example, Suncayr was able to conduct product testing in Australia and gradually grow and expand by leveraging JLABS’ connections.

Such instances occur frequently at JLABS, and it is precisely through these positive “connections” that JLABS has entered into cooperation agreements with many of its incubated companies in subsequent stages.

On June 27, 2019, Johnson & Johnson Innovation, a subsidiary of Johnson & Johnson, announced the official launch of JLABS@Shanghai. This is the largest JLABS facility globally in terms of floor area and the first JLABS in the Asia-Pacific region.

It is reported that JLABS@Shanghai is operated byShanghai Zhangjiang Pharma Valley Public Service Platform Co., Ltd.Co-developed in partnership with Johnson & Johnson Innovation, the facility can accommodate nearly 50 innovative entities, covering sectors including pharmaceuticals, medical devices, consumer health, and medtech. On its “opening” day, it already31 companies have moved in., of which 16 are engaged in pharmaceutical R&D, 13 in medical device R&D, and 2 in consumer product R&D.

Furthermore, in building an innovation ecosystem, JLABS@Shanghai provides entrepreneurs and innovators with core resources, including funding, technology, equipment support, and entrepreneurial education. Taking funding as an example, JLABS@Shanghai has signed cooperation agreements with dozens of venture capital firms in China to date.

Sharon Chan, Head of JLABS@Shanghai, once stated thatWhether in terms of model, standards, or equipment, JLABS@Shanghai is no different from Johnson & Johnson’s JLABS locations around the world.

However, adjustments will also be made based on the domestic market conditions. For instance, in terms of sector coverage, in addition to biopharmaceuticals, medical devices, and consumer products, JLABS@ShanghaiIn the fields of artificial intelligence, microbiota, and immunology and oncologyTo varying degrees, it is involved.

Although JLABS@Shanghai has not yet yielded the same abundant results in medical innovation and incubation as JLABS locations in other regions, there is no need for haste. A period of mutual adjustment and adaptation is inevitable. We are confident that JLABS@Shanghai will soon demonstrate its full potential, helping more innovative projects in China cross the “valley of death” and successfully transition from the laboratory to the market.