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Insight & Intelligence™: May 2, 2016

Top 10 U.S. Biopharma Clusters

Where Does Your Region Stack Up in GEN’s Annual Ranking?

Top 10 U.S. Biopharma Clusters

While nearly all regions saw significant increases in NIH grants and venture capital funding, all those extra dollars didn’t result in any new regions joining the list, adding new meaning to the old adage that money doesn’t change everything. [usa.gov]

    The old adage that money doesn’t change everything could well be said of this year’s Top 10 U.S. biopharma clusters as listed by GEN.

    Nearly all regions saw significant increases in NIH funding (thanks to the $2 billion boost agreed upon by Congress for the current fiscal year) and in venture capital or “VC” funding (thanks to a market that was bullish on biopharma until this fall).

    On NIH funding, the top region racked up more than a half billion dollars in grant funding from the agency since the start of the 2016 federal fiscal year on October 1, 2015—compared to $312.797 million collected by the top region on last year’s GEN List of Top 10 U.S. Clusters. And when it comes to VC money, this year’s number one region collected 47% more than the $1.82 billion raised a year ago.

    Yet all those extra dollars didn’t result in any new regions joining the list, and very few of the regions have changed positions since annual rankings of the regions list last year.  That may change in the near future, if regions near the top-10 cutoff continue to grow. Highest among those regions is Denver, which recorded more biopharma jobs (26,817) than Seattle, enough to place 10th on that single criterion, and just outside the top-10, raking eleventh, on lab space (3.6 million square feet) and VC funding ($56  million in six deals).

    GEN ranks regions based on five criteria:

    • NIH funding—Taken from the publicly available NIH RePORT database, for the current federal fiscal year, from its start on October 1, 2015, through March 27, 2016.
    • Venture Capital (VC) funding—Taken from 2015 figures furnished by the publicly available MoneyTree Report.
    • Patents—Based on the number of patents containing the word “biotechnology” awarded since 1976 in namesake cities and suburbs where key companies are located.
    • Lab space—Based on total-size-of-market figures, in millions of square feet, furnished by the commercial real estate brokerage JLL in its Life Sciences Cluster Reports for 2015.

    Jobs—Based on JLL’s report. While job numbers are ranked this year compared with last year’s Top 10 US Clusters list, less weight had to be given to job totals in regions where GEN has found widespread discrepancies in job figures. However, workforce size was factored in when deciding the ultimate position of a region.

    #10. Chicagoland

    Like last year, Chicagoland was ninth in patents (1,204) and tenth in NIH funding (330 awards totaling $111 million). While it slipped in VC funding to ninth ($132 million in six deals), the Windy City region is higher in lab space (eighth with 4.858 million square feet) and has climbed three notches in jobs, to #7—52,501 according to JLL, including the 29,000 within Chicago’s Illinois Medical District. The District’s governing commission recently solicited public comment on a draft master plan, and welcomed a new executive director, Suzet McKinney, Dr.P.H. Chicago is home to the nonprofit healthcare-technology incubator and community hub MATTER, which opened last year and now houses more than 100 biopharma, diagnostics, healthcare IT, and medical device startups. Under a deal inked in January, MATTER will work with Abbott Laboratories to develop innovations from member companies. Abbott, Baxter International, and their respective spinouts AbbVie and Baxalta, anchor the region, as do the U.S. headquarters of both Astellas and Takeda.

    #9. Los Angeles / Orange County, CA

    The City of Angels and surrounding Southland region are number-two in jobs (117,284 according to JLL; 99,049 according to the California Life Sciences Association)1, thanks to the presence of anchors stretching across academia (University of Southern California and University of California, Los Angeles), industry (Amgen and Kite Pharma), and research institutions. The region’s rankings beyond jobs are lower, placing seventh in NIH funding (363 awards totaling $160 million), seventh in patents (1,959), 10th in lab space (4.2 million square feet), and 10th in VC funding ($80 million in nine deals). But if a ranking existed for recent biopharma attraction efforts, LA/Orange County would be closer to the top than the bottom. Last year, a “Los Angeles Biotech Summit” drew the region’s industry leaders to USC, which is planning a biotech park adjacent to its Health Sciences Campus, while the Los Angeles County Board of Supervisors contracted with the public-private Los Angeles County Economic Development Corporation to launch a cluster-building initiative.

    #8. Raleigh-Durham, NC (includes Research Triangle Park, NC)

    North Carolina’s biotechnology hub continues to see new arrivals, two announced in March. Grifols plans to start construction next year on a new plasma fractionation plant near Raleigh in Clayton, NC, while Braeburn Pharmaceuticals will spend $19.9 million on a manufacturing and research facility in Durham County that is projected to create 52 jobs over five years. However, another strength of the region’s biopharma cluster, CROs, are consolidating, with Burlington, NC-based LabCorp reportedly in talks to buy Raleigh-based INC Research, after recently acquiring Covance, which is based in New Jersey but has facilities in Durham. The region saw a year-over-year rise in VC funding (rising two spots to seventh with $212 million in 11 deals) and patents (up to #10 with 912), but remained in the same positions it held a year ago in NIH funding (sixth with 330 awards totaling $166 million), lab space (sixth with 9.92 million square feet), and jobs (ninth with 31,984, according to JLL, while the North Carolina Biotechnology Center counts more than 63,000 industry jobs statewide).

    #7. Seattle

    After years of state budget cuts and corporate moves like Amgen’s pullout from the region, Seattle and Washington state are hoping for better biopharma news. Delivering on that will be the priority of Leslie M. Alexandre, Dr.P.H., whose appointment as president and CEO of trade group Life Science Washington was announced April 21. This year, the region is fifth in NIH funding (219 awards totaling $218 million) and sixth in VC funding ($253 million in 11 deals), a figure skewed by a single $195 million financing won by Adaptive Biotechnologies in May. The region placed eighth in patents (1,763), thanks to its base of academic and nonprofit research institutions. Seattle is also ninth in lab space (4.5 million square feet) and 11th in jobs (23,922 according to JLL, though Life Science Washington counts 36,300 jobs statewide). Amgen’s former campus overlooking Elliott Bay was acquired for $229 million—not by any biotech, but by Expedia, whose Hotels.com is promoted by “Captain Obvious.” Less obvious is Seattle’s base of younger biotechs. PhaseRx plans to raise up to $30 million through an initial public offering, while Juno Therapeutics—whose 2014 IPO raised $265 million—will move next year to a new HQ at the Alexandria Center in the South Lake Union neighborhood. Aptevo Therapeutics plans to stay in the city’s Belltown section after its expected spinout later this year by Emergent BioSolutions.

    #6. Greater Philadelphia

    The birthplace of American democracy, and the U.S. Marine Corps also begat the nation’s oldest research campus and is siring one of the newest. The University City Science Center in March rolled out Phase 1 Ventures, a new source of funding that can provide up to $450,000 for startups in biopharma and other technologies. Science Center also added two biopharmas to its Port incubator, ProClinical and Annapurna Therapeutics—the latter set to be acquired by Avalanche Biotechnologies but expected to remain in Philly. The newest science venue, the Pennovation Center, is being developed by the University of Pennsylvania and set to open this summer. Pennovation Center offers shared wet-lab space within the 23-acre Pennovation Works site, an office-lab-production space complex. The “City of Brotherly Love” and vicinity places highest in lab space (fifth with 11.01 million square feet), followed by jobs (sixth with 54.627, according to JLL), and patents (sixth with 2,131, including 693 from Princeton, NJ)2. The region ranks lower on VC funding (eighth at $202 million in 23 deals) and NIH funding (also eighth at 221 awards totaling $162 million). 

    #5. San Diego

    The “Plymouth of the West” ranked third in VC funding ($552 million in 39 deals), and already this year attracted nearly half that number in a single financing of $220 million (for Human Longevity, whose co-founder and CEO is J. Craig Venter, Ph.D.). San Diego ranked slightly lower in patents (fourth with 3,922) and jobs (also fourth with 63,730, according to JLL, compared with 34,000+ counted by the San Diego Regional Economic Development Corp., and 38,061 by the California Life Sciences Association). More challenging for the region is lab space (seventh with 9.5 million square feet) and NIH funding (ninth with 321 awards totaling $157.349 million). Among biopharma giants at home in San Diego and vicinity are Illumina, which will expand its headquarters next year when it moves into BioMed Realty Trust’s i3 campus in University Towne Centre (UTC). Also growing is GlaxoSmithKline, which on April 20 joined with Sanford Burnham Prebys Medical Discovery Institute (SBP) to launch a new translational neuroscience center. It’s the third regional initiative for GSK, which opened an R&D satellite site in La Jolla, CA, last year, and has nurtured San Diego-area startups with home-grown VC firm Avalon Ventures since 2013.

    #4. Maryland / DC Metro

    The federal agencies that fund and regulate research call this region home, and so too does the nation’s top academic recipient of research grant funding, the Johns Hopkins University. So it’s little surprise that the region’s best showing comes in patents (third with 3,959), followed by NIH funding (fourth with 457 awards totaling $221 million)—of which Hopkins alone accounted for 63% or $139 million. Interestingly, the region is also fourth in lab space (9.5 million square feet), thanks to a presence of drug and vaccine developers strong enough for Gov. Larry Hogan to call biopharma the “backbone of Maryland’s economy” during an industry forum held April 18-19 at the Gaithersburg, MD, headquarters of home-grown MedImmune, the biologics arm of AstraZeneca. Another pharma giant, GlaxoSmithKline, last year chose Rockville, MD, as one of its three global Vaccine Development Centers, adding 600 jobs. Maryland and suburban Washington rebounded last year in VC funding (fifth with $262 million in 19 deals), but lag in biopharma jobs (eighth with 38,189, according to JLL).

    #3. New York / New Jersey

    The combination of the Empire State and Garden State leads the nation in biopharma jobs (127,651 according to JLL), but not in VC funding (fourth with $340.097 million in 25 deals) despite the presence of Wall Street and the financial industry. NY-NJ is second in NIH funding (826 awards totaling $366 million), yet lags behind four other clusters in patents (fifth with 3,522). New Jersey carries the region in lab space, accounting for more than half (58.5%) of the region’s total 14.194 million square feet—good enough for third, but two notches below a year ago, thanks to stronger demand in Boston/Cambridge and the Bay Area. New Jersey is also the region’s dominant partner in jobs (60% of the region’s total 127,651) thanks to its heritage pharma industry and a biotech segment that includes giants such as Celgene and Amicus Therapeutics (which acquired Durham, NC-based Scioderm last year). Biotech is also growing in New York: Regeneron Pharmaceuticals continues to expand in suburban Tarrytown, NY, while New York City’s Accelerator late last year spun out its first two startups, both drug developers, Petra Pharma and Lodo Therapeutics.

    #2. San Francisco Bay Area

    The Bay Area will be the center of the biopharma industry in June, when the Biotechnology Innovation Organization holds its annual BIO International Convention at the Moscone Center in San Francisco. “The City” has emerged as a biotech mecca from the considerable shadows of South San Francisco (where Genentech celebrated its 40th anniversary on April 7), as well as the Peninsula and East Bay, a bright spot for the region. Two more positives are the region’s leadership in VC funding ($2.667 billion in 118 deals last year), and in patents (9,559). SF and vicinity are second to Boston/Cambridge, MA, in lab space, though not by much (16.36 million square feet). More sobering for a part of the country that has long been synonymous with biopharma, the Bay Area places lower in NIH funding (third with 366 awards totaling $230 million), and jobs, where it is fifth with 63,158, according to JLL, though the California Life Sciences Association offers a slightly higher count of 63,907.

    #1. Boston/Cambridge, MA

    The New England Patriots may not have repeated as champions this past year, but the largest metro area within the football powerhouse’s home region is once again on top when it comes to biopharma. Boston/Cambridge narrowly edges the Bay Area to claim number one in NIH funding (981 awards totaling $519 million) and lab space (16.77 million square feet). The region is second to the San Francisco area in VC funding ($2.028 billion in 103 deals) and patents (5,634), and ranks third in jobs (82,075 according to JLL; 60,459 according to industry group Massachusetts Biotechnology Council or MassBio. Biopharma has cemented the region’s stellar reputation for innovation, a key factor (along with Connecticut raising taxes) in General Electric deciding in January it would move its headquarters to Boston, where 800 life sciences and other staffers are expected to be based.

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