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August 16, 2016

Cluster’s Mass. Appeal Draws Companies, Jobs

Attractions, Relocations Build Biopharma Beyond Boston/Cambridge Area

Cluster’s Mass. Appeal Draws Companies, Jobs

Massachusetts has what many regional development experts call industry inertia, which means most of the companies come to Boston and stay and build off of the innovation that underpins the cluster. [compassandcamera/Getty]

  • Nearly a decade ago, PricewaterhouseCoopers (now PwC) urged Massachusetts to fight off growing competition from other states and countries for biopharma businesses and their jobs: “The Commonwealth must capitalize on this expectation of unprecedented international growth in life sciences to capture a substantial share of the resulting wealth and employment,” PwC concluded in a 2007 report titled “Super Cluster.”

    A spate of recent announcements shows how closely state officials, industry and academic leaders, and entrepreneurs have followed that advice.

    Since June alone, MilliporeSigma announced plans for a $115 million R&D campus in Burlington, MA, replacing its site in Billerica, MA, while Pfizer broke ground on a $200 million biologics clinical manufacturing facility in Andover, MA. Merck & Co. and Takeda Pharmaceutical said they will expand R&D in Cambridge. GE Healthcare Life Sciences opened its North American headquarters in Marlborough, MA, while its corporate parent signaled its interest in building a new corporate HQ at Boston’s Fort Point.

    Zumutor, a developer of monoclonal antibodies, is establishing business development operations in Woburn, MA, while keeping its R&D in Bangalore. Another recent arrival, Eurofins Lancaster Laboratories, has expanded into the state by opening its first northeastern office at the Cambridge Innovation Center.

    “Other clusters have strengths and weaknesses, but none of them have the innovation that we have here,” Matthew Powers, an evp with JLL who leads the commercial real estate firm’s New England Life Sciences practice, told GEN. “Not only do you have employees, you have academic institutions. You have what I like to call industry inertia, since all these companies come here and stay and build off of the innovation that underpins the cluster. You have the full spectrum of a pipeline, so you have startups through mature companies.”

  • A Safe, Secure Bet

    Anchored in Cambridge and increasingly Boston, Massachusetts’ biopharma cluster has capitalized on longtime strengths, from the presence of research universities and their professors, students, and graduates to a manufacturing base increasingly focused on biopharma as other industries moved to lower-cost countries or states.

    According to 2014 figures released this year by statewide life-sci industry group MassBio, Massachusetts had a biopharma workforce of 60,459—up 4.9% from 2013 and 47% from 2004. Nearly half those jobs are in biotech R&D—29,897 in 2014, up 21% from 2007 when the U.S. Bureau of Labor Statistics created the category. Biopharma manufacturing employment in Massachusetts has grown 28% since 2005, to 9,989 employees, as the nation saw biopharma manufacturing employment drop 2%.

    Powers said Massachusetts benefited over the past decade from high concentrations of landlords specializing in serving biopharmas and venture capital firms that launched and nurtured startups. One such startup, Decibel Therapeutics, said August 4 it will lease 32,000 square feet at the Van Ness complex in Boston’s Fenway neighborhood. Decibel was launched last October with $52 million in Series A financing led by Third Rock Ventures. VC and landlord backing positioned the startups well for acquisition by corporate giants as they changed from fully integrated to specialized drug developers seeking external R&D.

    “A company can come in and acquire a startup and be a part of this cluster without having to buy real estate or be a real estate specialist to figure out, in a market like Cambridge where there’s less than 1% vacancy, where do they locate and find this innovation,” Powers said. “It’s a safe, secure bet in what is a very risky proposition for them.”

    “Asking” rents sought by landlords for lab space have zoomed as demand has soared. Powers said rents in Cambridge now average in the mid-$60 range per square foot. That has helped push companies seeking cheaper rents into the suburbs: “Lexington, Waltham, Worcester, and Woburn are among the top locations outside of Cambridge/Boston,” Elizabeth Steele, MassBio’s director of economic development and global affairs, told GEN.

    Lower cost, plus proximity to Boston and Cambridge, prompted Zumutor to base its U.S. offices in Woburn, CEO Sohang Chatterjee told GEN: “The reason for choosing the greater Boston area was based on three key factors—the large concentration of R&D labs and start-up ecosystem to partner with, the single largest percentage of institutional as well as strategic investment happening here, and access to the intellectual assets in the local academic network.”

  • State and Local Support

    Also over the past decade, Massachusetts officials took a higher-profile role in advancing the industry. In 2006, state legislators overrode then-Governor Mitt Romney’s veto to create a state-funded, quasi-independent agency supporting basic research and biomanufacturing with $10 million in first-year funding and plans to spend $50 million over 5 years.

    Two years later, Romney’s successor Deval Patrick and state lawmakers transformed the Massachusetts Life Sciences Center into a key funding source for capital projects, tax incentives, and workforce development, through a 10-year, $1 billion bond expiring in 2018 (see sidebar).

    Local communities also offer tax breaks. Andover exempted Pfizer from $2.9 million in taxes under a five-year tax-increment financing agreement that helped persuade the pharma giant to break ground on a clinical manufacturing facility for vaccines and complex biologics. Pfizer will pay Andover $3.9 million in taxes over 10 years toward the 175,000-square-foot facility, where 75 employees will be based when it begins operation in 2019.

    Pfizer is one of several biopharma giants to build manufacturing plants across the state. Bristol-Myers Squibb (BMS) in May completed a $280 million expansion of its Devens, MA, biologics manufacturing campus. BMS completed the original complex in 2009 after winning $60 million in state and local economic incentives.

    A month earlier, Alnylam broke ground in Norton, MA, on a $200 million manufacturing facility designed to supply RNA interference (RNAi) therapeutics for clinical and commercial needs. The town agreed to forego $7.055 million in new taxes from Alnylam over 13 years, during which the company will pay $4.428 million. Andover has said it would have received only $176,930 had the site stayed undeveloped.

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