Where biotech is better off than anywhere else

(This article was published on June 18, 2012 by BostInnovation.)
More than 15,000 people from around the world have descended upon Boston for the annual BIO International Convention. Among them are economic development officials hoping to entice companies to move to their region with cheap land, low tax rates and regional culinary novelties such as fresh crawfish.

But they are likely to leave empty handed.

We’ve seen biotech companies in the Boston area move seeking cheaper land. But the Boston suburbs are about as far as they go. And they inevitably come back to the city.

Biogen Idec, the third largest biotechnology company in the world, just reversed its relocation two years ago from Cambridge to Weston.

And drug maker Vertex is moving its headquarters from Cambridge – but only across the river to Boston to two new office towers under construction.

Life science companies stay close to their roots

Why is it so hard to uproot a biotech company? Biogen Idec co-founder Phillip Sharp, an MIT professor, expressed the reason well: “Biogen Idec is a high-tech company and must be in touch with the cutting edge of biotech.”

While the proximity to scientists and universities is the top factor influencing the decision to be in Boston, it is closely followed by the ability to find appropriately trained talent in all aspects of the business, from product research to manufacturing and distribution.

Any hope economic development officials coming to the BIO International Convention have of establishing a biotech hub in their state will rest upon developing unique pockets of expertise.

Long-term nurturing bears fruit

Massachusetts’ biotech credentials did not develop overnight. But after decades of tactical and strategic nurturing, the cluster is bearing fruit. As the following chart* of Series A deals shows, Massachusetts now is producing more than twenty new venture-backed companies each year.

The blossoming comes at a time when large drug companies, with research budgets shrinking, are instead looking to startups in hopes of feeding their drug development pipelines.

A startup takes root

Like apples falling from a tree, startup firms tend to take root near their parents. Because these children tend themselves to spawn further spinouts, the cluster becomes stronger.

An example serves to illustrate the point:

A postdoctoral fellow at Novartis and a senior officer with Genzyme founded 4s3 Bioscience after discovering a mechanism to deliver large molecules to muscle tissue, key to tackling neuromuscular disorders for which there are no treatments.

Outsourcing the research supported by a grant from the Department of Health and Human Services, 4s3 obtained results that led to seed funding from Genzyme Ventures.

While applying for an accelerator loan from the Massachusetts Life Science Center, 4s3 began looking for its first laboratory space and contacted a former colleague at Genzyme now at the University of Massachusetts Venture Development Center, which had just opened new incubator space for emerging life science companies in Boston. After obtaining the loan from the Massachusetts Life Science Center, 4s3 moved into the incubator. Eighteen months later, after successfully completing key studies, 4s3 obtained a $20M Series A, and is making preparations to expand its operations in Massachusetts.

Grow your own

Massachusetts economic development officials attending the BIO International Convention no doubt will talk about how helpful it is to start a company in a place where there is infrastructure for biotech companies, accumulated knowledge about how to make them succeed and many others starting up companies.

Instead of wooing companies, economic development recruiters coming to the BIO International Convention ought to be listening to what the biotech industry needs, and building an ecosystem that nourishes them.

After all, it seems increasingly apparent that the secret to success in biotech is to have a successful parent.

* Data compiled and analyzed by Aijan Isakova, Venture Development Center, based on data from OnBioVC.

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