High Tech Council Study Shows Deep Ties of Biotech, BioPharma Firms

For Immediate Release April 11, 2007
Contact: Cort Boulanger (339) 222-2442

High Tech Council Study Shows Deep Ties of Biotech, BioPharma Firms
$13 Billion in Critical Alliances Drives Biotech Growth in State

State House, Boston - Massachusetts biotechnology and pharmaceutical employers benefit from unprecedented financial and research collaboration but fierce competition from other states threatens future growth and drug discovery, according to a new study released today by the Massachusetts High Technology Council at the Legislature’s Biotechnology Caucus.

The study, prepared by the Donahue Institute at the University of Massachusetts, discovered that from 2000-2006, 13 of the leading pharmaceutical firms invested more than $13.4 billion in 357 alliances with state biotech companies – far outpacing the amount of annual venture capital investment in Massachusetts biotech firms.  The study also revealed that biopharmaceutical investment typically occurs during the critical early stages of drug development when many drugs fail due to lack of funding.

“The study clearly shows the remarkable amount of collaboration – and interdependence – between biotechnology and biopharma companies in Massachusetts,” said MHTC President Christopher R. Anderson.  “It is important that policymakers recognize the unintended negative consequences of harmful policies – like imposing pharmaceutical price controls – have on Massachusetts biotech employers and drug discovery.  Quite simply, to be pro-biotech you must also work to support biopharma employers.”

Donahue studied a sample section of 13 leading pharmaceutical firms – including Abbott Labs, AstraZeneca, BiogenIdec and Genzyme – that have created 357 Massachusetts alliances worth $13.4 billion.  In addition, nearly half of these alliances occurred during the early stages of discovery or preclinical research when resources are most scarce.  Donahue also estimates that the alliances hold an additional $14.6 billion in additional downstream value.

Despite this critical link, biopharmaceutical leaders are increasingly concerned that potential price controls and other negative policies on the federal, state or local level could harm the state’s premier biopharmaceutical cluster and send jobs out of state, said Anderson.

"The Biotech Legislative Caucus must ask questions to understand why biopharmaceutical jobs are growing faster in other states," said Representative Michael Rodrigues, co-chair of the Biotechnology Caucus. "There is a commitment on behalf of the Legislature and the administration to do whatever we can to help these companies grow and prosper.  This study provides a road map to help us reach our full potential for life sciences growth."

The study also provided a snapshot of the progress the state’s biopharmaceutical sector has made in recent years.  It concludes that Massachusetts is still a leader in biotechnology research and development, but that aggressive strategies by competitor states were eroding the state’s leadership position.

• The Massachusetts biopharmaceutical sector experienced 44% job growth (from 33,619 to 48,242 jobs) from 1998-2004, but competitor states and the nation as a whole (57%) added biopharma jobs at much higher rates. Overall, Massachusetts slipped from fifth to seventh in total biopharma employment.
• Massachusetts has the highest wages per worker of any state at more than $98,000 annually, more than $8000 above second ranked New Jersey and 25% above the national average.
• Massachusetts more than doubled the amount of venture capital investment received by state biotech firms from 1998-2004 and at $561 million is a strong second to California.  However, other states and the national average grew at higher rates that Massachusetts.
• Massachusetts nearly doubled the amount of National Institutes of Health medical research grants up to $2.27 million in 2004.  But many competitor states experienced higher rates of growth in critical NIH funding.

"With a skilled workforce and world class research facilities, Massachusetts is one of the premier centers of biopharmaceutical research and development," said John Hennessey, Executive Director & General Manager, Boston R&D, AstraZeneca. "Those resources attract global biopharmaceutical companies, like AstraZeneca, creating jobs and critical links to Massachusetts biotech companies."

The Donahue researchers conducted a survey of some of the state’s leading biopharmaceutical employers to determine the business conditions of the state.  The survey results showed that despite an availability of skilled workers and proximity to world-class research partners, Massachusetts, in comparison to other states, was not always effective in meeting business needs.

The executives polled in the report cited burdensome business regulations and protracted state and local permitting processes, despite the significant permitting reform efforts of the Legislature and state government in recent years.  Many executives felt that the state’s business cost structure should be more stable and predictable and challenged the state to improve the pipeline of science and technology employers graduating from its public education system.

“The report clearly finds that the Commonwealth's historic science and technology strengths have made it a global Bio-Pharma leader.  It also identifies clear challenges facing Massachusetts if it is to retain and grow this critical industry in the years ahead,” said Eric Nakajima, Donahue Senior Research Manager and study co-author.  "To remain competitive, Massachusetts needs to develop its life sciences workforce pipeline, advocate vigorously for increased federal support for research and development and continue to proactively support the industry’s expansion needs."

About the Massachusetts High Technology Council
The Massachusetts High Technology Council – the state’s most prominent technology business lobbying group – is composed of more than 100 CEOs representing the state's top technology employers.  For 30 years, the Council has worked to make Massachusetts more globally competitive for the state’s diverse technology economy.  In 2004, the Council launched the Massachusetts Defense Technology Initiative (MassDTI), which works to grow the state’s defense technology cluster. Learn more at www.mhtc.org.
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To download the full report, please visit www.mhtc.org.