shoes and textiles moved south, then overseas

Biotech’s Downstream Economic Impact for

Massachusetts

Mark Trusheim

Board Member & Treasurer

Massachusetts Biotechnology Council

The Massachusetts Biotechnology Council (MBC) is a non-profit association for Massachusetts biotechnology industry.

The MBC advances common goals of the Massachusetts biotechnology industry by:

• Strengthening industry community & collaborations• Influencing legislative and regulatory policies• Building connections and support with stakeholders


Source: Ernst & Young, Beyond Borders: The Global Biotechnology Report 2002;Feinstein Kean Healthcare, BIO Editors & Reporters Guide.

Profile of National Industry• United States Biotechnology Industry

– 1,500 biotechnology companies (300 are public)

– Employing 200,000 people

– $17 billion invested in biotech in 2003

– 190 products on the market– 50 products are under review at FDA and 300 are in

Phase III

Source: Massachusetts Technology Collaborative, 2002 Index of the Massachusetts Innovation Economy, 2003, MassBiotech 2010 report, MBC, 2002; MISER, 2003.

• Massachusetts– Over 300 biotech (71 public) companies employing

approximately 30,000 individuals

– Pharmaceutical products sector is state’s 4th largest exporter - July 2003

– Nearly 90 clinical trials underway in Q1 2004

Profile of State Industry

Areas of Biotech Research• Cancer• Arthritis• Parkinson’s• Central Nervous System• Diabetes• Cardiovascular• Tissue Repair• Autoimmune• Asthma• Genomics/Proteomics• Diagnostics• Bioinformatics• Biodefense• Biological Devices• Nanotechnology

• Psoriasis• Cystic Fibrosis• Vaccines• HIV/AIDS• Rare Disorders• Brain• Mental Health• Infectious Diseases• Xenotransplantation• Stem Cells• Marine/Agricultural Biotech• Transgenic Animals, Fish, and Plants• Industrial• Environmental Remediation

Geographic Distribution of Massachusetts Biotech Employment in 2001

Worcester

Woods Hole

BeverlyDanvers

Wilmington

West Bridgewater

Wareham

Fall River

Devens

Boxborough

Billerica

Agawam

Ashland

Bedford

Boston

BrightonCambridge

Canton

Charlestown

Framingham

Franklin

Hopkinton

Lexington

Marlborough

Maynard Medford

Milford

Natick

Needham

NewtonNorthborough

Norwood

Rockland

Waltham

Watertown

Wellesley

Westborough

Woburn

Number of employees

1,000

500

100

Andover

Source: Massachusetts Biotechnology Council, BCG Value Science Center

Life Sciences Cluster Composed of Diverse and Interconnected Segments

HEALTH CAREHospitalsProviders

PayersHMOs

Public health organizations

Patients

PUBLIC INSTITUTIONSState officialsLocal officialsQuasi-publics

Public agenciesCommunity-based

organizations

EDUCATIONUniversities

Community collegesK-12 schools

OTHER SERVICESLaw firms

Real estateIT firms

AccountantsConstruction

Medical devices

BIOTECHHuman therapeuticsAgricultural biotech

Marine biotechEnvironmental biotech

PharmaceuticalsDiagnosticsBiodevices

SPECIALIZEDSUPPLIERS

Lab/ bio supplies & equip.Platform & tools companies

Contract manufacturingBioinformatics

CROs

BASIC RESEARCHAcademic research labs

Academic medical centers

FUNDING ENTITIESGovernment grants

Venture capital firmsFinancial institutions

Competitive Advantage Massachusetts Companies Cite Universities and Talent as Primary

Sources

Source: MBC, BCG Biotech 2010 project interviews

2 2112

35

8

11

11

14

19

21

0

10

20

30

40

50

60

70

80

90

100

Proximity to major universities

Availability of scientists

Strength of partner industries

Proximity to other biotech companies

Quality of life

Availability of skilled technicians

Availability of spouse jobs

Leg./ reg. environment

Cost of laborOther

Personal

Quality supplier base

Average allocation of 100 points across potential sources of Massachusetts advantage

“We started here because our founders come from Massachusetts universities. We stay here because the best people

are here.”

“We started here because our founders come from Massachusetts universities. We stay here because the best people

are here.”

Weather

Others Agree, MA is the Place to Be

• Milken Institute Report: New England is #1US Biotech cluster

• Venture Capital: In Q2 2004 MA received most investment of any region according to MoneyTree

• The state receives highest NIH dollars per capita. $2.1B in 2004 through 5,386 awards. (CA received $3.0B)

• Companies relocate here: Novartis, Merck, Pfizer, AstraZeneca, Amgen, Abbott Laboratories plus many smaller firms

Massachusetts Biotech In-StateCapabilities

(1) Clinical development structure in state(2) Commercial manufacturing onlyNote: Sample is 134 human therapeutics companies Source: Massachusetts Biotechnology Council Survey 2002, BCG analysis

CommercialResearch Development(1) Manufacturing(2)

108

57

8

9

10

7

2611

153 23 2 24

Mass.companies

Out-of-state companieswith Mass. locations

Activity in Massachusetts

Activity outside Massachusetts

Opportunity to Create Nearly 100K Jobs in Massachusetts by 2010

Note: 2001 baseline: 30K biotech jobs and ~70K indirect jobs= ~100K total jobs Source: Bio E&Y 2000 Report; MBC 2002 survey; BCG Analysis; Economic Model

Massachusetts share of U.S. biotech jobs 1991-2010

Mass. share of biotech jobs (%)

Lose ground• Mass. share

erosion continues

Increase share• Mass. strengthens

its number 2 position

Unleash potential• Mass. closes gap

with Calif.

11

22

33

~150K new jobs

~90K new jobs

~20K new jobs

0

2

4

6

8

10

12

14

16

18

20

1991 1996 2001 2005 2010

The Threats to MA Success

• Macroeconomic limits: Increased rationing worldwide through queues, adoption delays and price controls.

• Scientific freedom limits: Stem cell research restrictions. Human gene therapy restrictions. Etc.

• Research pipeline gaps: Basic research transition to therapeutic research. Human clinical trial capacity.

• Downstream pipeline gaps: bio-manufacturing, commercial operations

The MA Pipeline is Springing Leaks

Basic Research

Therapeutic Candidate

LeadOptimization

Pre-ClinicalRegulatoryReview

RegulatoryApproval

ClinicalTrials

Biomanufacturing

Clinical Trials

Commercial

Tech Transfer/Company Formation

VC funding moved downstreamNIH funding has not

NC & Foreign locations

MA Med Centers run relatively fewCROs mostly elsewhere

Partner out

Clinical Adoption/ Marketing

Should We Care about the Leaks?

Basic Research


LeadOptimization


RegulatoryApproval


ClinicalTrials

Biomanufacturing

Clinical Trials

Commercial


Future product pipeline at risk

Construction & Manufacturing jobsSpread wealth beyond 495 belt

Help hospitals remain solventImprove patient access to best therapiesValue to being close to the clinicSubstantial service sector jobs

Commercial jobsControl economic destiny

How Might We Patch the Pipe?

Basic Research


LeadOptimization


RegulatoryApproval


ClinicalTrials

Biomanufacturing

Clinical Trials

Commercial


Therapy focused research: Shared animal model facility Translational medicine Disease centric institutes

$3B CA Stem Cell initiative$1B IL Stem Cell proposal$1B FL biotech VC funding$0.8B WI biotech initiative$0.3B FL Scripps incentive

$0.05B MA Tech fund

Expedited permitting (passed)Shared mfg. facility for trials, teaching, dev.Smart incentives for full mfg sites.

Leverage community & western centers Innovative IRB & patient monitoringFaculty & administration focus

Become more acquisitive

Our History Shows the Risk

• Henry Ford moved from Cambridge (640 Memorial Drive) to Detroit

• Shoes and Textiles moved South, then overseas

• Lyndon Johnson moved the NASA Space Center from Kendall Square to Houston

• Minicomputers & workstations were out competed by California and Texas

• Time will tell on IT off-shoring and Telecomm

The Benefits are Large

• Up to 100K, even 150K new jobs

• Move the economic, not just research, center of Biotech to MA

• Provide MA residents with the best access to the best medicines in the world

• Add over $250M in state & local tax revenue (Milken Institute assuming doubling of current job base)

Success Demands Collaboration

HEALTH CARE

PUBLIC INSTITUTIONSEDUCATION

OTHER SERVICES

BIOTECH

SPECIALIZEDSUPPLIERS

BASIC RESEARCH

FUNDING ENTITIES

Biotech’s Downstream Economic Impact for

Massachusetts

Mark Trusheim

Board Member & Treasurer


shoes and textiles moved south, then overseas

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