Massachusetts’ top state legislator for economic-development issues said he expects the state government early next year to craft a bill to promote the state’s life-sciences industry based on the 10-year, $1 billion measure introduced earlier this year by Gov. Deval Patrick.
Such a move would clear the way for action by both houses of the General Assembly, which the legislator anticipated would come before spring when the State House will be mired in reviewing the state’s 2008-09 budget.
“I’m looking at the very latest, it will be the end of January,” said Rep. Daniel Bosley, chairman of the Joint Legislative Committee on Economic Development and Emerging Technologies, referring to the crafting of the life-sciences bill.
Bosley made his remarks in a Nov. 2 interview with BioRegion News that offered the first inkling of a timetable for legislative action on the closely watched state biotech bill.
“I’d like to have it done by the end of our session this year but I don’t think that’s possible,” Bosley said. “This is an awful lot of drafting and an awful lot of specificity.”
Bosley, a Democrat from North Adams, said the measure would include significant changes from the Life Sciences Initiative submitted in July by Gov. Deval Patrick.
Just what those changes will be is the subject of ongoing talks between legislative leaders and top aides to Patrick, who over the past week joined the governor in campaigning for the life sciences bill at two events and at a legislative hearing.
The governor’s economic-development office last week offered an olive branch to business groups seeking similar state aid for their industries in return for supporting the legislation, with a spokeswoman telling BioRegion News the administration would help them some time in the future.
In a Nov. 2 interview, Bosley discussed where lawmakers and the governor agree and differ on the pending bill. He said the legislature is committed to assisting the life science industry, as it did when his committee crafted the state stem-cell research bill in 2005 and an economic stimulus measure the following year.
Bosley also defended the pace of legislative review against complaints by Patrick that lawmakers have dragged their feet.
“When you spend a billion dollars, you need to do your due diligence,” Bosley said. “There are big areas of consensus on the bill. We all want to put more money into job training. We all want to do some form of what he calls innovation centers. When I hear where he’s going and where we’re going, we seem to be going on parallel tracks,” he added.
“I think we’re all eager to do something for the industry and we’re all working in the same direction,” Bosley said.
A spokeswoman for Patrick’s economic-development office, which oversees the governor’s life-science bill, agreed that the governor and lawmakers have found some common ground.
Kofi Jones, a spokeswoman for Patrick’s Executive Office of Housing and Economic Development, told BioRegion News talks were continuing
“I would say we are very hopeful that we will be able to work with the legislature to pass this life science bill as quickly as possible,” said Jones. “It’s a vital piece of legislation that will move toward creating cures and jobs here in the commonwealth.”
Patrick’s bill — officially House Bill 4235, “An Act Providing for the Investment In and Expansion of the Life Sciences Industry in the Commonwealth”— would set aside $100 million per year over 10 years on economic incentives to attract and retain biotech companies, subsidize research, and train future professionals.
Patrick has proposed that the state spend $500 million of the bill’s allocation on public education and other facilities, and life sciences equipment; $250 million on fellowships, research grants, and workforce training programs; and $250 million on tax subsidies targeted to job creation.
The state expects private colleges, institutions, and companies to chip in a total of $250 million for capital, fellowships, research grants, and workforce training.
The life science bill also calls for overhauling the Massachusetts Life Sciences Center, a state agency created last year, and expanding its activity beyond advancing the state’s life science industry by funding companies and researchers.
On Oct. 5 the center’s board approved $12 million for matching grants under three new programs: New Faculty Startup grants to attract and retain nationally prominent faculty at Massachusetts’ colleges and universities by increasing funds for lab space build-out and initial research activities; New Investigator grants toward research in stem cells, genomics, and RNA interference; and cooperative research grants intended to draw more industry sponsorship of research toward discoveries and inventions “with beneficial medical applications and significant commercial potential.”
The center’s board would be expanded to include a venture capitalist and a researcher.
Under the governor’s bill, Massachusetts would create an unspecified number of Life Science Innovation Centers statewide for research and technology transfer.
“We’d like to make them more comprehensive than that and put some services there and locate some of our faculty from our public institutions, and give some support services,” Bosley said.
Bosley said the centers should resemble Pennsylvania’s three regional biotech centers, called Life Science Greenhouses, one each in Philadelphia, Harrisburg, and Pittsburgh. Pennsylvania launched the greenhouses in 2001 using $100 million of funds from the national tobacco settlement reached three years earlier.
Massachusetts’ centers, Bosley said, should include a presence by community colleges that join with companies to offer biomedical training programs, as well as a means for linking startups with venture capital, though just how has yet to be figured out. The centers would also help companies manufacture their products within the state: “We’d like to find ways to downstream that manufacturing here, and if there’s a way for us to help in that transition, we want to include that.”
And while Patrick’s administration has talked about possibly two or three such centers, Bosley said “we’d like to probably do a few more than that.”
Beyond the innovation centers, Bosley said, lawmakers are also looking to broaden the bill into plant and agricultural biotech and launch new international trade efforts focused on the life sciences industry — such as attending more trade shows, and launching new collaborations with clusters worldwide.
Several times in recent months, and most recently in an Oct. 27 Associated Press report, Patrick has complained about what he considers the legislature’s slow pace of review on his life science measure and other proposals. “I was sent here to make change and it is frustrating, the pace of change,” Patrick told the AP. “Yes, I am frustrated.”
Three days later, the governor sought to move beyond frustration and sway the joint committee, legislative leaders, and other lawmakers by testifying for the bill himself. In his testimony to the joint committee, Patrick said passing the bill was essential for Massachusetts to maintain what he termed its global leadership among life science clusters.
“For Massachusetts — a state dependent on intellectual capital and research — the threat is real, and the stakes are very high indeed,” Patrick testified. “Our competitors are actively luring our state’s best and brightest researchers, doctors and entrepreneurs.
“California and New Jersey are investing hundreds of millions in the life sciences, North Carolina is providing lucrative tax benefits to lure our companies, and Florida has invested hundreds of millions so that life sciences can expand in their state, he said. “China and Ireland — two nations with a proven record of well-coordinated competitive strategies — have joined the global sweepstakes for talent as well.”
Patrick’s comments were echoed in testimony by his secretary of housing and economic development, Daniel O’Connell: “Massachusetts needs to be in the game every time a new CEO is thinking about producing a life saving drug or a scientist is beginning research to find a cure.”
O’Connell said the innovation centers “will also help researchers avoid the very expensive, very time-consuming federal bureaucratic tangles surrounding certain research.”
He also disclosed that Patrick’s administration has formed a “weekly working group” consisting of “our partners in the legislature, academia, life sciences industry leaders and patient advocacy groups” to secure passage of the life sciences bill.
In addition to the working group, Patrick has sought to advance the bill through a series of public appearances that began last month at some of the state’s life-science anchors — including Alnylam Pharmaceuticals in Cambridge, Baystate Medical Center in Springfield, and UMass Lowell. Last week Patrick visited UMass Medical School in Worcester.
The latest event was to have taken place Nov. 5, when the governor was set to visit the Rockland, Mass., headquarters of drug developer EMD Serono, the US arm of Swiss-owned Merck Serono.
Two additional events will be held to round out the tour, but the state won’t discuss pending announcements.
On Nov. 8, life science advocates will seek to sway legislators on the bill again at a second hearing, to take place at the University of Massachusetts’ Amherst campus.
Bosley told BioRegion News the joint committee will hold fewer than the “five or six” hearings once anticipated, given the strong support already voiced for the measure by industry leaders — support that he said was generally shared by legislators.
Support for the bill runs beyond life sciences CEOs, according a survey released Oct. 11 by UMass’ Boston and Lowell campuses through their Massachusetts Economic Assessment and Analysis Project. The MEAAP survey showed 74-percent support for the legislation among CEOs in a wide range of industries, and an equal percentage concluding that the bill would likely increase the state’s overall rate of economic growth.
While only 13 percent of the CEOs said their companies were involved in the biotech, pharmaceutical, or medical device or instrumentation industries, 38 percent said they thought “the governor’s overall approach” would be helpful to their companies. MEAAP surveyed more than 500 CEOs of companies with 20 or more employees. The poll has a margin of error of 4.5 percent.
State-funded UMass stands to benefit from the measure, since it includes $66 million toward a stem cell bank and $38 million toward an RNA interference center, both to be built at the university’s Worcester campus.
“I think we’re all eager to do something for the industry and we’re all working in the same direction.”
The stem cell bank would make available for public and private research stem cell lines held by eight institutions — Boston University, Brigham & Women's Hospital, Children's Hospital, Harvard University, Massachusetts General Hospital, Massachusetts Institute of Technology, Partners HealthCare, and the University of Massachusetts.
On Oct. 25, the life sciences center approved for UMass’ Medical School the $7.7 million first year of a three-year funding request for the stem-cell bank, plus $570,000 to establish a web-based, searchable library listing of available stem cell lines for researchers. “It is our hope that the legislature will provide the funding in this bill necessary to continue this important work,” O’Connell told the joint committee.
During his testimony, Patrick blamed what he termed “inaction” by the legislature for Novartis’ decision to choose Singapore over Massachusetts and other undisclosed regions as the site of a planned 700,000-square-foot manufacturing plant set to employ 400 people.
“Our inaction on this proposal over many months caused them to abandon those plans here and focus instead on other states,” Patrick said.
Novartis has refused to confirm Patrick’s account of its decision-making. Spokesman Jeffrey Lockwood said the company chose Singapore for several factors typical of relocation searches, ”everything from innovation climate to transportation infrastructure to housing costs; there’s a whole list of things.”
He would not discuss factors specific to the Singapore search but did tell BioRegion News that Massachusetts was the only US site on Novartis’ short list of three potential locations for the plant. The other sites were Ireland, Singapore, and Switzerland, where Novartis is headquartered.
One likely factor in Novartis’ Singapore decision is the country’s low labor costs for manufacturing. Data issued last year by the US Bureau of Labor Statistics concluded that as of 2005 the hourly compensation for manufacturing employees in Singapore was one-third that of their American counterparts.
However, Singapore’s hourly compensation for production workers in manufacturing jobs rose 3.8 percent between 2004 and 2005, compared with 3.6 percent for the US.
Novartis has reason to scrutinize labor costs: The company’s third-quarter results, reported Oct. 18, included a 12-percent year-to-year drop in profit from continuing operations.
Novartis has also announced plans to eliminate 240 jobs at its US headquarters in East Hanover, NJ, 510 US sales jobs, and another 510 third-party sales representatives, for a projected annual savings of $230 million.
The planned layoffs come at a time when Novartis reported 2-percent growth in its pharma segment for the first nine months of the year. The lackluster growth was due to the withdrawal in the US market of the company’s irritable bowel syndrome drug Zelnorm, and the launch of generic rivals of Famvir, Lotrel, and Lamisil.
‘Key Tax Incentives’
Novartis is one of two pharma giants to weigh in publicly on the life sciences bill. Over the summer, UK-based Shire took the unusual step of complaining publicly that the state had been slow to show support for the life sciences industry. With the bill’s fate uncertain, Shire has argued, it cannot gauge the financial impact of its expansion well enough to decide whether to expand in Lexington or somewhere outside the state.
Shire is considering building two additional structures on development pads — the 200,000-square-foot 400 Patriot Way, and the 170,000-square-foot 200 Patriot Way — to house its technical operations and manufacturing facilities.
Shire is “tied to the life sciences bill and tied to an incentive package that would be presented by the commonwealth of Massachusetts as part of our decision-making process,” Shire spokesman Matt Cabrey said.
Shire already has a presence at the technology park. Earlier this year it agreed to lease the 125,000-square-foot 300 Patriot Way, once occupied by Raytheon and which the pharma giant is now renovating; as well as lease 55,000 square feet at 125 Spring St. Those leases are unaffected by the expansion proposal, Cabrey said.
Late last month, Shire won approval from the state Economic Assistance Coordinating Council for a “tax incentive financing” agreement reached by the company with Lexington officials. The accord creates a 20-year town property tax exemption that slides from 95 percent in the first fiscal year starting July 1, 2008, to 5 percent in the final fiscal year ending June 30, 2028.
Despite the approval, Shire is holding off on its expansion while it awaits action from the state on the life sciences bill, Cabrey said. He added that Novartis’ bypassing Massachusetts will not affect his company’s decision on whether to expand in Lexington.
O’Connell in his testimony cited Shire and a second company, Organogenesis, as examples of companies tying their Massachusetts futures to the passage of the bio bill’s proposed tax credits. On May 31, Patrick joined Organogenesis executives in crediting the life sciences bill for the company’s decision to keep its headquarters in Canton, and add there 300 new jobs and 250,000 square feet of new facilities. In return, the company was promised a $12.9 million incentive package that includes grants and unspecified “support,” plus access to $5 million in low-interest loans.
“These tax incentives are a key component to the state’s ability to capture life science-related manufacturing job growth, with the potential to bring tens of thousands of good paying jobs to the state,” O’Connell said.
Organogenesis has yet to decide where in Canton it will stay. It is considering several sites — including a 20-acre parcel now used by the state Highway Department at the intersection of interstates 93 and 95, CEO Geoff McKay told the Boston Herald last week. The intersection is the subject of an environmental report, for which the state on Oct. 26 announced awarding a $5.7 million contract to Fay Spofford and Thorndike of Burlington. A MassHighway spokesman, Erik Abell, was unavailable for comment.
Bosley said the life sciences bill would fare much better than Patrick’s other key economic development proposal — namely opening three casinos across Massachusetts, in a measure he said would generate $450 million a year in state tax revenue. Bosley is among legislative leaders who oppose the casinos, citing concern over the potential for creating thousands of new problem gamblers, and the resulting cost to the state in services.
At an Oct. 31 hearing co-chaired by Bosley’s committee and the Joint Committee on Mental Health and Substance Abuse, he joined lawmakers from both in expressing continued opposition to the casino plan. They expressed frustration after Michael Botticelli, director of the state Substance Abuse and Addiction Bureau, balked at estimating how many more people would become problem gamblers if the casinos were built.
Patrick has countered with a different number — the 20,000 new gaming jobs and $2 billion in economic activity he said would be created statewide by the casinos.
“I think we can do better than gambling,” Bosley told BRN. “If you look at the investment that we’re making in the life sciences, it will create multiples of the jobs that we would create by putting up casinos, and they’d be much better jobs.”