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Massachusetts Plans to Spend $1B to Reinvigorate State's Biotech Industry

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BOSTON – Massachusetts, trying to deflect studies that claim its biotech leadership has eroded in recent years, plans to spend $1 billion over 10 years to attract and retain biotech companies, subsidize research, and train future professionals.
 
The plan, announced by Gov. Deval Patrick during the 2007 Biotechnology Industry Organization’s annual conference held here last week, will comprise four programs: a statewide stem cell bank; an unspecified number of new “Life Science Innovation Centers” for research and technology transfer; new fellowship grants for research institutions to attract and retain top talent; and a competitive grant program intended to fill the funding gap opened by four years of flat NIH growth.
 
Patrick said the state will spend $500 million 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.
 
“It is essential now that we and the commonwealth step up to maintain and indeed extend our global leadership in the life sciences,” Patrick said during the conference.
 
Joshua Boger, newly elected BIO chairman and the president and CEO of Vertex Pharmaceuticals in Cambridge, said in response: “Governor, you’ve bet on innovation and you’ve upped the ante. I can say for the industry, we see your raise and we’ll step up to the challenge.”
 
Patrick announced his Life Sciences Initiative a week after PricewaterhouseCoopers, the New England Healthcare Institute and the Massachusetts Technology Collaborative, a state agency that promotes the development of technology-based industries, issued a report detailing the strengths and challenges of the life sciences industry in Massachusetts.
 
Among challenges cited in the report, entitled “Super Cluster: Ideas, Perspectives and updates from the Massachusetts Life Sciences Industry,” was that employment growth in the biotech sector lagged behind the national average between 2001 and 2005.
 
A growing number of states, communities, and other countries are competing for life sciences businesses and jobs. Housing and living costs in Massachusetts are growing, and commutes have grown. Meantime, the state’s K-12 schools are producing fewer math and science students. (See related interview, this issue)
 
Patrick said he plans to raise the funds to pay for his initiative by raising hotel and restaurant taxes, removing a century-old property tax exemption for telecom companies, promoting the development of rental units and smaller “starter” homes, and extending commuter rail service to Fall River and New Bedford, a $1 billion proposal that has met with local opposition.
 
Patrick and other state officials said they would also work to steer some new biotech development to ailing industrial cities in western Massachusetts, where housing costs are lower than the Boston-Cambridge cluster. One step in that direction was unveiled at the BIO conference when the state’s Department of Business Development, the Massachusetts Alliance for Economic Development, and the Massachusetts Biotechnology Council launched a new biotech site-selection Web site. According to the site, the state has more than 2,900 acres of land and more than 4.6 million square feet of space available that could be used by biotech companies.
 
Mark Robinson, chief operating officer and interim president of the Massachusetts Biotechnology Council, the state’s life sciences industry group, told BioRegion News it views Patrick’s proposal as a first step in a long-term process of state support for biotech that would include tackling quality-of-life issues.
 
“Is that going to address all the issues? No. It’s one set of initiatives,” Robinson said. “We’d assume this is a statement about a more active government that wants to help solve problems, and so we’d expect to see other issues addressed over time.”
 
Martin Madaus, CEO of Millipore, said Patrick’s plan will help his company expand in the stem-cell market, where it now sells several kits that help researchers detect the cells. Millipore, based in Billerica, launched new media and cell lines for stem cell research during the first quarter.
 
“It is certainly an area we are highly interested in,” said Madaus. “We think it has great promise and we have in our plan. We have more trust now that we can invest into this great technology.”
 
Massachusetts’ proposed 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. The cells would be available for use by researchers in and outside the state.
 
“We are dedicated to making Massachusetts the foremost capital of stem cell research on the planet,” Patrick said. “Our competitor states and foreign nations are investing billions of dollars to attract researchers, institutions, and industries. My administration will compete for every single job available — every single one.
 
“Using our sales team, we will aggressively seek to retain existing companies and to recruit emerging ones,” he added.
 
Mass Appeal
 
Robert Coughlin, the state’s undersecretary for business development, said Massachusetts flexed this competitive muscle late last year when its Business Resource Team persuaded Bristol-Myers Squibb to locate a biologics-manufacturing plant in Devens after considering sites in New York and North Carolina.
 
Bristol-Myers Squibb paid $3.65 million to buy the 89-acre former Army base from the state Development Finance Agency. The plant, which topped out on May 2, would employ 350 people in its first phase, which will cost $750 million and result in 397,000 square feet in space.
 
The building is set for completion in 2009 and Bristol-Myers Squibb expects to win federal regulatory approval the following year. Later expansion phases would bring employment to about 1,000 jobs. In exchange for the jobs, state and local officials shelled out $60 million in subsidies and tax exemptions.
 
“It’s one thing to say streamlined permitting. It’s another thing to do it, and we’re doing it,” Coughlin said. “Bristol-Myers Squibb is a perfect example of that. It was done in 48 days.”
 
Coughlin said the state has also aided biotechs last year by expanding its 180-day “expedited” permitting program by including individual properties. The state has also begun reviewing applications for grants toward road, water, sewer, and utility upgrades in biotech projects under a new $100 million program.
 
And last week Coughlin, Patrick, and a bevy of state officials celebrated AstraZeneca’s groundbreaking on a $100 million, 132,000-square-foot expansion of its research facility in the Boston suburb of Waltham. When completed in 2009, the facility will occupy 382,000 square feet and add 100 researchers to its current Waltham workforce of 450.
 
Competition from other states poses a growing challenge to the state’s biotech and pharmaceutical industries, two studies released over the past seven months have concluded.
 
“The level, degree and aggressiveness of the competition [in the US] has accelerated dramatically over the past several years; and, although we are making progress in a number of areas, our comparative position is negatively affected by the fact that Massachusetts is a complex place to do business, especially given inconsistencies in the local permitting process and the reputation for an unpredictable regulatory environment,” according to “Taking_Stock of Progress and Challenges: Massachusetts Life Sciences Supercluster,” a 16-page study released last October by the John Adams Innovation Institute, the economic development arm of the Massachusetts Technology Collaborative.
 
The collaborative is a state agency that promotes development of renewable energy, electronic medical records, and other technology-based industries.
 
Meantime, a study released April 11 by the Massachusetts High Technology Councilfound that biotech CEOs in the state believe competition is just one challenge facing Massachusetts, along with rising costs and slow state and local bureaucracies.
 
“The state has a decent pipeline of talented college and university graduates, but the cost of living drives many professionals out of state and discourages talented workers in other states from relocating to Massachusetts,” according to the study, “A Critical Alliance: The Biotechnology & Pharmaceutical Industries in Massachusetts” and prepared by the Donahue Institute at the University of Massachusetts. “Business leaders identified the high cost of housing as a particular factor in why many talented scientists and professionals chose not to relocate to Massachusetts to work for the companies in our survey.”
 
“Bio-pharma companies who participated in our study all expressed significant concern that state government in Massachusetts does not respond effectively to the needs of individual companies or the industry at large,” the study found. “The first significant concern expressed by the companies is a shared experience that the state does not effectively track company-level needs and concerns or assist companies in navigating often complex permitting and regulatory requirements.”
 
 
UMass could benefit from Patrick’s plan if the state approves funding for two proposed projects valued at more than $100 million -- $66 million for a stem cell-research facility, including the proposed bank, as well as a $38 million RNAi research center.
 
While final location decisions have yet to be made, UMass President Jack Wilson said the stem-cell bank would probably be in Worcester, where the university’s medical school is located, while other facilities will be built either in Worcester or the UMass campus in Amherst.
 
UMass has an edge in RNAi: Craig Mello, a professor at the school, last year won the Nobel Prize in medicine for helping to co-discoverer RNA interference technology. The university hopes to multiply the $20 million in annual license revenue it generates from RNAi patents developed with MIT.
 
“With the human genome sequence and technologies like RNAi, we’re beginning to make some real progress,” Mello said. “We’ve got to invest now because there’s a limited window of time when that opportunity can be really developed. If we don’t develop it here, it’s going to be developed elsewhere.”
 
Back-Room Biotech
 
Wilson said he and other biotech leaders in the state began sitting with Patrick in February to craft the life-sciences plan.
 
Patrick “really was a very strong broker bringing everybody to the table, bringing the leaders of other private universities, the public universities, industry groups. He brought us all into his office, sat us down, and got us talking about what could make a difference in Massachusetts,” Wilson recalled. “It was very important for the state to re-establish a leadership position. It can truly be said that the commonwealth will have all the pieces in place so that Massachusetts will be positioned to be a global science, technology, and innovation leader for generations to come.”
 
Wilson is also vice chair of the board of the Massachusetts Life Sciences Center, a state entity created just last summer to advance the industry by funding companies and researchers. Patrick’s plan would expand the center’s funding and role beyond issuing grants to researchers who collaborate with industry partners.
 

“Is that going to address all the issues? No. It’s one set of initiatives. We’d assume this is a statement about a more active government that wants to help solve problems, and so we’d expect to see other issues addressed over time.”

The life sciences center was developed by Patrick’s Republican predecessor, Mitt Romney, who in office angered many biotech leaders by directing the state Public Health Council to restrict stem-cell research by barring the creation of embryos strictly for research.
 
Patrick’s Department of Public Health asked the council last month to overturn those limits – a decision is expected later this year -- while Romney, who is currently running for US president, has courted pro-life voters opposed to the destruction of embryos entailed in the research.
 
Shortly before leaving office Dec. 31, Romney named an aide in his Executive Office of Administration and Finance, Aaron D’Elia, as the center’s $125,000-a-year executive director. Patrick said the appointment overstepped the bounds for a lame-duck governor, while The Boston Globe and several blogs complained that D’Elia had no biotech industry experience and shared Romney’s view on stem cell research.
 
In an interview last week, D’Elia denied any qualms on stem-cell research, and said he would carry out any funding for it approved by the five-member board that oversees the center: “That has never been an issue with me,” he said. “And on any ethical issue, it’s not my decision. It’s the board’s.”
 
D’Elia said he was not brought in to shape Patrick’s initiative, and referred questions about it to the governor’s office. Before the announcement, he said, he had heard the governor wanted to issue bonds for biotech research, as well as boost spending for the center.
 
The Patrick administration has “supported me up to this point,” D’Elia said. “The next step for me is to understand what this reorganization is.”
 
D’Elia heads the center under a one-year appointment. Patrick spokeswoman Cyndi Roy said the administration would not discuss D’Elia’s future with the state government.
 
According to D’Elia, “I’m doing the best job I possibly can. I’m here to execute what the board wants me to do. If the board wants me to continue or not, that’s up to the board. I don’t know what my status will be.”
 
While lawmakers approved $10 million in July 2006 for the life sciences center as part of a broader economic stimulus plan, D’Elia said, it ”has not passed out dollars.” And the center has not hired the four or five employees Delia envisioned – the result, he said, of the change of administrations.
 
D’Elia said the center planned to spend its $10 million this year to launch two efforts now in the works – with support, he said, from Patrick’s administration. By the second week of August, the center plans to issue a formal request for proposals seeking grants for projects by academic researchers working with companies.
 
D’Elia said the center is also exploring, with help from UMass’ Donahue center, how the state’s education system can supply more trained workers to life-sciences companies, especially at pre-doctoral levels. Early next year, the center expects to make recommendations on improvements to state colleges, community colleges, and even K-12 education. Part of the study will follow up on last April’s Donahue study, which cited worker training as a key challenge for Massachusetts’ life science industry.
 
“Massachusetts is one of the leading locations in the world” for biotech, D’Elia said. “But if we want to continue to be a leading location, we need to think 10 and 20 years down the line and make sure we do this.”
 
D’Elia said he did not know whether the programs would emerge as part of Patrick’s plan, or separately.
 
Legislative Support, Spending Challenges
 
Patrick’s proposal has also won quick support from the state’s top two legislative leaders, House of Representatives Speaker Salvatore DiMasi, a Democrat from Suffolk, and Senate President Therese Murray, Democrat from Plymouth.
 
Patrick said the state would float a bond to pay half the $1 billion price tag, then fund the rest from its general budget. While the governor has previously championed cost-cutting to plug budget shortfalls, which for the coming fiscal year will be $1 billion, he said the life-science program constituted essential spending.
 
Patrick and legislative leaders haven’t always seen eye to eye on spending, but the governor’s life science initiative should see greater consensus among the politicians, said David Tuerck, president of the Beacon Hill Institute at Suffolk University, a free market-oriented think tank.
 
The institute has argued against Patrick’s life-sciences proposal on economic-development rather than moral grounds: At $100 million a year, Tuerck noted, the program would yield a fraction of the $2.27 billion of NIH funding received by state researchers in 2005.
 
“In the scope of things it’s not a lot of money. The prospect for harm is as small as the prospect for any measurable success,” Tuerck said. “The process that has fueled Massachusetts’ economy is an entrepreneurial process. It is not a process that has benefited from or depended upon industrial policy, government picking winners and losers, and that’s what I see going on here.”
 
Rather than subsidize economic development programs for biotech, Tuerck said, the state could help the industry more by cutting the corporate tax rate from the current 9.5 percent. Just how to cut corporate taxes, and which ones, is the task of a 15-member Study Panel on Corporate Taxation Patrick announced April 30.

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