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Massachusetts Policy Groups Call for State To Broaden Scope of Subsidies Beyond Biotech

Massachusetts should expand its $1 billion, 10-year biotech subsidy program into a broader and costlier program that would foster more industry-academic collaborative projects between the life sciences and other technology sectors, a pair of public policy groups says.
And while a state agency that fosters public-private technology partnerships didn’t dismiss the idea last week, it said state budget constraints make the idea one that is easier said than done.
Boston-based Mass Insight Corporation is calling for Massachusetts to create at least two Global Challenge Centers statewide as centerpieces of a more expansive effort to bolster the state’s array of high-tech industries — not only biotech, but nanotechnology and defense-related technology as well.
The nonprofit group has also called on the state to nurture those collaborations by expanding the existing John Adams Innovation Initiative from its current $35 million to $100 million. That money, Mass Insight says, should be spent in addition to the $100 million a year envisioned over the next decade under Gov. Deval Patrick’s Life Science Initiative, now pending before state lawmakers. The initiative is intended to attract and retain biotech companies, subsidize research, and train future life sciences professionals. [BioRegion News, May 14].
“People on the ground who are working in biotech or defense IT, et cetera, all recognize these connections. I’m not sure that in branding the initiatives and marketing, both to ourselves and the outside world, that we’ve emphasized enough the cross-sector plays,” William Guenther, president and founder of Mass Insight, told BioRegion News. “Given the fact the state’s economy has had three very important legs — life sciences, broader technology including defense communications, and the financial services industry — it’s obviously critical on a comprehensive basis to support all three of those legs.”
Mass Insight has outlined its proposal within a four-page “draft white paper” titled: The Massachusetts Research & Development Agenda: How Can Massachusetts Leverage Resources to Maximize Economic Benefit. You can read the report here.
The report urged the state to boost economic development funding with an eye to raising subsidies for public-private, industry-academic collaborations with counterparts around the world. It was the conclusion Mass Insight and Battelle Memorial Institute recommended in their 2003 “Science and Technology Road Map.”
“With competitor states and nations investing more and more resources into collaborative R&D projects, Massachusetts cannot afford to wait to become a major, large-scale player,” the draft white paper concluded.
Guenther said Massachusetts should emulate California, which in recent years has established four new institutes devoted to cross-technology collaborations. The University of California in 2000 launched four Institutes for Science and Innovation — the California Institute for Quantitative Biomedical Research or QB3; the California Institute for Telecommunications and Information Technology or Calit2; the California Nanosystems Institute; and the Center for Information Technology Research in the Interest of Society or CITRIS.
A proposal to spend $19.8 million for operating costs of the four California centers during the fiscal year starting July 1 remains in limbo because of the state’s budget stalemate. California has said its four institutes will require a total $1.2 billion —$100 million from the state, and $200 million in private fundraising, for each institute. A UC spokeswoman was unable to say at deadline how much of the $1.2 billion has been approved to date.
“We need to be playing at that level,” Guenther said. While having funding available for individual research projects is important, he added, “You want to be able to support large-scale, $100-plus million centers. In terms of public investment and the public university partnering with the private [sector] here, we’ve not had the kind of scale that we needed.”
Michael Widmer, president of the Massachusetts Taxpayer Foundation, said the state could ramp up its spending on tech collaboratives, but “not easily.”
The plan “will require tough choices. This is another priority, an important one, but one competing with regular support for public higher education, with K-12 support for local schools, with calls for early education by the administration, including universal kindergarten and extending the school day,” Widmer said in an interview. “There’s a long list of competing demand for limited money, just within the education world, never mind healthcare, human services, local municipal aid, et cetera.”
The universal education proposals, as well as a Patrick plan earlier this year to eliminate tuition for in-state community college students, will be reviewed by a state commission before they advance to the point of review by the state legislature, Widmer added. Earlier this year state officials feared a budget shortfall of $1 billion, until a surge in real estate taxes linked to sales of pricey downtown Boston properties appeared to have erased the red ink heading into the last month of its last fiscal year. The state has yet to calculate its June 2007 revenues.
A spokesperson for the state Executive Office of Housing and Economic Development referred questions on Mass Insight’s proposal to the Massachusetts Technology Collaborative. MTC is a 25-year-old, state-created quasi-public agency created to develop “a partnership of government, and industry, and education” toward a training facility for semiconductor and other microelectronic technologies. After that industry faltered a decade later, the collaborative refocused away from operating facilities, and toward its current mission of promoting business activity throughout Massachusetts by nurturing academic-industry partnerships in a variety of technologies — including biotech, renewable energy, and computerized physician order entry for hospitals.
Patrick Larkin, director of the John Adams Innovation Institute and deputy director of MTC, said the global challenge centers proposed by Mass Insight “don’t represent a duplication of what we do. It’s actually complementary more than anything else.”
The state, he noted, has proposed a $66 million stem-cell bank as part of Patrick’s proposed Life Science Initiative. The stem-cell bank would rise at the University of Massachusetts’ Worcester campus and 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.
Asked whether the state needed a similar collaborative facility with a cross-technology focus, Larkin said officials would consider projects that arose through academic-industry collaborations: “They would define the opportunity, and the state would assess it, and evaluate it against other opportunities, because you only have limited resources.
“You never want to be putting public resources in an area that displaces private resources. That’s the first rule of thumb. And more desirable would be to have public resources follow major investment and commitments by the private sector to move in a certain discipline,” Larkin added. “When I look at the Mass Insight paper, they’ve introduced some extremely compelling opportunities. But judgments have to be made in the context of available resources and all of the externalities around it.”
The John Adams Innovation Institute is MTC’s economic development division, committed in part to growing industry clusters by identifying policies and resources to carry them out through collaborations with stakeholders and policymakers.
Adams has spent about half of its original $35 million contained in two separate funds created under the 2003 Act to Promote Jobs, Economic Stability and Competitiveness in Massachusetts, signed into law by Patrick’s predecessor Mitt Romney. Since then, MTC has leveraged $35 million in federal money and $10 million in private funds from the $12 million it has allocated to date under its matching-grant program, Larkin said.

“Given the fact the state’s economy has had three very important legs — life sciences, broader technology including defense communications, and the financial services industry — it’s obviously critical on a comprehensive basis to support all three of those legs.”

Also since 2003, the institute has since received another $10 million in capital, and will review future funding before deciding long-term when it will seek additional money, and how much of it.
“There are discussions as these resources diminish, making sure there’s always enough capital there to attract that kind of leverage,” Larkin added.
Support from High-Tech Council
Mass Insight’s call for collaboration centers has gained support from the Massachusetts High Technology Council, a private nonprofit public policy group consisting of CEOs from biotech and other high-technology sectors.
Chris Anderson, president of the High Technology Council, told BioRegion News his group favors a greater state role in cross-technology collaborations since other tech sectors employ more people than biotech. Life sciences account for some 30,000 of the 250,000 workers within the state’s various tech sectors. Defense technology itself accounts for 90,000 workers, with IT, software and medical devices accounting for most of the remainder.
“The question isn’t, should we be doing this initiative in life sciences? It’s one small piece. And quite frankly, the economic upside in terms of job growth is not simply going to come just from the biotech cluster. It’s important. People latch on to it because it’s an exciting science,” Anderson said.
“But our medical devices industry, our software industry, our telecommunications and other communications industry that all collectively weave into defense technology applications, as well as semiconductors, really make up the innovation economy in Massachusetts. We’re not a one-technology state.”
The Adams institute, he said, will require “a minimum of $100 million be made available to these types of centers that could be used to compete” for research proposals issued by the Department of Defense, the National Science Foundation, or the National Institutes of Health. The money would only be spent, he said, should Massachusetts be awarded projects from those or other government agencies — “It’s a no-lose situation.”
Anderson also said the state should shift tax breaks and other incentives toward more large biotech and pharmaceutical employers, in addition to the life science startups that have traditionally benefited from state economic development subsidies. While Massachusetts has long reasoned that cash-strapped startups should receive more state support than its largest life sciences employers, the high-tech council said large employers should also be subsidized given their importance to the state’s economy.
Mass Insight’s Guenther said he agreed with the council’s view and added: “We need to pay attention to the large companies and the contributions they are making to the economy and the future prosperity of the sector.”
Massachusetts has already subsidized some of its life science giants. Bristol-Myers Squibb was rewarded with $60 million in subsidies and tax exemptions by the state and local governments for a $750 million, 400,000-square-foot biologics manufacturing plant now under construction and set to open in 2009 on part of a former Army base in Devens, Mass. And in June, Cambridge, Mass.-based Alkermes benefited when the state approved $4 million in infrastructure improvements sought by the city of Chelsea toward an expansion of the company’s manufacturing site there [BioRegion News, July 23].