Courtesy of Neil W. Van Dyke
Massachusetts contends for the forefront of life-sciences research and development. Nonetheless, some business leaders worry that Massachusetts could fall behind, because this state lacks a formal link between industry and the state's public and private academic institutions. An ongoing roadmap, however, aims to keep Massachusetts on track as a leader in biotechnology.
Academic-industrial partnerships generate widespread benefits in other states. In a report on the needs for such links,1 Alex d'Arbeloff, founder of Boston-based Teradyne, asked, "Why has Silicon Valley created so many more large companies? Think about it: Apple, Intel, Hewlett Packard, Sun, and Cisco all benefited greatly by collaborating with Stanford." He added, "Many [of the companies] were founded by Stanford faculty. I can point to many Stanford faculty members who move in and out of industry. There's been less of that going on [in Massachusetts]."
William H. Guenther, president and founder of Massachusetts Insight Corporation in Boston, wants more interaction between industry and academia. In February 2004, he and his colleagues released the first phase of a step-by-step biotechnolo-gy roadmap.2 This report aims to help Massachusetts retain its national standing in biotechnology and the life sciences. That goal, however, may be difficult to achieve as other states – especially California, North Carolina, New York, and Pennsylvania – find new ways to attract public and private backing for research and development.
FEATURES OF THE MAP
As a start, this roadmap proposes the development of nine research centers or consortia to bring together universities and companies. According to Guenther's plan, the centers should be built around specific areas, including imaging-device manufacturing, nanotechnology, neuroscience systems, and next-generation sensing. The plan also urges the development of a statewide medical-devices network to promote and capitalize on new innovations, plus a network of regional product-development centers at campuses throughout New Eng-land. The centers would rely on talent from universities to create high-skilled manufacturing and jobs.
Perhaps one of the most promising proposals in the roadmap involves the creation of a Neuroscience Systems Biology Consortium. Members of the consortium would study signal pathways to and from the brain. Meanwhile, strategic alliances with industry would hopefully spur the development and marketing of new drugs and treatments, possibly for Alzheimer disease or other mental and neuromuscular ailments that have an impact on America's aging population. Participants would include the Massachusetts Institute of Technology (MIT), Harvard Medical School, Partners Health-Care (based in Boston), Tufts University, Boston University, Brandeis University, and the University of Massachusetts (UMass) at Amherst and Worcester. Researchers at these institutions already work on projects that could be linked with industry. At MIT, for example, the McGovern Institute for Brain Research focuses on brain function and its interplay with genes.
Industry in Massachusetts also makes this state a leader in science and technology. In June, a Milken Institute report3 ranked Boston number two among major cities that are viewed as important hubs for life-science firms. The life sciences in San Diego – ranked number one – account for 55,600 jobs and contribute nearly $6 billion to the so-called gross metro product, according to the report. Although Boston boasts more than 300 biotechnology companies and 30,000 workers employed in this industry, some business leaders believe that Massachusetts should do more. For example, Ray Stata, chairman of Analog Devices in Norwood, Mass., believes that San Diego's new status has a lot to do with its relationship with the University of California. "What is surprising about San Diego," says Stata, "is that the University of California at San Diego is only 40 years old. In terms of one university having an impact and promoting such a shift in the winds, then the University of California is the driver."
Other states also are gaining leverage. Twenty years ago, Pennsylvania, for instance, established four research collaborations called the Ben Franklin Technology Partners, says Laura Felty, a spokesperson for the Pennsylvania Department of Community and Economic Development. Between 1989 and 2003, those partnerships helped create 18,317 jobs. Over the last decade, the Ben Franklin Program also generated $400 million in additional state-tax revenues set aside for advancing technology.
According to the Mass Insight report, Massachusetts spends too little on research. In 1998, for example, in the midst of the state's economic boom, the state contributed only 1.8 percent of its overall budget to public-university research and development, according to the National Science Foundation. Other states spent more. North Carolina allocated 13.6 percent of its budget to public-university research, and Florida spent 10.8 percent of its total budget, federal statistics show. In addition to spending fewer states dollars on research, Massachusetts experienced a drop in federal research dollars. In 2001, for example, federal research funding dropped to 5.5 percent, down from 6.9 percent in 1985, according to the roadmap. "For a long time, we assumed that the marketplace would take care of us because we have MIT and Harvard University," says Guenther. "We also assumed that we would win every round in the competition for new technology and new jobs. But we have to wake up to the fact that other states have learned how to play our game and, as a result, we have many more competitors today."
Although many business leaders support the roadmap, some disagree with its assessment. Peter Feinstein, managing director of BioVentures Investors in Cambridge, Mass., says, "The primacy of Massachusetts is unlikely to be challenged near-term in a significant way. There is too much critical mass right now – Genzyme, Biogen, Novartis." As for the roadmap's call for collaboration, that's been done before, Feinstein says. Former Governor Paul Dukakis set up five centers of excellence 15 years ago, and they were designed to help spur innovation among emerging biotechnology companies and universities. Although Mass Insight concluded that public-research investment has not been adequate, Feinstein says that most states are grappling with budget constraints, even though the US economy is beginning to improve.
Beyond government spending, Feinstein points out a crucial Massachusetts advantage: venture capital. Indeed, venture-capital funding for biotechnology in Massachusetts grew from $95 million in the first quarter of 1995 to $240 million in the first quarter of 2003, according to the MoneyTree Survey, a quarterly funding report by PricewaterhouseCoopers and several other firms.
Change could already be underway. In January, for example, the Massachusetts legislature allocated $100 million for economic development. Of that, $60 million will be used to promote the kind of collaborative science and technology research and product development that Mass Insight recommends. Cort Boulanger, vice president of the Massachusetts High Technology Council, says that the investment marks the largest appropriation by the state to date. He adds: "Essentially, the roadmap says that the Massachusetts state government will be a real partner on this issue and will work with companies, and that should help us create innovations that will build more jobs in the long term."
The roadmap also urges more state spending on UMass, creating a $600 to $800 million research fund by 2014. The bulk of the money would come from private and federal sources, but the state would spend $50 to $75 million annually on operations and capital funding. However, for every dollar that state officials invest in UMass, the report estimates that Massachusetts would receive $3 in outside funding, mostly from matching federal dollars.
UMass deserves the investment. Guenther points out that UMass is the third largest research university in the state, comprising two-thirds of the research conducted outside Boston. In addition, UMass could help fight the state's growing brain drain. According to reports by the University of Massachusetts Donahue Institute, about 1.23 million people moved into the state between 1990 and 2002, but 1.44 million left, resulting in a net loss of 210,000 people. Stata agrees that UMass could help to reverse such losses. He indicates that 85 percent of the state university's seniors remain in Massachusetts after they graduate. By contrast, he says, only 10 percent of the students accepted at MIT are from Massachusetts. "Massachusetts doesn't have a single public campus that is on the list of elite research universities," Stata says. "We need to be concerned about that."
The growing cost of research, says Stata, makes collaboration between industry and research universities essential. "It used to be every university could afford its own infrastructure to do research," he says. "Today, those research areas, whether nanotechnology or whatever, are $100 million investments, and they require that industry and academia pull together."