State of the State in Biotech

By Sunday, some 20,000 people will have descended on the city when the Hub opened "BIO International Boston." Organizers estimate the four-day conference will generate more than $31 million in spending.

Meanwhile, the event gives the whole state a chance to sell itself to the global industry. Massachusetts is recognized as a key US center for biotech, but other states are gaining. WBUR's Business and Technology Reporter Curt Nickisch has more on the state of the state's biotech industry.TEXT OF STORY

CURT NICKISCH: In the laboratory of the biotech company Hematech, researchers are cloning cow embryos.

SOUND OF CLONING LABORATORY

NICKISCH: Cow cells normally have sixty chromosomes that carry DNA. These have sixty one. Lead scientist Jim Robl has duped the cells into carrying an extra, tiny chromosome with human antibody genes.

JIM ROBL: So all of those are contained within this small chromosome fragment. All of the essentials to have the chromosome carried on through cell division, and the cell goes merrily on its way, without any interruption or the cell knowing that this added piece of DNA is there.

NICKISCH: Robl developed many of the techniques for this complex genetic manipulation at the University of Massachusetts, where he researched for fifteen years. But now he runs his lab in South Dakota. In 2002, Robl moved his startup and its six employees from a biotechnology park in Worcester to one in Sioux Falls. His reason? Business climate. South Dakota has low housing costs and no corporate or personal income taxes. Today Hematech employs dozens. Robl sold the company two years ago for almost forty-six million dollars.

ERIC NAKAJIMA: There are weaknesses in Massachusetts; there are areas in which we're less competitive.

NICKISCH: Eric Nakajima is a public policy researcher with the Donahue Institute at UMass; he's authored a new report assessing the state's biotechnology and pharmaceutical industries. Nakajima says the Commonwealth remains a global leader, but its primacy is increasingly being challenged.

NAKAJIMA: So when we talk about our competitors, we may compete with South Dakota, we may compete with North Carolina as many people talk about, California, but also at the same there's Puerto Rico, Ireland, places like Singapore, and the emerging competition in India and China as well.

NICKISCH: Between 1998 and 2004, for instance, the number of workers in Massachusetts' bio-pharma industry grew forty-four percent. Even so, Nakajima says in the overall number of industry jobs, the state fell behind, to seventh in the U-S.

NAKAJIMA: Is the growth decent? It's decent. Is it actually behind other states in the nation as a whole? It is. There are other competitor states within there that are performing even better. So I think that is a challenge.

NICKISCH: Nakajima says the good news is that Massachusetts outshines competitors in other key measures. Along with California, the Hub State has by far the highest levels of venture capital and National Institutes of Health funding. That highlights the state as a premier location for research and development. However, Nakajima says high labor and business costs make the state less attractive for bio-pharma manufacturing and production. Some say that's now changing.

SOUND OF CAMERA FLASHES, THEN UNIDENTIFIED MAN SAYS "EVERYBODY LOOK AT THE CAMERAS FIRST" THEN MORE CAMERA FLASHES

NICKISCH: Last week, Governor Deval Patrick and Bristol-Meyers Squibb executives smiled during a photo op at the former Fort Devens. Construction has begun there on a seven hundred fifty million dollar plant to manufacture a new biotech drug. With state officials looking on, Bristol-Meyers CEO Jim Cornelius called the project the envy of everyone in the world.

JIM CORNELIUS: The team literally ran the search from Ireland to Singapore to many locations here in the United States. So my hats are off to the people in the front row here because Devens turned out to be the winner of that.

NICKISCH: Bob Culver, the head of the economic facilitator MassDevelopment, says landing the Bristol-Meyers plant shows what the state can accomplish when it overcomes its shortcomings.

BOB CULVER: Local property availability. Quick zoning and permitting at the local level. People who know how to talk the language of the businesses so they can attract them to the site, and then dealing with local as well as state legislators to make sure that the economics of the deal work.

NICKISCH: The new Bristol-Meyers facility is something Governor Patrick plans to tout this week as he sells the Commonwealth to companies at the BIO conference in Boston.

GOVERNOR DEVAL PATRICK: I know that there's some other governors coming from other states, and we will have some friendly competition, but it will be competition to be sure, but we are up to it.

NICKISCH: While the Bristol-Meyers Squibb plant may prove a great calling card, the state still has a way to go to become more competitive fundamentally. Eric Nakajima of the Donahue Institute at UMass says Fort Devens was special, because the state had more say over that former military installation. He says future deals will hinge more on cities and towns.

NAKAJIMA: We're a challenging environment and there are issues around cost or land assembly or implementing some of the permitting changes that have been made. There are issues around workforce development, in terms of the long-term pipeline and quality of workers. On the other hand, in many respects we're very, very strong. That in fact if we really leveraged our assets as well as we could, we might even be able to do even better.

NICKISCH: Better, because Nakajima says in the end, the Commonwealth has something that many of its burgeoning competitors do not: a sizeable and proven industry. That's often a dealmaker for companies looking to team up and share the risk and expense of bringing a biotech product to market. Nakajima says if the Commonwealth can significantly improve the biotech business climate on top of that, few places would be as competitive.

For WBUR, I'm Curt Nickisch.