How to build a biotech cluster: insights from Bio 2017

For regions seeking to diversify and strengthen their economies, biotech is an incredibly desirable industry. Bio, the leading trade association, states:

For a decade and a half, the bioscience industry has been a leading performer for the U.S. economy. The industry has grown its employment base by nearly 10% or 147,000 jobs since 2001. Bioscience job growth has been more rapid compared not only against the overall private sector, but also against other U.S. knowledge-driven, technology-based sectors such as finance and insurance, aerospace, and computer hardware. Overall industry employment has increased for 4 consecutive years, and in 2016 all five of the major industry subsectors grew.

At last week’s Bio International Conference, held June 20-22 in San Diego, dozens of U.S. states and numerous European and Asian countries vied for the attention of scientists and entrepreneurs with attractive booths and glossy brochures touting the benefits of establishing a biotech company in their region.

Everybody wants to build a biotech cluster. But how? What can countries, states, and cities do to help foster this industry locally? What has led to the development of successful clusters to date?

Here are some takeaways from the Bio Conference, including actions and intentions of leading biotech economies to further build their clusters:

First, on a macro level, the Pugatch Consilium has identified 7 “enabling factors” which lead to biopharma innovation. These are highly skilled and technically trained human capital, labs and research facilities which make up R&D infrastructure, intellectual property protection, a strong regulatory environment, technology transfer, market and commercial incentives, and rule of law. The 2017 release of their report, Building the Bio Economy, points out that

Success in biotechnology is neither preordained nor guaranteed. Countries like Denmark, Singapore, Ireland and Israel are not intrinsically blessed with world-class biotechnology capabilities. They do not have sizeable markets that can on their own attract large-scale investment and R&D. Instead, these countries have had to focus on getting the policies right, making themselves attractive and competitive.

The report draws a strong link between policy and results, concluding that “economies that tend to have in place policies that create an enabling environment tend also to be more competitive when it comes to biotechnology outputs.” The complete report, which analyzes these and other factors among 26 geographically and socio-economically diverse countries, can be downloaded at http://www.pugatch-consilium.com/?page_id=1589#bio_4th.

Next, several government and industry leaders emphasized the importance of planning and prioritizing cluster growth. The Honorable Leanne Enoch, Minister for Innovation, Science and the Digital Economy in Queensland, Australia, described how Queensland has been “very deliberate about investment in research structure”, and how their 10-year Road Map explicitly ironed out changes in the government and steps to transform current traditional industries, such as sugar cane or other agricultural products, to adapt to new industries, such as biofuels. Similarly, the Honorable Rolando Pablos, Secretary of State in Texas, recalled how “we learned our lesson in the early ‘80s – don’t depend on one industry.” The Texas state government intentionally set out to diversify the economy and develop an environment for the biosciences to grow, adding medical schools and research facilities, making regulations more transparent, and enabling lawsuit and tort reform to allow the medical community to come back to Texas and stay.

In reflecting on the development of Boston’s dynamic growth into one of the world’s leading biotech hub, Issi Rozen of The Broad Institute stressed the importance of basic science. The strength of Boston’s great universities in basic science has led to commercialization opportunities, which attracted venture capital, which led to more innovative research, creating a virtuous cycle for industry growth. Even so, Dr. Stacey Adam, Scientific Program Manager for Cancer, Foundation for the National Institutes of Health (FNIH), pointed out that for the cluster to take off, “There needs to be a catalyst” – some agent, whether it is an industry group, government leader, or public-private partnership – that brings diverse partners together to galvanize growth. Dr. Chandra Ramanathan, Bayer VP and Head of East Coast Innovation Center, concurred, noting that the Massachusetts Biotechnology Council, MassBio, has played an important role as catalyst in the development of the Boston supercluster.

Moreover, what are some of the specific initiatives regions are pursuing to develop their biotech cluster? Bio’s report, Bioscience Innovation in the States, tracks state participation in a variety of initiatives, such as small business innovation research matching grants, tax credits to encourage early-stage investments, tax exemptions, efforts to increase the availability of venture capital, and R&D tax credits. It also describes innovative public-private partnerships, business climate policies, and specific initiatives to make facilities and infrastructure to foster company growth. For example, in New Jersey, the 46,000-square foot Commercialization Center for Innovative Technologies (CCIT) incubator offers office space, wet labs, educational and networking programs, and other support (such as help identifying funding sources) to assist companies spun out from or collaborating with Rutgers, Princeton, the Stevens Institute of Technology and the New Jersey Institute of Technology. The report can be accessed at https://www.bio.org/sites/default/files/BIOSCIENCE_INNOVATION_IN_THE_STATES_LEGISLATION_AND_JOB_CREATION_THR_UGH_PUBLIC_PRIVATE_PARTNERSHIPS.pdf.

Other countries and regions are also investing in infrastructure. Zhuhai, a city in the populous Pearl River Delta of southern China, has designated a biomedical park in the Jinwan area, which will provide an incubator, wet labs, animal testing, a rapid prototyping center, a regulatory approval center, and manufacturing space to new and established biotech firms. Jinwan also has a state-supported investment fund.

Because indeed, the availability of venture capital is a critical factor in growing a cluster. The Bio report details 14 states that make direct investments into bioscience companies, and 11 states that have created a “fund of funds” which invests in private venture-capital funds. Maryland has a range of funding programs available for life-science companies at various stages of development, from proof of concept, seed/start-up, to early and later stage companies, which can tap the evergreen MD Venture Fund for $.5 to $1.5 million. The Connecticut Bioscience Innovation Fund is another evergreen fund that not only provides capital, but also know-how; once a company moves from pre-seed to seed, the Fund takes a seat on their board, to help the fledgling company access business expertise and further funding sources. The fund is specifically geared towards “moving toward commercialization”, and all applicants must demonstrate a quantifiable return on investment

Finally, it helps to have an industry leader based in your region. Johnson & Johnson has created Innovation Centers in London, San Francisco, Boston and Shanghai, and Jlabs “no strings attached” incubator programs are active in 6 North American cities. During a “Fireside Chat” at Bio, illumina CEO Francis de Souza described multiple initiatives to foster genomics exploration in many different fields, including an in-house accelerator program at their San Diego campus, and a $200M investment fund. In partnership with a local community college, illumina has also created a bio manufacturing training program, and the company is eager to open source this curriculum.

What initiatives are anchoring your efforts to build industry clusters in your region? What is working, and why?

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