By Sara Gambrill
The U.S. life sciences market, which is number one in the world, actually comprises 50 state markets all vying for as big a slice of the overall U.S. market as possible. Massachusetts and California have traded the #1 and #2 rankings back and forth for years, according to various reports, with North Carolina making a consistently strong showing. All three states have created initiatives to make them attractive to the life sciences industry, as have a number of other states. But none, it could be argued, has a strategy quite as comprehensive in scope with as broad a range of tools as Massachusetts.
The Massachusetts Life Sciences Initiative includes a $1-billion, 10-year investment package administered by the Massachusetts Life Sciences Center, a quasipublic agency. The Center’s strategic priorities include promoting and preserving the health and competitiveness of the state’s academic institutions by funding promising scientific research, new investigators, research collaborations between academia and industry, and infrastructure projects; investing in the pipeline by fostering discovery and supporting technology transfer; and investing in workforce development and life science company formation and growth.
During its three-year history, the center has invested about $214M in grants to academic institutions and medical centers, grants for “shovel-ready” capital projects, and investments in life science companies. The center invests where it can get a match, so it has attracted another $706 million in matching investments.
“Our mission is to serve as the hub of the life sciences cluster. We have academic institutions, medical institutions, and industry — including pharmaceutical, biotechnology, medical devices, medical diagnostics, and bioinformatics. A big part of our mission is to look at where the gaps are in their needs and ensure that all of the elements that are needed across the cluster are here and being grown and strengthened,” said Susan Windham-Bannister, president and CEO, Massachusetts Life Sciences Center.
It would be impossible in this space to describe every program, let alone every investment, that the center is involved in, but it is possible to describe how the center addresses challenges that the life science industry universally faces. These challenges include early-stage companies’ need for capital, Big Pharma’s need to fill their pipelines, and all companies’ needs for a skilled workforce.
Addressing Early-Stage Company And Big Pharma Challenges
Half of the initiative, or $500B, is in a capital fund, which can be used for investments in infrastructure, equipment, and supplies. The center also has an investment fund, appropriated by the legislature and contemplated in the initiative to be $25 million per year, and through that fund, the center provides loans of up to $750,000 to early-stage companies engaged in research and development, commercialization, and manufacturing. The loans are disbursed through the center’s accelerator program and match other sources of capital, such as federal grant dollars.
“Often, these early-stage companies complete cycles of grants for the government, and then they need bridging capital,” Windham-Bannister said. “We provide working capital for early-stage companies that are still a little risky for VCs. We’re able to help them get the data points that institutional investors need to see before they’re willing to come in.”
Support for the accelerator program is augmented by the center’s corporate consortium program. The program’s two charter members Johnson & Johnson and sanofi-aventis have each agreed to contribute $250,000 per year over two years to help fund early-stage companies. Members have no say over which early-stage companies get funding and have no rights to the intellectual property funded. But, with the permission of the companies that receive funds, they can get a look at the device, therapeutic, technology, or diagnostic being developed. This investment can potentially save Big Pharma time trying to pinpoint early-stage companies working on promising discoveries for licensing or acquisition opportunities.”
Early-stage companies receiving funds have undergone the center’s rigorous vetting process, which helps them attract the notice of the VC community as well as Big Pharma. These companies have the option of being assigned a mentor from the VC community who can help them shape plans for the best way to bring their products to market. “For entrepreneurs and scientists, this is the most valuable information — how to talk about their products in the context of the market and reimbursement, how to show they understand what it would take to get this product through regulatory assessment and commercialize,” Windham-Bannister said.
An additional benefit to the accelerator program is that its funds do not weaken company owners’ financial stakes. Windham-Bannister said, “We’re a non-dilutive source of funding. We can get investors to the table, help de-risk the investment, but we’re not threatening their financial gain. If anything, we’ve made a more profitable, less risky venture.”
Job Creation And Workforce Development
One-quarter of the initiative, or $250 million, is devoted to the center’s tax incentive program. Life science companies in Massachusetts compete every year for a share of up to $25 million worth of tax incentives jointly administered by the center and the Massachusetts Department of Revenue. Companies must commit to creating a certain number of jobs the year following receipt of the tax incentive and to maintaining these jobs for five years or face clawbacks (i.e. money or benefits that are distributed and then taken back as a result of special circumstances).
But, life science companies all face the challenge of finding skilled workers to fill their job openings. Through the center’s investment fund, they make investments in workforce development. “The largest part of the workforce in life sciences is not Ph.D.s and post-docs; it is made up of people with strong vocational skills, the people who do skilled manufacturing jobs, who are in sales and marketing, support IT, and are administrative assistants and project managers,” said Windham-Bannister. The center has invested about $3.4 million in grants to 32 community colleges, vocational and technical schools, and workforce development programs. When the center studied workforce needs in Massachusetts, one of the things that became clear was the need for entry-level workers who come ready to do their jobs. Companies believe the best way to provide training is through an internship.
The center funds intern positions at small companies, where the need and the return are greatest. “Students are getting a very rich work experience and are also getting exposed to entrepreneurship, so we’re hoping to enrich not only the next generation of workers but also the next generation of entrepreneurs,” Windham-Bannister said. The center has funded 300 interns working 12 weeks in the summer for $7,200. The center’s matching service has already posted 1,000-plus student resumes for this coming summer on the center’s website where the more than 100 companies interested in participating in the program can search them.
Collaboration Is Key
Ultimately, the advantage for companies working with the Massachusetts Life Sciences Center is that it’s a one-stop shop for support, expertise, and programs for life science organizations that want to come to Massachusetts, stay there, or continue to grow there. “We can bring all the parties to the table and then provide you with a solution, as opposed to a single program. That’s part of what Massachusetts is looking to create by having this kind of initiative, by having this hub,” Windham-Bannister said. “We don’t do everything, but it’s our mandate to know what’s going on and where to put companies in touch — or better still — to pull all the parties together on their behalf and save them some legwork.”
Collaboration within the state is just one part of the picture. Windham-Bannister also said the friendly rivalry among the states helps the U.S. life sciences industry as a whole to thrive. “We realize that as life sciences in our states go, life sciences in the United States will go, and we want to hold onto our life sciences,” said Windham-Bannister.
Massachusetts and California have a collaborative, as well as competitive, relationship. “We push each other, but we also talk a lot about how we can collaborate. We’re interested in stem cell therapies, and that’s the real focus of the initiative in California. We’ve been out there and met with VCs. We know VCs will sometimes move companies from Massachusetts to California to develop them, but as often as not they’ll move them here from California to develop them. It’s a good bicoastal collaboration.”
But collaborative efforts don’t — and can’t — stop at the state level. During talks with delegations from many countries, Windham-Bannister has discovered that the life sciences industry everywhere is facing similar challenges. She said, “How do we create a bridge that keeps companies going forward? A big piece of it is collaboration. Not just within Massachusetts or between Massachusetts and California, but global collaboration is becoming important to all of us. It’s hard to do it all by yourself.”
SOURCE: Massachusetts Life Sciences Center