GEN’s Annual Ranking Counts Down the Nation’s Most Nurturing Regions
Despite consolidation of capital and talent in the nation’s two largest biopharma clusters, all 10 regions ranked by GEN have significant assets that make them attractive to biopharma researchers, executives, and investors. [Wsvan/Wikimedia]
Bruce Booth, D.Phil., a partner at Atlas Venture, astutely observed earlier this year that two key resources fueling the growth of biopharma were, until recently, somewhat geographically spread among the ten or so regions of the nation where the industry began to arise a generation ago.
“In recent years, this has changed—Boston and San Francisco are now the preeminent biotech clusters. And their gravity in the ecosystem is only getting stronger,” Dr. Booth concluded in a March 21 post on his Life Sci VC blog. “Beyond having great science and the right ‘pixie dust’ in the local environment, two fundamentally important ingredients to the success of any cluster are capital and talent—and both are aggregating into the two key clusters.”
So it’s no surprise that Boston/Cambridge, MA, and the San Francisco Bay Area again top this year’s GEN List of the nation’s top 10 biopharma clusters, as they did last year and in 2015. Yet that’s not to say the other eight clusters rounding out the list are the proverbial chopped liver; they too have significant assets that make them attractive to biopharma researchers, executives, and investors, often drawing upon heritages that include the presence of big pharmas or home-grown biotech giants.
And while the regions making the list this year will be very familiar to biopharma industry watchers, the regions just below the top ten also continue to build clusters that may someday propel them to future GEN lists. Highest among those remains Denver at No. 11, which ranked higher on two criteria—ninth in lab space (four million square feet) and tenth in jobs (27,666, according to JLL).
GEN ranks regions based on five criteria:
- NIH funding—Taken from the publicly available NIH RePORT database, for the current federal fiscal year, from its start on October 1, 2016, through May 23, 2017.
- Venture Capital (VC) funding—Taken from 2016 and Q1 2017 figures furnished by the publicly available MoneyTree Report.
- Patents—Based on the number of patents containing the word “biotechnology” awarded since 1976 in namesake cities and suburbs where key companies are located.
- Lab space—Based on total-size-of-market figures, in millions of square feet, furnished by the commercial real estate brokerage JLL in its U.S. Life Sciences Outlook report for 2016.
- Jobs—Based on JLL’s report. While job numbers are ranked this year compared with last year’s Top 10 US Clusters list, less weight had to be given to job totals in regions where GEN has found widespread discrepancies in job figures. However, workforce size was factored in when deciding the ultimate position of a region.
The region rounds out the Top 10 in NIH funding (713 awards totaling about $252.5 million), lab space (3.5 million square feet), and VC funding (five deals totaling $69 million in 2016), but fares better in patents (1,143) and best on employment (53,054 jobs, including 29,230 within Chicago’s Illinois Medical District). This year’s VC numbers should be much better; while MoneyTree Report recorded no biotech VC deals in Q1, a single company nearly equaled last year’s deal volume in May. Iterum Therapeutics closed a $65 million Series B financing whose proceeds will help it develop its first product candidate sulopenem, an antibiotic designed to treat Gram-negative multidrug-resistant infections.
Improving the region’s biopharma ecosystem will be among the priorities of James E. Audia, CSO of Constellation Pharmaceuticals, who on May 25 was named the new executive director of the Chicago Biomedical Consortium, effective August 1. The consortium was formed to stoke collaboration among researchers at Northwestern University, The University of Chicago, the University of Illinois at Chicago, and other institutions.
In March, Rosalind Franklin University of Medicine and Science said it will build a $50 million Innovation and Research Park with labs and an incubator for biopharma startups, and space for larger global life sciences companies. Ground for the 100,000-square-foot addition to the campus’ north side is set to be broken in September, with the project completed by summer 2019.
#9. Los Angeles / Orange County
A milestone in the cluster-building effort of the “City of Angels” and surrounding Southland region is set to occur soon. Site clearing has begun for a 20,000-square-foot incubator on the campus of the Los Angeles Biomedical Research Institute (LABioMed), funded by a $3 million county grant spearheaded by L.A. County Board of Supervisors Chairman Mark Ridley-Thomas. The incubator is set to open next year. Lab space remains the L.A. region’s biggest challenge, as it ranks 11th among top U.S. clusters with just over 2 million square feet, less than the other nine regions on this list and the Denver region. Also in May, LABioMed since it joined with UCLA to sell royalty rights to Allergan’s Kybella® (deoxycholic acid), the first and only FDA-approved injectable drug for submental fullness, for an undisclosed price.
Basic research is among strengths of the region, which ranks seventh in patents (1,479), and ninth in NIH funding (806 awards totaling $337.4 million). Those numbers can be expected to grow, as startup accelerator Make in LA joined LabLaunch last year to create a new bioscience-focused lab at Make in LA’s Chatsworth, CA, campus, with plans to create the first early-stage biotechnology incubator in the City of Los Angeles. Where the region shines is in number of jobs, where it ranks second with 120,688, according to JLL—though regional life science industry group Biocom counts 117,879, consisting of 69,830 in Los Angeles County and 48,049 in Orange County.
#8. Raleigh-Durham, NC (includes Research Triangle Park, NC)
North Carolina’s mecca of biopharma yo-yoed in VC funding, finishing ninth in Q1 (seven deals totaling $14 million) after placing fourth in 2016 with 10 deals totaling $211 million. That figure includes the $47 million Series C financing won last year by Research Triangle Park (RTP)-based, small-molecule cancer therapy developer G1 Therapeutics. On May 16, G1 raised $105 million in gross proceeds through an initial public offering. Ten days later, RTP saw one of its largest real estate deals ever when GlaxoSmithKline sold 20 buildings totaling 1.1 million square feet within the campus for an undisclosed price to Parmer Innovation Centers; GSK will instead lease four buildings totaling 700,000 square feet. Also in May, Durham-based Parion Sciences licensed exclusive global rights for its Phase II dry eye treatment candidate P-321 to Shire for up to $535 million.
The region also ranks eighth in NIH funding (749 awards totaling $349 million) and tenth in patents (928)—but fared a little better in jobs, ranking ninth with 35,073 according to JLL, though the North Carolina Biotechnology Center counted 62,937 jobs statewide in 2016. The Center faces either a budget freeze at $13.6 million each year during 2017–19, or a five percent cut, in the approximately $23 billion biennial spending plan under discussion by state lawmakers at deadline.
If the region’s biopharma leaders needed another reason for worry, it came in April when advertisements emerged in Seattle urging life sciences companies to move their businesses and jobs to New York City. It was the latest affront to a region that has worked to bounce back from setbacks such as the departure of Amgen and state budget cuts that wiped out the R&D tax credit. Industry advocates are trying to restore the credit, but a bill to that effect hasn’t advanced beyond referral to committee. More positive news has emerged from a few growing companies: Nohla Therapeutics, spun out in 2015 from the Fred Hutchinson Cancer Research Center, opened a new lab in Seattle’s Eastlake neighborhood in February, two months after winning $43.5 million in Series A financing, while Seattle Genetics in January disclosed plans to add 200 employees this year, bringing its workforce to 1,100-plus.
The region ranked fifth in VC (eight deals totaling $169 million in 2016), dipping in Q1 (two deals totaling $31 million) to sixth, same as its ranking for NIH funding (621 awards totaling $374.4 million) and patents (1,887). However, the Seattle area has already more than doubled its VC dollars this quarter, as Genoa Pharmaceuticals closed on a $62 million Series A financing in May. The region fares worse, however, in lab space (eighth with 4.6 million square feet) and especially jobs (11th with 24,320, according to JLL). A report released in February by Washington state’s Life Science & Global Health Advisory Council showed the life sciences industry has lost three percent of its jobs since 2011.
#6. Greater Philadelphia
The birthplace of American independence is increasingly a nurturing spot for early-stage biopharmas. Over the past year, the University of Pennsylvania opened the office-lab-production space Pennovation Center, whose tenants include tissue engineering and disease modeling startup BioBots; while in suburban Buckingham Township, the Pennsylvania Biotechnology Center of Bucks County broke ground in April on a $13 million expansion expected to create 100 jobs. The University City Science Center, the nation’s oldest research campus, welcomed Chondrial Therapeutics to its Port incubator. University City is part of an “innovation district” that could attract more jobs in part by focusing on precision medicine, a Brookings Institution initiative concluded in May.
Yet during this year’s Philly Tech Week, according to Technically Philly, Barbara Schilberg, CEO of VC firm Bioadvance, said investors remain concerned about getting startups past their seed stage: “The thing to watch is if they can get to a Series A.” VC funding is among challenges for the region, which ranked eighth both last year (11 deals totaling $125 million) and in Q1 (two deals totaling $29 million). The region also ranked eighth in patents (1,365), but fared better in lab space (seventh with nearly 6.4 million square feet), employment (sixth with 53,614 jobs, according to JLL) and notably NIH funding (fifth with 671 awards totaling $389 million).
#5. Maryland / Virginia / DC Metro
Area biopharma leaders have committed to growing their “BioHealth Capital Region” cluster into one of the nation’s top three by 2023, building on anchors ranging from the NIH and FDA, to the nation’s top academic recipient of research grant funding, the Johns Hopkins University. Hopkins accounts for 64.5 percent of the region’s NIH funding (556 awards totaling $271.4 million), placing fourth with 880 awards totaling nearly $420.7 million. The region is close to meeting its goal in patents (fourth with 4,108), but further back in employment (eighth with 39,145 jobs, according to JLL) and lab space (sixth with 9.5 million square feet).
Vaccine developers continue to grow. In May, Gaithersburg-based Emergent BioSciences opened an $80 million expanded medical countermeasures plant in East Baltimore, while GlaxoSmithKline announced a $139 million capacity expansion at its API plant in Rockville, MD, due to growing demand for its lupus erythematosus treatment Benlysta® (belimumab). The region finished sixth in VC funding last year ($146 million), but climbed to fourth during Q1 (seven awards totaling $71 million). Courting the industry eagerly are both Virginia Governor Terry McAuliffe (D) and Maryland Governor Larry Hogan (R), a non-Hodgkin’s lymphoma survivor who calls the cluster-building effort a personal mission.
#4. San Diego
“America’s Finest City” will be the center of the biopharma industry in June, when the Biotechnology Innovation Organization holds its annual BIO International Convention at the San Diego Convention Center, expected to draw 16,000 attendees. The “Plymouth of the West” and vicinity remain third in VC funding with 28 deals totaling $650 million last year. Nearly one-third of that total came from a single deal, the “in excess of” $220 million Series B financing of Human Longevity Inc. HLI and its executive chairman J. Craig Venter, Ph.D., who stepped down as CEO earlier this year, are among anchors of the region’s cluster-within-a-cluster focused on genomics, which according to the San Diego Regional Economic Development Corporation encompasses some 100 of the 1,200-plus companies and institutions. Another anchor, Illumina, in January opened the $40 million, 293,000-square-foot “Building 6” manufacturing facility, built for the sequencing giant by Alexandria Real Estate Equities.
Illumina’s roughly 3,000 employees help made the region fifth in jobs (63,730 according to JLL, compared with 49,763 counted by Biocom). The region ranks fourth in lab space (11.9 million square feet plus 1.1 million square feet under construction) and third in patents (4,383), but seventh in NIH funding (741 awards totaling $352.9 million).
#3. New York-New Jersey
The region’s biopharma industry may emerge as winners in the ongoing political rivalry between New York Governor Andrew Cuomo (D) and New York City Mayor Bill de Blasio (D), who is seeking re-election this year. Both have advanced big-money cluster-building efforts: In April, Cuomo and legislative leaders agreed to include $620 million for life sciences programs in the state’s $153.1 billion budget for 2017–18, while de Blasio used a meeting with Seattle Mayor Ed Murray to restate the city’s commitment to the industry. Back in December, de Blasio announced $500 million in incentives designed to help create 16,000 life sciences jobs. Across the Hudson River, New Jersey in April launched a smaller incentive, the NJ CoVest Fund, designed to provide seed funding to Garden State-based early-stage life sciences and other technology companies.
New Jersey accounts for nearly 61 percent of the region’s jobs, helping catapult the Empire State–Garden State tandem to number-one in jobs (127,308, according to JLL). Among growing companies is Tarrytown, NY-based Regeneron Pharmaceuticals, which in January said it will purchase its headquarters site for $720 million—a month after shelling out $50 million for an office property in nearby Sleepy Hollow, NY. Despite being home to Wall Street and the financial industry, the region ranks only seventh in VC funding (11 deals totaling $132 million in 2016; two deals totaling $29 million in Q1). NY–NJ fares better in patents (fifth with 3,208), and especially in lab space (12.7 million square feet) and NIH funding (third with 1,835 awards totaling about $787.3 million).
#2. San Francisco Bay Area
The Bay Area leads the nation in patents (10,312), and is close behind Boston/Cambridge in lab space with 19.3 million square feet. The lab market may be peaking; developer Oyster Point Development in January halved the lab R&D space it proposes to build at The Landing at Oyster Point in South San Francisco, from the 2.25 million square feet submitted to City officials last year, to one million square feet, replacing the lab space with 1,191 residential units. However, on May 4, the “Birthplace of Biotechnology” saw another developer, BioMed Realty, break ground on the first phase of Gateway of Pacific, a 1.3 million square foot lab-office campus.
In VC funding, the Bay Area finished 2016 second with $2.2 billion in 80 deals, and narrowly edged Boston/Cambridge in Q1 2017 with $1.435 billion in 20 deals. The region finished third in NIH funding (1,283 awards totaling about $520.6 million), and fourth in jobs with 67,738 according to JLL, though the California Life Sciences Association offers a slightly higher count of 68,313 as of 2015. That number can be expected to grow in coming months, with Juno Therapeutics in April confirming plans for a Bay Area office, saying it “puts us in the best position to continue to hire world-class talent.” Not all the region’s job news has been good; OncoMed halved its workforce in April.
#1. Boston / Cambridge, MA
A decade after then-Governor Deval Patrick (D) enacted the Massachusetts Life Sciences Initiative, his successor has yet to announce what support the state will offer the industry when the $1 billion, ten-year measure expires next year. However, Gov. Charlie Baker (R) has committed the state to growing life sciences companies through workforce development programs and funding for drug R&D. Supporting biopharma is also the goal of the region’s incubators and accelerators—including the first Chinese-owned bioincubator, the Qilu Boston Innovation Center (QBIC), which opened May 19. QBIC was founded by Qilu Pharmaceuticals, a $2 billion-a-year Chinese drug developer that opened within the incubator its first branch company, cancer immunotherapy developer QLB Biotherapeutics.
Not surprisingly, the region leads the nation in NIH funding (2,169 awards totaling nearly $1.055 billion), lab space (19.9 million square feet), and 2016 VC funding (78 deals totaling $3.06 billion), though Boston/Cambridge finished second to the San Francisco Bay Area in Q1 with 19 deals totaling $534 million. Biopharma growth is fueling a wave of speculative lab space development in and around Boston and Cambridge; King Street Properties, for example, is building the $200 million, 145,000-square-foot 828 Winter Street adjacent to an existing lab building owned by the developer, and slated for completion in 2018. The region is also second in patents (6,496), but third in jobs with 86,235 according to JLL, though industry group Massachusetts Biotechnology Council (MassBio) reported 63,026 last year.