Here’s Why Boston’s Life-Science Sector Is So Strong

By    July 24, 2014

Boston skyline

Ashok Chander says he had a simple reason for moving his startup, Cellanyx Diagnostics, from New York City to Boston.

“Bluntly, it’s because of the talent and funding environment in the Boston area and Cambridge,” said Chander, CEO of the cancer-diagnostics company, which has offices in Boston and lab space in Beverly, MA, just north of the city. “It’s such a rich and very diversified life-sciences community here. My (angel) investors are based in Cambridge, and our labs are in an incubator space in Beverly, only a 50-minute drive away. It’s very convenient.”

In recent years, a lot of other life-science companies, whether small startups like Cellanyx or Switzerland’s giant Novartis, have been flocking to the Boston-Cambridge market, leasing out small lab spaces or spending hundreds of millions of dollars on gleaming new research facilities and headquarters.

Boston vs. San Francisco

Industry boosters in Boston and San Francisco often go back and forth about which metro area is No. 1 when it comes to the life-sciences sector in the U.S., at least as measured by venture capital funds pouring into young biotech companies.

In 2011 and 2012, the Boston area could lay claim to being the top market for venture capital in biotech, with the San Francisco area trailing slightly behind at No. 2. But last year, the San Francisco area pulled ahead by raising $1.16 billion in venture capital for biotech companies in 84 deals, compared with Boston area’s $933.5 million, also in 84 deals, according to the National Venture Capital Association.

Ashok Chander

Ashok Chander moved his life-science startup from New York City to Boston.

Then again, if you want to be technical and stick purely to specific city boundaries, as opposed to metro areas, the No. 1 U.S. city for biotech funding last year was Cambridge, MA, only a quarter of a mile across the Charles River from Boston and the recipient of $584 million in biotech funding last year. That’s compared with $428 million for San Diego and $272 million for San Francisco, according to CB Insights.

In a League of Its Own

Add in private and government funding for other types of life-science projects and firms—such as medical device makers, disease diagnostic firms andmedical research institutions—and the Boston-Cambridge nexus emerges as being in a league of its own.

In all, the Boston area boasts nearly 30,000 scientists and other workers directly involved in biotech, pharmaceutical and clinical research, the highest concentration of life-science research workers in the U.S., according to U.S. Bureau of Labor statistics provided by the Massachusetts Biotechnology Council.

“Clearly, the Boston and the San Francisco areas have emerged as the two dominant (biomedical) hubs in the U.S.,” said Michael Powell, a partner at venture capital firm Sofinnova Ventures. “Critical mass is key to our business, and a place like Boston, in particular, has both numerous top academic institutions and new research centers. It’s also one of the financial centers of the U.S. and has a very healthy VC scene.”

Academic Power

The core of Boston’s strength as a life-sciences mecca is the area’s rich array of top academic institutions.

Harvard Medical School

Harvard Medical School adds clout to Boston’s life-science scene.

Harvard University and the MIT are both in Cambridge, while Tufts University is in Somerville, which abuts Cambridge just to the north. To the south, Boston University lies immediately across the Charles River in its namesake city.

Harvard, Tufts and BU all have medical and dental schools in Boston, affiliated with a combined seven teaching hospitals in Boston. All of those teaching hospitals are top recipients of funding from the National Institutes of Health, with the Harvard-affiliated Massachusetts General Hospital, Brigham & Women’s Hospital and Beth Israel Deaconess Medical Center ranking first, second and third in the country, respectively, in NIH hospital-research funding last year.

Kendall Square’s Transformation

The Boston-Cambridge life-science sector is ultimately concentrated in two key districts: Kendall Square in Cambridge and the Longwood Medical Area in Boston, about two miles from each other. Kendall is a hybrid for-profit and nonprofit technology hub, while Longwood is mostly a nonprofit research and clinical-services district with strong ties to teaching hospitals.

Over the past four decades, Kendall Square has transformed from a former industrial neighborhood, sitting immediately east of MIT’s main Cambridge campus, into a booming high-tech and biomedical hub.

In the 1970s, 1980s and 1990s, Kendall Square was best known for its high-tech companies, often spinoffs from MIT, and it’s still a major powerhouse of software and hardware companies: Google, Amazon, Microsoft and Twitter, among others, all have research facilities in Kendall Square, which also is home to scores of midsize and startup tech companies.

Kendall Square

Kendall Square now is a global hot spot for biomedical research.

But in the 1990s and beyond, Kendall Square has blossomed into a biomedical research hub, anchored by MIT and MIT-affiliated institutions, such as the Broad Institute, a joint MIT-Harvard genomics research foundation. The famous Whitehead Institute for Biomedical Research also calls Kendall Square home.

John Osten, a longtime commercial real estate broker in Cambridge who works for JLL, remembers when the biomedical sector in Kendall Square was dominated mostly by local players, such as Biogen Inc. (now Biogen Idec) and Genzyme Corp. (now part of France’s Sanofi).

Today, national and international biotech and pharmaceutical companies have moved their North American or world research operations into Kendall Square, including Novartis (which is building a $600 million R&D headquarters in Cambridge) and Pfizer (which recently opened a $300 million R&D headquarters in Cambridge).

Too Popular?

In all, more than 2 million square feet of R&D lab and biomedical office space have been added to Kendall Square in the past seven years, according to Osten.

“All of it is build-to-suit and all of it is filled,” Osten said. “I’ll have people coming in from other parts of the country and around the world, and they’re all looking for space to be in Cambridge. But Kendall Square is filled, so I’ll apologize and tell them they might have look at space near Harvard Square, a 20-minute walk away. But they don’t care. It’s only 20 minutes, and it’s still Cambridge.”

Deval Patrick

Massachusetts Gov. Deval Patrick speaks at the Pfizer grand opening.

The ability to easily walk from one life-science company to another is one of the major draws of Kendall Square, which includes a subway stop.

“The magic of it for scientists, entrepreneurs and others is that you can just walk around and bump into other people, and collaborate and maybe partner with them on projects,” said Alexandra Lee, executive director of the Kendall Square Association, which represents major property owners and businesses in the Cambridge neighborhood.

But Cambridge has gotten so crowded that there’s now a spillover of life-science companies across the Charles River into Boston.

Longwood’s Emergence

For instance, Vertex Pharmaceutical’s world headquarters in Boston’s waterfront Seaport District recently was completed. The Seaport area is a former railroad and docking yard that’s now seeing a huge surge in development, as companies in the high-tech, biotech and financial industries move into the suddenly hip area just south of Boston’s Financial District. The Vertex headquarters is part of an $800 million project to develop Seaport’s Fan Pier area.

Brigham and Women's Hospital

Brigham and Women’s is one of the anchors of the Longwood Medical Area.

The other powerhouse center of Boston’s life-science sector is the Longwood Medical Area, where 17 million square feet of clinical, research and administrative space is packed into a 213-acre area. Longwood is home to Harvard Medical School, Brigham and Women’s Hospital, Beth Israel Deaconess, the Joslin Diabetes Center, the Dana-Farber Cancer Institute and other medical facilities. The Longwood area, just five blocks from famed Fenway Park, recently has seen $1.2 billion in new construction, including the $300 million Longwood Medical Center, which already has been partially leased to the Dana-Farber Cancer Institute.

“The density of big-pharma companies, world-class research institutions, biotech startups, top educational facilities, clinical collaborations and venture capital make Boston pretty special and unique,” said Bill Sweeney, East Coast regional director of the technology and venture capital group at City National Bank. “The people in the industry can literally walk across the street or down the block and interact and collaborate with others. It’s a pretty amazing place for entrepreneurs and innovators.”

Photo of Ashok Chander courtesy of Boston Herald; photo of Harvard Medical School courtesy of Harvard University; photo of Kendall Square courtesy of MIT; photo of Gov. Deval Patrick courtesy of Massachusetts Governor’s Office; photo of Brigham and Women’s Hospital courtesy of the hospital

css.php