Massachusetts, often considered a difficult place to do business, is becoming a popular choice for a key global sector: European life sciences companies.
Executives from the Continent’s pricey precincts are unfazed by Boston-area costs and the trans-Atlantic flights. And they see the Massachusetts biomedical cluster as a gateway to a US market that increasingly looks like a safe haven from Europe’s debt crisis.
At least 15 companies from Europe have set up shop or expanded operations in the Bay State over the past four years, representing more than half of all life sciences firms that have done so, according to the Massachusetts Life Sciences Center.
Among them are two announced in the past week: Batavia Bioservices, a company based in the Netherlands, will open a site in Woburn, while London-based Xenetic Biosciences PLC plans to move its drug research operations to Waltham or Lexington.
As the annual convention of the Biotechnology Industry Organization kicks off Monday in Boston, local officials will be rolling out the red carpet to foreign delegations here for the conference, which is expected to attract more than 15,000 attendees from 65 countries.
Governor Deval Patrick will be meeting this week with French biotech leaders, the British minister of industries and science, the Italian ambassador to the United States, and the president of Catalonia, among others, in a round of receptions and private sessions around BIO.
“I see showing up at BIO as the part of my job that’s the salesman part,’’ the governor said.
Boston Mayor Thomas M. Menino is also welcoming visitors. Biotechnology executives from Great Britain, France, and other western European countries, who were early arrivals for BIO, got a tour Friday of the city’s Longwood Medical Area, home to its world-famous teaching and research hospitals, and then were invited to a lavish reception on Sunday.
“We’re going to be out there selling our city,’’ said Menino.
The interest is certainly mutual. Franzpeter Bracht, chief financial officer of German biotechnology company Glycotope GmbH, has four drug compounds in European clinical trials and is coming to BIO partly to scout potential sites for a US office.
“We’re clearly thinking about Boston,’’ Bracht said. “Boston is a good place for a biotech or pharmaceutical company. If there are invitations to talk, I will accept them.’’
State officials say they have found it’s sometimes easier to persuade British, French, or German companies to use the Bay State as a base to tap the US market - especially at a time of financial strains and uncertainty in Europe - than companies from Ohio or North Carolina.
“Right now there’s an alignment in economic development strategy between Europe and Massachusetts,’’ said Ken Brown, executive director of the Massachusetts Office of International Trade and Investments. “We both have a focus on innovation and education.’’
The Patrick administration’s 10-year, $1 billion life sciences initiative, which gives companies incentives to create jobs in Massachusetts, is another selling point - and a sharp contrast to the austerity measures European executives see in their own countries.
Buying property, plants, and equipment in the United States is a way for European companies to hedge their bets as the Continent’s debt crisis worsens. Foreign direct investment in the United States climbed to $234 billion last year, up 14 percent from 2010, the Commerce Department reported last week.
Massachusetts has been viewed as a difficult place to do business because of a reputation as a high-tax, high-cost state with onerous regulations. But companies expanding in the United States from London or Paris often aren’t fazed by Boston expenses, said Phil Budden, the Cambridge-based British consul general for New England.
A more important factor, especially as the debt crisis casts a shadow over European economies, is the ability to capitalize on Boston’s assets to sell into the large and relatively stronger US market, hiring top graduates of Boston’s universities and forging partnerships with local biomedical start-ups that can provide new products and technology, Budden said.
“For a British company, the real attraction of Boston is the density of life sciences and academic institutions,’’ Budden said. “Companies that come over here to expand also want to raise money, and Boston is a financial center. And it’s a very simple six-hour flight.’’
Jeff Albers, president of the US arm of Norwegian biotech Algeta ASA, said the company chose to make Cambridge its American base because of its access to talent, its entrepreneurial culture, and the fact that it was no more expensive than other potential East Coast sites.
Algeta’s lead drug candidate, a treatment for bone metastases stemming from prostate cancer, “feels like a Cambridge-type product’’ because it requires a specialized sales and marketing force, said Albers, a veteran of Cambridge biotechnology company Genzyme Corp. “I looked around and saw a lot of talent here that could help us commercialize our products.’’
Massachusetts has attracted a number of overseas drug companies over the past decade. Some are Japanese, notably Takeda Pharmaceutical Co., which bought Millennium Pharmaceuticals of Cambridge, and Dainippon Sumitomo Pharma Co., which purchased Sepracor Inc. of Marlborough. A pocket of smaller companies, such as patient monitoring technology firm EarlySense, come from Israel, a life sciences powerhouse in the Middle East.
But most of the newcomers hail from Europe, where executives cite the shorter flight to Boston than to rival life sciences hubs in California. Massachusetts is also closer to the Food and Drug Administration in Washington, which approves drugs and medical devices.
Among the European pharmaceutical companies that have planted their flags in the Boston area are Switzerland’s Novartis AG, which moved its global research and development headquarters to Cambridge; Shire PLC, a company from Ireland that runs its human genetic therapies division from Lexington; and AstraZeneca PLC, the Anglo-Swedish drug maker with a big research center in Waltham. Germany’s Merck KGaA owns EMD Serono in Rockland and EMD Millipore in Billerica.
The most prominent new player is France’s Sanofi SA, which already operated a research lab in Cambridge but raised its profile last year when it acquired Genzyme, the largest Massachusetts biotechnology company. Sanofi is using Genzyme as a springboard into the emerging personalized medicine field and its global center for drugs that treat rare diseases.
As overseas pharmaceutical companies have become more important players, some in the Boston area have feared the region could lose its entrepreneurial edge. Companies like Sanofi, Merck, and Takeda have had to guard against talented employees bolting to return to the start-up world.
“Sanofi has been sensitive to the idea of preserving Genzyme and what we represent,’’ said Genzyme chief executive David Meeker. “What we benefit from is the resources of a larger company. Everybody feels the need to be here. But clearly if big pharma moved too aggressively to control things, you’d have a dampening effect on the entrepreneurial spirit here.’’
Massachusetts has also been a lab for an emerging model of biopharmaceutical collaboration, where big drug companies forge research alliances with, or take equity stakes in, smaller biotechs without acquiring them. This is often attractive for the smaller and midsized biotech and medical technology companies that the state is seeking to attract.
“We want to meet with the international delegations that will be at BIO,’’ said Susan R. Windham-Bannister, president of the Massachusetts Life Sciences Center, the agency set up to administer Patrick’s life sciences initiative. “And our message will be that we value collaboration.”Robert Weisman can be reached at firstname.lastname@example.org.