The San Francisco Bay Area has better weather. North Carolina’s Research Triangle has lower costs. San Diego has even better weather than San Francisco.
These regions, all centers of biotechnology, are among Boston’s fiercest competitors for life sciences investment, companies, and jobs, offering advantages that can’t be matched in a cold-weather, high-cost city. But Boston has nonetheless emerged as the leader in the industry, overcoming its natural disadvantages with a concoction of brains, money, and risk-taking that one analyst described simply as “magic.”
This week, economic development recruiters from biotech hubs and places that would like to be are descending on Boston and the industry convention known as BIO in hopes of capturing some of the Boston magic — not to mention companies and jobs. But analysts said duplicating Boston’s success would be nearly impossible because few, if any, regions have all the elements that underpin the cluster here: overlapping research institutions, deep pools of venture capital, and an entrepreneurial start-up culture.
Even the Bay Area, where similar characteristics have helped create the world’s leading technology cluster, can’t compete with the concentration of biotech firms, researchers, and venture capitalists in Greater Boston, said Glen Giovannetti, who leads the Global Life Sciences practice at Ernst & Young, a professional services and consulting firm. Giovannetti pointed to Kendall Square, where a study by Boston Consulting Group found 48 venture-backed biotech start-ups per square mile, compared with 13 per square mile in Palo Alto and 7 in South San Francisco.
This concentration gives the Boston area an advantage, he said, fostering interactions between researchers, scientists, executives, and entrepreneurs that lead to new breakthroughs, products, companies, and jobs. “To my mind, Boston is unique as a life science and health care cluster,” he said.
Ernst & Young’s data show the gap between Greater Boston and other biotech hubs. In 2011, New England led all US regions in capital raised for biotechnology, attracting nearly $1.57 billion in investment — nearly double the $800 million invested in the Bay Area, the closest rival.
New England also dominated in “innovation capital,” which Ernst & Young defines as money raised by emerging companies. Last year, 132 New England biotech firms received venture investments, compared with 101 for San Francisco.
The San Francisco Bay Area, Boston’s leading competitor, has a biotech industry that goes back more than 35 years, and includes groundbreaking firms like Genentech. That region has established a strong biotech presence by combining the same elements that work in Boston, including prestigious research institutions and universities, such as Stanford and the University of California at Berkeley.
In fact, Jim Connolly, a Boston partner and the leader of the US Pharmaceutical and Life Sciences practice at PricewaterhouseCoopers, a professional services firm, compared the Boston and San Francisco biotechnology communities to a “Red Sox/Yankees-style rivalry.”
After Boston and the Bay Area, Ernst & Young ranks the top regions for biotech activity as San Diego, the Pacific Northwest (primarily Seattle), Washington-Baltimore, New York, New Jersey, and Los Angeles/Orange County.
These regions are particularly strong in narrow, specialized areas. The Washington area, for example, is a natural center for activities around government regulation and drug approval. The National Institutes of Health, the largest source of funding for medical research in the world, is located in nearby Bethesda, Md.
Carolina’s Research Triangle, anchored by North Carolina State University in Raleigh, Duke University in Durham, and the University of North Carolina at Chapel Hill, has more than 80 firms engaging in research and development, product development, clinical trials, and pharmaceutical manufacturing. The New York metro area hosts many spinoffs from major pharmaceutical companies based in New Jersey, like Johnson & Johnson and Merck & Co.
But none of these has the variety and depth of Boston’s cluster, which encompasses research, drug development, manufacturing, medical devices, and a wide range of technologies, analysts said. The Boston area also hosts a variety of support industries, such as real estate companies that specialize in building and managing biotech laboratories.
Joe Cortright, president of Impresa Inc., a consulting firm in Portland, Ore., that specializes in regional economic analysis, said biotech clusters like Boston are not developed over months or even years. It can take generations, as one scientific discovery leads to another, new technologies are spun off, and entrepreneurs launch companies, cash out, and do it all over again.
As a result, Cortright said, Boston has a headstart that will be very difficult for competitors to overcome.
“There are no new, surging biohubs that should cause Boston to look over its shoulder,” said Cortright, who authored a study on biotech clusters for the Brookings Institution, a Washington think tank.
Adding to the challenge for many other regions, Cortright said, is there’s no single factor to spur a biotech cluster. Rather it’s that magical mix of research, capital, and entrepreneurship. As an example, Cortright cited Baltimore, which has a small biotech industry.
The city is home to Johns Hopkins University, a major medical research center, Cortright said, but does not have a significant venture capital community or start-up culture that turns research into products and companies. “It has Johns Hopkins University, which is significant, but after that they have very little,” he said.
Giovannetti added that developing an entrepreneurial culture is not easy. Among the greatest hurdles is accepting failure and putting aside the stigma that often comes with it.
“In many cities, if you’ve run a company that failed, that’s a mark against you,” he said. “In Boston, if you’ve started four companies and three of them have failed, you’re considered experienced.”