SAN FRANCISCO — Pharmaceutical giants have been flocking to Massachusetts from every corner of the United States and Europe
to set up research centers, hoping to capture some of the magic coming out of the state’s academic labs and biotech startups.
But for some stubborn holdouts, California remains a better place to spark entrepreneurial activity. Other out-of-state companies believe they can easily forge long-distance partnerships with Massachusetts drug makers.
“We’re not going to stick an R&D center in Boston,” James Sabry, senior vice president for partnering at Genentech, a South San Francisco cancer drug maker, said last week in an interview at the J.P. Morgan Healthcare Conference. “We do deals with Boston companies. But we go wherever the science is.”
George S. Golumbeski, senior vice president of business development at Celgene Corp., a fast-growing Summit, N.J., biotech that has established partnerships with 11 Massachusetts companies over the past five years, said he is not interested in scouring the Boston real estate listings any time soon, either.
“There are no existing plans to uproot our research group and move it to Boston,” he said.
But Golumbeski added that Celgene’s “footprint in Boston will grow” through further collaborations.
Genentech, a pioneer in biotechnology, was acquired by Switzerland’s Roche Holding Ltd. in 2009 but operates as an independent company. It entered into a drug discovery alliance with Cambridge-based Constellation Pharmaceuticals Inc. in 2012.
Last week, corporate parent Roche agreed to spend more than $1 billion for a majority stake in the Cambridge cancer diagnostics startup Foundation Medicine Inc. But Roche has no plans to join fellow European pharmas such as Novartis AG, Sanofi SA, Shire PLC, or AstraZeneca PLC and plant its own research labs in or around Greater Boston, Sabry said.
“Geography doesn’t matter anymore,” said Sabry, who practiced medicine at Brigham and Women’s Hospital in Boston early in his career. “What matters is the quality of the science. There’s a constant flow of people between Boston and San Francisco. You’re the older brother, we’re the younger brother. Boston may have more startups, but in terms of venture capital, San Francisco still outstrips Boston.”
Ken Kengatharan, president and chief operating officer at Armetheon Inc., a Santa Clara, Calif., company developing drugs to treat cardiovascular diseases, said the Boston area attracts Big Pharma outfits from Europe mostly because it’s a shorter plane flight than California. But the entrepreneurial culture is stronger here, he said, and as the Asian biosciences industry grows, it will develop stronger ties with the San Francisco region.
“I don’t agree that Boston is becoming the center for the industry,” Kengatharan said. “The pool of talent we have from Stanford and the University of California in San Francisco is huge. Sixty percent of the venture capital in the United States goes into a 10-mile radius around Silicon Valley.
“Do you know how many other places around the world have tried to replicate what we have in Silicon Valley?” Kengatharan asked rhetorically. “There is nowhere else in the world that is so friendly to entrepreneurs.”
Many life sciences companies have been voting with their feet, however, by moving their research operations and employees to Massachusetts. Last year alone, Baxter International and GE Healthcare said they would establish sites in Massachusetts, while Shire moved to consolidate much of its US operations in the Boston area. All of the companies cited access to biomedical talent and proximity to top researchers and entrepreneurs.
“Technology lets you communicate anywhere, but that works better for software companies,” said a Lexington life sciences consultant, Harry Glorikian. “Being in proximity to others makes a big difference in drug discovery. When you work at the lab bench, with the soft science and the whiteboarding you do in biology, being close by shortens the time and increases the probability of success.”
Celgene embraces what its leaders call a “distributed” research model. That means it develops some drugs in company labs but others come about through dozens of partnerships with companies worldwide. It acquired Avila Therapeutics of Bedford in 2012 and has options to eventually buy Boston-based Acetylon Pharmaceuticals Inc. and Forma Therapeutics of Watertown. It is also collaborating with Agios Pharmaceuticals Inc., Bluebird Bio Inc., Epizyme Inc., and Acceleron Pharma Inc., all in Cambridge.
“They’re freestanding companies, but they are fundamentally part of our research and development,” Golumbeski said. “We’re consistently active on the collaboration front. You can’t have your hand on the pulse of biotech without having collaborations in Boston.”
While his company is not scouting around Cambridge for lab space, Golumbeski disagrees with West Coast executives who question the centrality of Boston in life sciences.
“Boston has become the epicenter, the number one place for biotech in the world,” he said. “That’s why we’re up there a lot. These are high-quality companies with top-flight science. A decade ago, you could debate Boston versus San Francisco. You can’t debate that now.”