Biotechnology powerhouse Massachusetts is used to fending off challenges from states such as California, Maryland, and North Carolina.
Now, as its ambitious 10-year, $1 billion life sciences initiative winds down, Massachusetts faces fresh competition from a neighbor and familiar rival in everything from sports to financial services: New York.
Last month, New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio unveiled separate life sciences investments that together would commit $1.15 billion to boosting the biotech and medical technology industries in the Empire State. It’s a big bet on life sciences, and it’s almost certainly going to require a response from Massachusetts Governor Charlie Baker — before the initiative launched by his predecessor, Deval Patrick, expires in 2018.
“This raises the table stakes,” said Travis McCready, president of the Massachusetts Life Sciences Center, the state agency created to build up the industry cluster through a mix of tax breaks, loans, and capital improvement grants. “This puts the state of New York and New York City on the map in the life sciences, and it’s something we have to be mindful of.”
McCready’s boss, Baker, began as a skeptic of supporting some business sectors at the expense of others, initially weighing the idea of merging the life sciences center and other agencies into a broader economic development agency. That notion was abandoned under pressure from the state’s biotech and medtech business leaders. They argued Patrick’s initiative helped to spur startup activity and lure global life sciences giants to the state.
When it comes to courting European pharma companies such as Novartis AG of Switzerland and Sanofi SA of France, Massachusetts has advantages over its chief rival, California. Global drug industry players want to collaborate with Massachusetts’ venture-backed biotechs. And setting up shop here means shorter trips back and forth across the Atlantic for travel-weary executives.
That advantage would disappear if New York emerges as a serious competitor. “From a geographic standpoint, New York is in a much better position to compete with us,” said Bob Coughlin, president of the Massachusetts Biotechnology Council, an industry trade group. “We have a headstart, but New York is certainly stepping up its game.”
New York already has many high-profile assets, from biotech giant Regeneron Pharmaceuticals Inc. in Tarrytown to Memorial Sloan Kettering Cancer Center in Manhattan, and trails only California and Massachusetts as a recipient of federal funds for biomedical research. But while New York is home to the headquarters of many Big Pharma companies — including Pfizer Inc. and Bristol-Myers Squibb Co. — its cluster of about 250 biopharma companies, universities, and research sites, remains much smaller than the more than 900 businesses and institutions in Massachusetts.
Former New York City Mayor Michael Bloomberg launched a plan with Cornell University to develop an engineering school on Roosevelt Island that could rival the Massachusetts Institute of Technology by spinning off life sciences companies across New York.
But New York state has never achieved the reputation and critical mass in biotech that it enjoys in fields such as finance, media, fashion, and the arts. New York officials, who admit to studying the Massachusetts game plan closely, say that’s going to change.
“We want to be a bigger player on the national and international stage in the life sciences,” said Morris Peters, a spokesman for the New York state budget division in Albany. “A lot of discovery and research breakthroughs happen in New York. What we haven’t been able to do is to turn them into companies and jobs. We have certainly been lagging behind places like the great Commonwealth of Massachusetts in attracting companies.”
Cuomo’s $650 million outlay seems to be modeled after the Patrick plan, with pools of cash earmarked for tax credits for companies that create jobs, grants to build biomedical labs, and loans for startups that can be matched by private investments. It also includes state-funded paid internships at biotechs, another feature of the Massachusetts plan.
De Blasio’s $500 million plan is less specific but aims to work with universities and venture capital firms to commercialize research, start companies, and create 16,000 jobs.
Joining in the New York campaign is health care giant Johnson & Johnson, which last week said it will open a partner-seeking research site called JLABS — one of eight in North America, including a Cambridge venture with the Lab Central incubator — in the New York Genome Center, a consortium of academic, industry, and medical organizations. Its goal is to collaborate with academic and biomedical researchers to get medical technology to market faster.
“We look for ecosystems that have a depth and breadth of quality research institutions,” said Melinda Richter, head of JLABS for Johnson & Johnson Innovation, who said the company seeks to mine the best ideas from many places. “There’s 10,000 diseases that haven’t been cured, so we hope New York can be everything it can be” in contributing to that effort.
New York is playing a long game, but it probably won’t pose a serious challenge to Massachusetts over the next several years, said Joel Marcus, founder and chief executive of Alexandria Real Estate Equities, a Pasadena, Calif., company that owns biotech office and lab space in both Massachusetts and New York. De Blasio launched his so-called LifeSci NYC last month at the Alexandria Center for Life Sciences on Manhattan’s East Side.
While his real estate company has poured $750 million into New York properties and wants to double that investment over the next five years, Marcus said Alexandria has invested several billions of dollars into the Massachusetts biotech hub. He said Massachusetts will probably hold onto its position as the industry’s US leader for the foreseeable future.
“Industry clusters take about 25 years to develop,” Marcus said. “New York has made great strides. It has world-class clinical assets and world-class science. But they need to promote risk capital, and they need to lower their real estate taxes. . . . It will take another 10 years or more for a real biotech cluster to emerge there.”
Massachusetts can’t afford to be complacent, however, MassBio’s Coughlin said. He said the message to the Baker administration from state biotech leaders is “it’s time to roll out a version 2.0” of the life sciences initiative before the current one expires.
Because the annual appropriations that fund the current initiative have lagged in some years, the state has so far invested or committed only $650 million of the $1 billion it touted, though officials believe the state remains on track to spend most of it within the 10-year framework outlined by Patrick in 2007.
Baker administration officials already have said they plan to reauthorize life sciences funding by June 2018, when the current initiative is set to expire. Industry leaders hope that the governor will put his own stamp on life sciences recruitment by launching new programs.
McCready already has pointed to some possible directions for those programs. He said his agency is focusing on expanding the state’s network of biomanufacturing plants. That could bring more production workers into an industry that already employs plenty of scientists. Another aim is to extend the biotech industry beyond its current strongholds in Cambridge and the suburbs along Route 128.
“We are actively talking about what the life sciences initiative will look like in the years to come,” McCready said. “The ecosystem in Massachusetts has changed from when the original initiative was architected back in 2007 and 2008, and we believe there are new opportunities for the administration to engage in. New York’s announcement was a great reminder of just how much more competitive the market for supporting life sciences has become.”
Correction: An earlier version of this story misstated the number of partner-seeking research sites that Johnson & Johnson will open.