Massachusetts life sciences initiative brings fewer jobs than expected
Patrick says effort curtailed by downturn
Four years after Governor Deval Patrick signed a $1 billion initiative designed to boost the Massachusetts life sciences industry, the program has brought new companies and jobs to the state - but not as many jobs as originally anticipated.
While the governor said in January 2008 that the biomedical initiative could generate 250,000 jobs over 10 years, the economic slowdown has made it unlikely the real gain will come close to that figure. The Massachusetts Life Sciences Center estimates the total number of jobs created so far is 8,750 - half of them temporary construction jobs.
Still, growth in life sciences comes at a time when other sectors have been shrinking. State officials blame the global financial crisis that took hold in fall 2008 for preventing even more job growth in the industry.
Given the weak economy, the initiative has been “a wild success,’’ Patrick said in an interview. “The profile of the industry in the city and the state has grown. This is a very strong [life sciences] market in the US, and if you’re going to be in the US, you’d better be here.’’
The economy not only eroded growth of the biotech sector, but it prompted cuts in the state’s support for promoting biotech expansion. The life sciences center, the agency created to manage the Patrick administration’s signature economic development program, so far has spent just over $300 million on a mix of grants, loans, and tax credits to help companies and academic research centers expand.
That is less than the center had hoped to invest by this stage, largely because lawmakers have scaled back on annual appropriations due to cuts in the state budget. To reach the target envisioned in 2008, the Legislature would have to pick up spending levels in coming years.
But officials have pushed forward with the life sciences initiative despite the headwinds, and claim a number of successes.
A particular focus has been on recruiting overseas companies to base their US business, and research, in Massachusetts. Patrick said he will be meeting with executives from Israel, France, Italy, Chile, and Turkey, at next week’s Biotechnology Industry Organization convention in Boston. Patrick said the initiative has brought “buzz’’ to the state’s biotech and medical technology hub, which makes life science professionals excited to be here.
Among the initiative’s achievements, he said, has been tapping matching private investments that have more than tripled the state’s outlays. Other highlights:
■ It has helped draw more than two dozen new company sites, ranging from out-of-state biotechs opening sales offices to existing players, such as Organogenesis Inc. of Canton and Vertex Pharmaceuticals Inc. of Cambridge, expanding operations.
■ State capital grants totaling $189 million have been committed to a dozen projects, including UMass research and biomanufacturing sites, the Dana-Farber Molecular Cancer Imaging Center, and the Joslin Translation Center for the Cure of Diabetes.
■ The state has extended $57.5 million in tax incentives to more than 50 companies. The recipients, which agree to add jobs in exchange for the tax breaks, include start-ups such as Knome Inc. in Cambridge and T2 Biosystems Inc. in Lexington, and established drug developers like Biogen Idec Inc. in Weston and Shire Human Genetic Therapies of Lexington.
But one question even supporters of the initiative have raised is: How much growth would have taken place anyway? Massachusetts had one of the nation’s strongest life sciences clusters long before the $1 billion push, mostly because it’s home to four medical schools, more than a dozen teaching hospitals, hundreds of start-ups, and bio-focused venture capital firms.
“Doing the analysis of what would have happened without the incentives is difficult,’’ said Peter D. Enrich, a professor at Northeastern University’s School of Law, who has studied the impact of government efforts to woo companies and jobs to regions. “The general evidence is the effect of state and local tax breaks on location decisions is marginal at best. Of course, once businesses have decided where to locate, if they can get tax breaks . . . that’s cream on the top.’’
The initiative was never entirely about luring companies, however. Most of the state’s grants have gone to help build new research labs and manufacturing space, especially at hospitals and state universities, that create the infrastructure for a booming biomedical sector.
Of the grants committed to projects, the largest was $90 million to help fund the Albert Sherman Center, a research building at the UMass Medical School in Worcester. Other grants have included $14.6 million toward a biomanufacturing center at UMass Dartmouth, and $14.3 million for a Framingham wastewater project that enabled Genzyme Corp. to build a plant to make drugs that treat rare genetic diseases.
Other classes of grants have bankrolled workforce development, business plan competitions, internships, and medical research projects at institutions ranging from the Broad Institute in Cambridge to Boston Children’s Hospital to Beth Israel Deaconess Medical Center.
The life sciences center has awarded $11.2 million in five-year accelerator loans, providing working capital for 20 start-ups. Four of those companies have repaid loans early, with interest, bringing the state nearly $2.5 million on an initial investment of $2.1 million.
Not every investment has worked out as well. Sixteen companies voluntarily returned a total of $12.2 million in tax breaks because they couldn’t meet job targets and wanted to avoid clawback provisions built into the initiative that would have made them pay back money.
While companies have created some jobs for lab technicians or office assistants, many have been the kind of skilled scientific positions that aren’t likely to employ large numbers of blue-collar workers. To address that shortcoming, Patrick said, manufacturing will become an increasing focus of the state’s life sciences strategy in the coming years.
State officials say they have used their $302 million in spending to draw $938 million in matching investment from corporations, federal agencies, foundations, and other private investors. That’s fueled activity in what officials call the nation’s top life sciences cluster, centered in Cambridge’s Kendall Square but stretching to the Boston suburbs and other biomedical pockets across the state, as well as the Innovation District rising on the South Boston Waterfront.
“All the ingredients were here,’’ said Susan R. Windham-Bannister, president of the life sciences center, based in Waltham. “What this initiative has done is to coalesce the community. When companies come here, they are now coming into a well-integrated ecosystem.’’
Windham-Bannister has joined with Patrick and other state officials in making pitches to companies that have opened or expanded sites in the state, especially foreign firms they have met at BIO conventions. They include instruments maker Izon Science from New Zealand, screening company Cytoo Cell Architects from France, and patient monitoring technology firm EarlySense from Israel, part of the Massachusetts-Israel Innovation Partnership rolled out at BIO in Washington, D.C., last year. All three businesses have already set up shop here.
Life sciences executives say Massachusetts is taking a smart approach at a time when they are being recruited to move to other states. Genzyme, for instance, considered other options for its drug manufacturing plant, but saw the state’s willingness to fund the wastewater project in Framingham, about 20 miles from its Cambridge headquarters, as a vote of confidence.
“It’s not so much the amount of money, because you can get money from many places,’’ said Genzyme chief executive David Meeker. “It’s the signal that it sends that this is a state that takes life sciences seriously. It’s a competitive world, and many places have a strong desire to have these plants in their backyard.’’
Some lawmakers, including state Senator James B. Eldridge, Democrat of Acton, believe too much has been given to big companies. “I’m skeptical about government incentives to larger, well-established corporations,’’ he said. “I’d rather see money invested in education and infrastructure. And I continue to push for more details about the number of jobs created from all these tax breaks, including for life sciences companies.’’
Other industry watchers say they are wary of government enticements in some cases, but believe the life sciences push makes sense given the industry’s importance to the state.
“It is possible this sector would have grown without the benefit of the life sciences initiative, but it’s far from guaranteed,’’ said Barry Bluestone, dean of Northeastern University’s School of Public Policy and Urban Affairs. “And it probably wouldn’t have grown as quickly. Everybody wants bioscience because of its great potential. This is one that is worth betting on.’’