Biotech has never concentrated in just one place. This industry tends to grow up in geographic clusters, but it will always be spread across the map, partly because great science comes from hundreds of academic hotspots around the world.
But there have always been two places—San Francisco and Boston—that have stood out far above all the other hubs of biotech. And something truly special is happening now in Boston’s biotech cluster. Boston, I’m convinced, is very close to taking the title as the world’s No. 1 biotech hub, and holding onto that distinction for a generation.
Before going too much further, I should say a little bit about where I come from on this question. I started covering biotech 11 years ago in Seattle, which is where I call home. Partway through, I spent an academic year on a fellowship in Cambridge, MA, that gave me freedom to attend classes and meet innovators at Harvard, at MIT, and in the Longwood Medical Area. Then I moved to San Francisco to cover biotech’s biggest companies for Bloomberg News. Four years ago, I made the startup leap to Xconomy, where I built up our biotech coverage in Boston, Seattle, San Francisco, and San Diego. I’ve spent a lot of time meeting and interviewing people in those places, and writing about life sciences innovation at startups as well as at big companies like Amgen and Genentech.
San Francisco, as I think most people in the industry would agree, is an amazing place for life sciences and has earned its ranking as the No. 1 cluster of biotech. This dates to the late ‘70s and the formation of Genentech. Even today, if you look at the categories Ernst & Young uses to rank geographic clusters in its most recent “Beyond Borders” report, the San Francisco Bay Area ranks No. 1 in six of the seven. The Bay Area is tops in number of public biotech companies, public company revenue, R&D spending, profits, cash balances, and total assets. Boston was No. 1 in public company market valuations (a number that fluctuates daily), and was second in every other category.
Those numbers tell much of the story at public companies, but not the whole story, because they leave out private companies and Big Pharma investment. If you think that private companies and startup funding are an important part of the story, and a leading indicator of future success, Boston has the edge. New England surpassed the Bay Area in seed/early stage biotech financing, and the number of startup companies in 2009/2010. New England had 124 seed/early stage companies that pulled in $1.17 billion in financing that fiscal period, compared with 99 companies that got $938 million that fiscal year in the Bay Area, according to figures from PricewaterhouseCoopers and the National Venture Capital Association.
While plenty of people in Boston can scratch the startup itch, quite a few others can find steady work and experience in Big Pharma. Those companies have decided over the last decade to invest big money, and hire a lot of people, in Boston. There’s Novartis, Merck, Pfizer, GlaxoSmithKline, and more. When Paris-based Sanofi bought Cambridge, MA-based Genzyme for $20 billion last year, at a point when it was closing R&D centers around the world, it created combined operations in Boston. When Tokyo-based Takeda Pharmaceuticals bought Cambridge, MA-based Millennium Pharmaceuticals a few years ago for $8.8 billion, it didn’t just pick up the company’s crown jewel and leave. It consolidated its global cancer drug R&D operation in Boston, invested a lot more money there, and charged CEO Deborah Dunsire and her team with creating more products like bortezomib (Velcade).
Now look at the independent biotech companies based there. Biogen Idec (NASDAQ: [[ticker:BIIB]]) has undergone a resurgence the past couple years under a new management team. Vertex Pharmaceuticals (NASDAQ: [[ticker:VRTX]]) has broken out to become a regional anchor, and regional role model for dozens of startups, thanks to two important new FDA approved drugs. And during a time when many VCs are cutting back investment or going out of business, Third Rock Ventures has burst on the Boston biotech scene, injecting big money into bold new startup ideas coming out of Boston’s research institutions. Companies like Agios Pharmaceuticals, Constellation Pharmaceuticals, Foundation Medicine, Bluebird Bio, Warp Drive Bio, and Zafgen are a few of these high-impact kind of opportunities that you rarely see sprouting up anywhere else. It will take a few more years to see if this strategy really pays off, but the early indications are encouraging and have emboldened Third Rock to expand this model to San Francisco.
Cutting-edge science at Harvard University and MIT put Boston on the map in the first place, and Boston is always working hard to keep its edge in fields like genomics, where the Broad Institute rules. But what is interesting to me is how many visionary decisions about transportation and land use—intentional or not—have been made to support that science, and that will pay dividends for generations. Without question, Kendall Square in Cambridge is the most
