[Updated: 11:40 am PT] It’s time for a challenge:
Will somebody please come out with a deeply researched and credible report that ranks U.S. regional biotech clusters, on the criteria that matter the most?
I’m feeling compelled to issue this challenge after going over the latest deeply flawed report on this subject, from real estate firm Jones Lang LaSalle. Back in the day before social media, guys like me in the press would take a 1- or 2-minute look at such a report, and click the delete button. That would be the end of it. But now that everybody’s a publisher, these kind of half-baked analyses tend to be widely shared and commented on without much critical review.
This question about U.S. biotech clusters matters to a lot of people, because years of research in business and economics tells us that the clustering effect is essential for complex industries like biotech. The network of researchers, venture capitalists, entrepreneurs, business executives, service providers and more all need to be able to collaborate, preferably in close proximity to one another, to achieve hard goals like developing a new drug or diagnostic.
When certain regions are good at putting together all the necessary ingredients, it’s an encouraging sign for the future of an entire regional economy. Economists, and elected officials, look to such reports for guidance on how their region is performing, and what could be done to improve.
So, what’s wrong with this study? The report, which I’m sure many of you have seen by now, ranked the top 21 regional biotech clusters in the U.S., and compiled data from other emerging hubs around the world. It concluded that Greater Boston is the No. 1 biotech hotspot, followed by San Diego, and the San Francisco Bay Area. Raleigh-Durham, NC and Philadelphia, PA rounded out the top five.
Predictably, the folks in Boston cheered “We’re No. 1!” The good folks of San Diego chimed in as well, saying “Yay, we’re No. 2, we beat SF.”
Now, I like San Diego a lot, and have made many reporting trips there since 2008 when I started Xconomy’s bureau there with Bruce Bigelow. I personally enjoy reporting on a lot of great entrepreneurs and companies there. There are some truly innovative, world-changing companies doing business there, like Illumina.
But sorry, San Diegans, this study is bogus.
This report measured regional biotech activity on a weighted analysis of four criteria. The authors considered the percentage of a region’s population employed in life sciences, based on 2011 data from the U.S. Bureau of Labor Statistics. The second criterion was the number of life sciences establishments, also based on BLS data.
The other two factors were venture capital financing, and basic research support from the National Institutes of Health. The authors of the report put a little more weight on the employment data, and a little less on the number of establishments, before producing a weighted composite score that enabled them to arrive at their rankings.
There are all kinds of flaws in this analysis. For starters,
