The BIO International Convention, held each year in June in a rotating roster of American cities, continues to attract scores of economic developers eager to put their cities and states on the biotech map. This year's gathering, held in San Francisco, was no different, with 19 US states and more than 30 countries fighting to put their cities on investors' shortlists.
Although investors are eager to listen to investment promotion pitches from advocates from all these locations, many still bet on the usual suspects where the US is concerned, according to a 2015 report published by global real estate firm JLL. “Despite higher rents and labour costs, firms continue to flock to premier markets,” the authors of the JLL report note. Data gathered by greenfield investment monitor fDi Markets confirms this, with the Boston area cited as the top location for biotech investments in the US, ahead of California, another well-established hub for the industry. North Carolina's Raleigh-Durham area, another well established biotech hub, also ranks highly in JLL's report.
According to a benchmarking exercise published in JLL's 2015 report, locations such as Boston and California (in particular San Francisco, San Diego and Los Angeles) are able to attract a large share of investments into biotech because they have the best mix of life sciences employment concentration coupled with sector-related employment growth, a high number of existing biotech companies and a number of patents and public funding available for biotech firms.
These locations might appear to be the most attractive for biotech investors, but they also come with the highest price tag, according to data gathered by JLL. San Francisco recorded a 16.9% increase in average rent in 2015 compared with 2014, the highest in the US. San Diego came in close second with 15.5% increase, followed by Raleigh-Durham, which saw year-on-year change of 12.4%.
Yet, although at first glance JLL's benchmarking exercise might seem to be all about well-known clusters, it also includes less obvious alternatives. But what, apart from lower costs for labour and rent, makes them stand out?
In the case of Philadelphia, which ranks seventh in JLL's benchmarking exercise and which hosted the BIO Convention in 2015, the city stands out because of its strong concentration of R&D companies. According to Christopher Molineaux, president and CEO of Pennsylvania Bio, a state-wide trade association, the city's rise is attributable to recent changes within the industry. “If you look at what has happened in the past couple of years, the pharma industry continued to consolidate, which led to many people being laid off from big pharma firms,” says Mr Molineaux. “In the Philadelphia region, they went and started their own R&D firms, with more than 700 of them being created between 2008 and 2014.”
When it comes to employment in the sector, Philadelphia's strength lies in numbers. With more than 17,000 professionals employed in pharma and medicine manufacturing and over 13,000 in medical equipment and supplies manufacturing, it ranks sixth nationwide, according to data from the US Bureau of Labor and Statistics.
These numbers were the major reason why global pharma giant GlaxoSmithKline (GSK) decided that Upper Providence, a township located 50 kilometres west of Philadelphia, would be one of its two global R&D sites, according to Brian McVeigh, GSK's transactions and investment manager. “One of the main reasons for moving operations here is access to the world-class talent, both local and drawing from New York and Washington, DC, which are located within close proximity,” says Mr McVeigh, who is a Philadelphia native.
While Philadelphia does not benefit from the same recognition within the biotech industry as Boston or North Carolina's Research Triangle Partnership region, even less clout is reserved for Minneapolis, which ranks ninth in JLL's benchmarking exercise. Yet in recent years, the city has attracted investments from companies such as Calyxt, a subsidiary of Cellectis, a French firm focusing on immunotherapies, and Cardio3 BioSciences, a Belgian biopharma firm specialising in therapies for cardiovascular diseases.
“We have a long history of migration from Germany and Norway. I guess, because of that, we focus on getting things done, not talking about them,” says Matt Podhorsky, city administrator of Chaska, a Minneapolis metro area city that houses companies such as Beckman Coulter, a clinical diagnostics firm, and Lifecore BioMedical, a medical and surgical devices firm.
Mr Podhorsky notes that German and Norwegian antecedents can help create a focused work culture. “Thanks to our roots, we have a strong work ethic, with people being loyal and priding themselves at what they do,” he says.
Links to European countries are not the only part of the region's tradition that makes the region attractive for biotech, according to John Shoffner, director of business development at the Minnesota Department of Employment and Economic Development. “We have traditionally been an agricultural state and the University of Minnesota is a top institution when it comes to agricultural sciences. That, combined with access to biotech professionals, makes us one of the top locations for bio-agtech investments,” he says.
Over in Maryland, which together with Metro DC ranks 13th in JLL's benchmarking exercise, the big draws are the state's access to funding and national biotech-related institutions, according to Benjamin H Wu, Maryland's deputy secretary of commerce. “Co-location and proximity to federal laboratories and entities such as the US Food and Drug Administration and National Institutes of Health definitely have a significant role in positioning us as a good location for biotech,” he says.
“It gives money but also opportunities to interact with these institutions much more closely than if located elsewhere,” adds Mr Wu, who says that other major partners for biotech companies are the University of Maryland and John Hopkins University, the latter being a leader when it comes to research grant funding.
Academic and funding opportunities were what brought Marco Chacon, founder and chairman of Paragon Bioservices, a contract development and manufacturing firm, to Maryland. “I came here to do my PhD at the University of Maryland and in many ways this place adopted me,” says Mr Chacon, who moved to the state in 1970s from Costa Rica. “But I would not be here if it did not make sense for our company,” he adds. Paragon Bioservices employs 170 staff and occupies 6500 square metres of the University of Maryland's BioPark, a laboratory and office park that has been in development since 2015.
“Now I am getting more involved in working with local authorities on how to make Maryland even more attractive for biotech,” says Mr Chacon. “Our goal for the near future is to become a number three location for the pharma industry. I must say that the outlook for this is very good.”