1 January 2012Big Pharma

Out in front: the Boston cluster

The Boston life sciences industry is flourishing, according to Jones Lang Lasalle, a multinational firm that advises life sciences companies on business strategies. Last year the company produced the first comprehensive, global life sciences ‘cluster’ report, with a heavy focus on the US.

It argued that, statistically, Boston and its surrounding area was the highest-ranking US industry hub, taking first place in five of six categories including government funding and venture capital funding. On the face of it, accruing 17 points more than second-placed New York-New Jersey, Boston stands far taller and stronger than any of its rivals.

But looking more closely, how dominant is Boston? For example, the town’s life sciences employment as a percentage of its total employment—16.2 percent—is only marginally higher than second-placed Philadelphia’s, at 14.8 percent. And venture capitalists, who are crucial for investing in the life sciences industry, increasingly flock to the San Francisco Bay Area rather than to Boston.

What is the secret of Boston’s success? The answer, it seems, is the town’s wealth of intellectual expertise. The area is home to world-leading universities such as Harvard and the Massachusetts Institute of Technology (MIT), which are the two best on the planet, according to The Guardian newspaper. Most important, their students are choosing subjects that feed the life sciences industry. The report says that for every 1,000 individuals in Boston aged between 25 and 34, 287 are science and engineering graduates.

These figures are supported by anecdotal evidence. Jill Uhl, director of intellectual property at John Hopkins University in Baltimore, says the abundance of prestigious universities allows Boston’s life sciences industry to attract some of the best students in the world.

This rich pool of talent is available to research institutes, pharmaceutical and biotech companies, which can all hire the best employees. Unlike many other places, she adds, the life science companies in Boston are small, independent operations that are flexible and have great access to the research being undertaken at the region’s universities.


A clear picture is emerging, one that reveals a small life sciences hub where students, researchers and businesses all closely interact. One of the main benefits of having so many high quality institutions clustered together, Uhl says, is the opportunity to collaborate. “While the life science community in Boston is very small, it is one of the most active,” she says.

Barry Greene, president of Cambridge-based Alnylam Pharmaceuticals, says the main advantage of being at the hub’s centre is the partnership opportunities that arise. These partnerships foster collaboration and advancement in research and development (R&D).

“For example, Alnylam has developed strategic collaborations related to its novel technology and product pipeline with local entities including MIT, Harvard, Biogen, Novartis and Cubist. In addition, the entire industry benefits from Boston’s world-renowned medical community, including hospitals and schools,” he says.

It is interesting to note that companies typically assess whether there is room to innovate before undertaking any R&D. Jennifer Camacho, shareholder at Greenberg Traurig LLP in Boston, says it is too expensive and too risky not to do things in this order.

Large pharmaceutical companies will employ teams of people to assess the market, while smaller companies tend to collaborate, she says. Camacho, who refers to the “synergy” between these smaller companies, says that they are often the best innovators, “thinking outside of the box”.

All companies face challenges when trying to secure or protect IP. Aside from regulatory issues, Camacho says the volume of case law handed down by US courts, particularly covering the biotech industry, is large. “This gives rise to questions on how different cases affect biotech companies, and is narrowing the realm of patent eligibility,” she says.

A final hurdle for life sciences companies is patent reform in the US. The America Invents Act, passed in September 2011, lays down new rules for filing patents, known as ‘first-to-file’. Although it won’t replace the current ‘first-toinvent’ system until March 16, 2013, Camacho says companies need to be incorporating these changes into their IP strategies.

While this legislation may be a challenge for life sciences companies, the government is keen to help Boston. As the Jones Lang Lasalle report notes, the cluster receives significant funding from the National Institute of Health, which has bankrolled Boston with at least $2.2 million to date.

These handouts, along with further tax breaks for companies locating in the area, provide incentives for businesses to grow and thrive. But for all the money, the prestige and the additional praise from Jones Lang Lasalle, has a Boston institution made an outstanding discovery, one groundbreaking drug that has been important for treating an illness or disease?

“To my knowledge, there hasn’t been a blockbuster drug generated by a Boston life sciences company,” says Uhl. The term blockbuster is, however, subjective and prevents us from understanding Boston’s notable successes. As Uhl herself notes, and others concur, there have been several important breakthroughs in the area.

For example, Doug Cole, general partner at Flagship Ventures in Cambridge, and George Xixis, a partner at Nutter, McClennan & Fish LLP in Boston, both argue that there have been positive advancements in the treatment of hepatitis C, an infectious disease primarily affecting the human liver.

On May 23, 2012, the US Food and Drug Administration (FDA) announced its approval of a hepatitis C treatment called Incivek, which is produced by Vertex Pharmaceuticals, based in Cambridge. Only 10 days earlier, the regulator cleared a similar drug from pharmaceuticals company Merck, based in New Jersey, setting up an intriguing sub-plot to the Boston-New Jersey rivalry.

According to the FDA’s Debra Birnkrant, a drug cocktail that has been the standard hepatitis C therapy for the past decade requires 48 weeks of treatment and fails in about half of patients. But the new developments, FDA commissioner Margaret Hamburg says, are “innovative” and represent a “new direction” in the treatment of hepatitis C, and a “significant improvement” over the current standard of care.


Incivek, which costs $49,200 for a 12-week treatment course, works by blocking an enzyme used by hepatitis C to copy itself. Incivek will battle against a virus affecting around 170 million patients worldwide but, according to Xixis, it will produce dividends of hundreds of millions of dollars. Could it become the blockbuster drug?

Xixis expects another drug, called BG-12— produced by a Massachusetts company, Biogen—also to do “exceedingly well”. The drug, which is now under review by US and European regulators, treats multiple sclerosis (MS), the disabling disease that attacks the central nervous system. Shares in Biogen immediately soared back in October 2011 when it revealed positive results from clinical trials.

The trials showed that over a two-year period, when given twice a day, BG-12 cut the annual relapse rate in patients with MS by 44 percent. When given three times a day, it cut the relapse rate by 51 percent. Biogen already produces MS drugs Avonex and Tysabri which are given by injection, but the new BG-12 pill could become the world’s leading treatment for the disease.

Looking ahead, how can Boston stay on top of the pile? “It all depends on money—to innovate and effectively secure funding for research,” Camacho says. Cole agrees, saying it will ultimately come down to businesses and, more specifically, their management.

Their decisionmaking, whom they hire and their access to capital, will be crucial factors affecting Boston’s ability to stay ahead of New Jersey-New York and the Bay Area, placed second and third, respectively, in the report. Choosing from the best intellectual pool, he adds, not just in the Boston area but all over the world too, will be equally important.

On this latter point, the future is positive: the ability to pick talent from a highly skilled labour force is certain. “North Carolina has generated a number of programmes designed to attract life science start-ups to the Research Triangle Park area,” Uhl says, “but North Carolina cannot compete with Boston in terms of the quality or number of universities there. North Carolina and Duke are excellent institutions, but once you get past them, there isn’t much else there.”

While Harvard and MIT remain world leaders, continuing to attract the brightest science and engineering students, Boston’s life sciences industry should prosper further. Perhaps the only blip on an otherwise positive record is the level of venture capital funding. Despite Boston receiving funding of more than $1.1 million, according to Jones Lang Lasalle, it is pipped to the post by the Bay Area, which has received around $700,000 more.

These figures are partly caused by Boston’s high prices—it is an expensive place to work and live. But with the government providing tax breaks for start-ups in Boston, it will be interesting to see what data the second Jones Lang Lasalle report shows when it is published in October 2012.

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