Why Boston covets its role as biotech hub

Inside a former furniture warehouse, scientists at a new biotech facility are busy studying cell proteins.

Across the street, in this neighborhood that straddles MIT and Harvard, a former candy factory is being transformed into the research headquarters for European biotech giant Novartis.

And across the Charles River, Harvard University is plotting its next major expansion: a new life-sciences research campus.

These are just a few of the signs of how the Boston area has grabbed a lead role in a field that many see as one of the most promising industries of the new century: biotechnology.

But even as new outposts of biomedical research rise here, Massachusetts faces competition. Thousands of jobs are at stake, in an era when downsizing is the trend in established sectors such as manufacturing.

Recently, a North Carolina industry group took out a full page ad this month in the Boston Globe inviting biotech firms to come down south, and the speaker of the state's House of Representatives sent personal letters to several CEOs.

It doesn't quite equal the shots fired at Ft. Sumter to start the Civil War, but the stakes are huge in this economic battle between the states.

"It's a big prize," says Mark Dibner, president of BioAbility, a biotech consulting firm based in North Carolina's Research Triangle Park.

With its cluster of top research universities and hospitals, the Boston area has long enjoyed a big chunk of the biotechnology business. Only the San Francisco Bay Area produces as many Ph.Ds, patents, and startups in the field.

But for all its advantages, Massachusetts faces rival states that are touting lower costs of living. Some are also exploiting growing anger within the industry that Massachusetts cities are among those seeking to buy cheaper drugs in Canada.

The field of biotech is transitioning beyond infancy. Companies are just beginning to mine potential commercial applications of cells. One study by the Massachusetts Biotechnology Council found future advances could produce 100,000 new jobs and billions in revenues.

Today, there are 280 biotech companies in Massachusetts, employing more than 30,000 workers. But it is also a fragile moment, as the state's biotech firms mature from start-ups focused on research into more expensive business of developing and manufacturing of drugs.

One company, Transkaryotic Therapies Inc., is typical: founded by a doctor at a Harvard-affiliated teaching hospital, TKT was 12 years old before the firm's first drug was ready for manufacture.

State leaders worry that maturing biotech companies may eventually go the way of other industries that were born in Massachusetts and then slipped away. First, textiles moved south. Then, after pioneering the field of computing and becoming dominant in in so-called minicomputers, the state lost out to California's Silicon Valley. "History must not repeat itself," MIT president Charles Vest told a summit of Massachusetts life-science industry leaders in September. "We can't miss this one as we did the silicon revolution."

The region remains a research leader. Many of the world's largest pharmaceutical companies have opened research facilities here. One is Novartis, which announced that it will move its entire research division here from Switzerland along with as many as 1,000 jobs. Harvard's plan to build a life sciences campus in the Allston section of Boston promises to bolster that lead.

But Massachusetts has enjoyed less success convincing firms that grew up here to keep their manufacturing operations in the state. BioGen IDEC, for example, still has 1,500 employees in Cambridge but built the second largest biomanufacturing facility in the world in North Carolina's Research Triangle Park.

High paying biomanufacturing jobs are an alluring target in states like North Carolina, which wants to employ former textile, tobacco, and furniture workers. Plus, biotech factories pollute less and require less energy than other industries.

That explains why a recent survey of local and state economic development agencies found 83 percent identified biotechnology as one of their top two targets for industrial development, a Brookings Institution study noted.

North Carolina boasts a lower cost of living, cheaper land, and a strong research base anchored in Raleigh and Durham by Duke, North Carolina State and University of North Carolina. The state government has long supported biotech, opening a center to fund training and business development in 1981. More recently, the state committed $60 million of tobacco-settlement money to train workers for biotech jobs.

By contrast, says Michael Astrue, CEO of TKT, says his firm had to import workers trained in manufacturing quality and toxicology from other states to staff its Cambridge manufacturing facility.

"It's not an easy place to do business," says Mr. Astrue, who received one of the letters from North Carolina's House Speaker, Richard Morgan. "Governors of other states call personally, begging us to move, and throw money at us, and here we get treated very rudely by significant people in the political establishment."

Plans by Massachusetts cities to reimport drugs from Canada certainly aren't making biotech companies feel welcome.

"The Canadian medicine crowd would love to turn Massachusetts into a biotech ghost town," one industry source says.

Gov. Mitt Romney's life-science development official, Scott Sarazen, admits the state has "historically been complacent" about biotechnology. He cites new tax rebates and funding for emerging technologies as evidence the state is trying to do better. "Just like the industry is dynamic and growing, we have to always stay current with it."