MassBio recently published their annual “2019 Industry Snapshot.” In addition to providing an in-depth look at the industry in the state, it provides a wealth of data on the industry overall.
The state of Massachusetts, and Boston in particular, is one of the dominant areas in the United States for biotech startups and the biopharma industry in general.
The Massachusetts Biotechnology Council, MassBio, recently published their annual “2019 Industry Snapshot.” In addition to providing an in-depth look at the industry in the state, it provides a wealth of data on the industry overall.
“The Massachusetts biopharma industry continues to grow and innovate at an incredible rate, creating both challenges and opportunities for companies who must fill their pipeline of talent to meet the increasing demands on their services,” stated Robert K. Coughlin, president and chief executive officer of MassBio. “We’re focused on efforts to support both the infrastructure needs of the Commonwealth in terms of employee housing and transportation, and also creating ways to ensure that a diversity of companies, from small startups to established biotechs, have the investments and resources they need to sustain this growth.”
Massachusetts and Boston have the benefit of access to a great deal of talent coming out of the Massachusetts Institute of Technology (MIT), Harvard University and Harvard Medical School, Massachusetts General Hospital and others. In the last decade, from 2009 to 2018, industry jobs grew 35%, adding almost 20,000 new jobs. Research-and-development jobs for the state in that period grew 47%. From 2017 to 2018, the change in biotech R&D jobs for Massachusetts was 10%.
It’s worth nothing that in this particular subsegment, for 2017 to 2018, Massachusetts is actually second to California with 14% growth. For the 10-year period, California biotech R&D jobs grew a whopping 110%. California and Massachusetts are followed by Pennsylvania (1 year, 11%; 10 years, 111%), North Carolina (1 year, 54%; 10 years, 22%), Maryland (1 year, -37%; 10 years, -1%), New York (1 year, 9%; 10 years, 161%), Washington (1 year, 11%; 10 years, 191%), Texas (1 year, 2%; 10 years, 25%) and Illinois (1 year, 19%; 10 years, 46%).
For the biopharma manufacturing sector, Massachusetts has grown over the 10-year period from 2009 to 2018 by 6% and from 2017 to 2018 by 1%. Across the country, this is not an area marked by big growth. Out of the top 10 states or territories, the largest biopharma manufacturing growth over the last 10 years was North Carolina, with a 16% growth rate and California with a 9% growth rate. New Jersey was hit hard, with a 10-year change of -42% and Puerto Rico with -37%.
In terms of Massachusetts, the largest biopharma employer in the state is Takeda, with 4,927 employees. It is followed by Sanofi (4,800), Biogen (2,400), Novartis (2,337) and Pfizer (2,226).
Yardi Matrix recently published an analysis of the Boston office market that was more comprehensive than just the life sciences market, but paints a good picture of what the commercial real estate market is like in Beantown.
Siemens Healthineers, which is the mother company for several medical technology companies, is headquartered in Munich, Germany, but its U.S. offices are expanding in Boston. Takeda Pharmaceutical is relocating its operation from Chicago to the Boston area.
The report cites that Boston has a 7.8 million-square-foot real estate development pipeline, yet pipeline outpaces real estate and office space supply and most projects under construction are pre-leased.
At the end of April 2019, Boston’s office vacancy rate was 9.7%. But, the report notes, “Due to aggressive demand coming from the growing technology and health-care industries, Class A assets were 7.4% vacant, while Class B assets were at 12% vacancy”
As those designations imply, Class A are the highest quality buildings in their market, generally newer built within the last 15 years. Class B are a step down, generally older, tend to have lower income tenants. They may be well-maintained, and many investors believe them as “value-add” investment opportunities because they can be upgraded. Class C properties are generally more than 20 years old and located in less desirable locations, and generally require renovation.
Arie Belldegrun, founder and former chair, president and chief executive officer of Kite Pharma, has teamed up with real estate developer Tishman Speyer to launch a biotech-focused real estate company, Breakthrough Properties. Kite was acquired by Gilead Sciences in 2017 for $12 billion.
Belldegrun’s family company, Bellco Capital, entered the joint venture and has bought its first property, a one-acre site in Boston’s Seaport District. The site went for $80 million. Breakthrough is also looking at sites in San Francisco. The site in the Seaport District has 250,000 square feet of development rights and is planned to be completed by 2021.
“This came out of necessity,” Belledgrun told Bloomberg. “I realized that there’s a significant need for an ecosystem in life sciences where scientists can work and interact.”
This is confirmed by the MassBio report, which notes that more than 12.4 million square feet of commercial laboratory space has been added to Massachusetts in the last decade, an increase of 70%. There is currently 30 million square feet of lab space in the state.
Belldegrun has also launched Vida Ventures, a venture capital firm focused on biotech startups. He indicates that Breakthrough Properties will also offer business development services to its tenants, and Vida Ventures may invest in some of the biotech companies it hosts.
The MassBio report notes that venture capital investment in Massachusetts’ life science companies hit $4.8 billion in 2018, and in the first two quarter of 2019 alone, the state’s biopharma companies raised just under $1.5 billion. Biopharma companies in Cambridge, Massachusetts received 63% of all biotech venture investment in the state. And, in fact, last year, 78% of all Massachusetts biotech companies that launched initial public offerings that year were located in Cambridge.
In short, Massachusetts is continuing its huge growth in biopharma both for jobs and companies looking to invest in the industry, with no end in sight.
