Critics of Gov. Patrick’s $1 billion life sciences bill question whether the drug development industry in Massachusetts needs financial help from the state.
Tinker Ready
From Memorial Drive in Cambridge, you can easily walk to the headquarters of Vertex Pharmaceuticals and across the Charles River to a Genzyme plant. The research arm of Swiss drug maker Novartis is less than a mile away in a renovated candy factory. Just beyond that is Kendall Square–where the MIT campus sits in a neighborhood filled with biotech companies.
Massachusetts has long been a magnet for the biomedical industry. Despite high costs, the state has two big draws—a well-educated workforce and proximity to top-notch research institutions such as Harvard and MIT.
But supporters of Gov. Deval Patrick’s proposed $1 billion life sciences bill say those days are numbered. They argue that states such as Maryland and North Carolina–as well as countries such as Singapore–have become much more aggressive in recent years about marketing themselves to companies, including those in Massachusetts, citing their tax breaks and low cost of doing business. Preliminary results from an ongoing survey of Massachusetts life science companies indicate that 20 of 26 companies polled said they would consider moving out of state. More than half reported already receiving offers from other states.
However, as the bill picks up pace in the legislature, critics have begun questioning the premise that the state is about to lose its dominance in the life sciences. By most measures, they say, the state is an industry nexus and there is little evidence of an exodus of life science companies.
At issue is a section of the bill that would expand tax incentives—amounting to as much as $25 million a year for 10 years—and fund road and sewer improvements to lure new companies to Massachusetts.
“When we say we will pay you to locate in a thriving mecca of this industry, it is dangerous,” said Sen. Mark Montigny, a New Bedford Democrat, during a State House hearing earlier this month.
Supporters of the bill said the danger is in letting a valuable industry slip away.
“Leadership in life sciences is ours to lose,” said University of Massachusetts president Jack Wilson at the same hearing.
State competition
The bill aims to boost tax revenue and bring high-paying jobs to the state by setting up a range of programs to support biomedical research, product development, and manufacturing. As part of the effort, the state’s reinvigorated Massachusetts Life Sciences Center (MLSC) has already approved $12 million in matching research grants for scientists and $7.7 million for a new stem-cell bank and registry at the University of Massachusetts Medical School in Worcester.
But the MLSC—a group of state officials and appointees–needs the Patrick bill to pass in order to obtain additional funding that would sustain those programs, create an RNA interference research center at UMass, fund roads and utilities, and give tax breaks to life science companies.
Fueling the debate is a range of conflicting views on the state’s competitiveness. An April study by analysts at PriceWaterhouseCoopers called Massachusetts a growing “super cluster” for the life sciences but warned of rising competition from other states. Companies complain that the state’s economic development programs are poorly coordinated and local permitting is cumbersome, according to the Massachusetts Biotechnology Council.
At the same time, Massachusetts ranked second only to California in National Institutes of Health funding, drawing $2.2 billion in 2006, and is also one of the top ranked states in the amount of life science venture capital funding received. Suffolk University economists measuring state competitiveness ranked Massachusetts second in the nation for 2007, after Utah.
Massachusetts is a life sciences leader, so it is unclear what problem the Patrick bill is trying to address, says Greg LeRoy, the director of Good Jobs First, a nonprofit economic development research group in Washington, D.C. He says the plan needs to make a better case for the need for public subsidies.
“Without targeting the plan, you risk subsidizing investment that would have occurred anyway,” LeRoy said at the state hearing.
Stay or go?
For Josh Boger, the head of Vertex Pharmaceuticals, the need for incentives from the state is real. “I’m the one who regularly gets detailed reports about how much more favorable things would be if we moved Vertex to another state,” said Boger, who is also the current chair of BIO, the national association of biotechnology companies.
As Vertex looks to expand its headquarters, Boger has been listening to pitches from other states, as well as other countries. “Am I looking at Massachusetts? Yes,” he said. “That doesn’t mean that I’m not looking elsewhere.”
He said the tax incentives in the Patrick plan are “incredibly modest” and will put the state on par with competitors. As he decides where to expand, Boger says he will view incentive programs as a measure of the state’s commitment to the industry.
The members and staff of a joint House and Senate committee are now reviewing the testimony from the public hearings and will soon make recommendations that could include changes to the bill. Even critics of the industry incentives support other elements of the bill, such as the creation of a stem-cell bank and the RNAi research centers at UMass. While the bill has powerful supporters in the legislature, it may look a bit different from Gov. Patrick’s original plan.