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BIOPHARMACEUTICALS
From Site Selection magazine, March 2016
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Staying Power

Cluster and venture capital data show where longstanding strength provides the backbone for feisty startups.

BIOPHARMACEUTICALS
R&D work conducted at Argonne National Laboratory is part of the life sciences infrastructure placing Greater Chicago among the leaders in US biopharma cluster locations. A team of scientists including several from Argonne recently determined the structures of several important tuberculosis enzymes (pictured), which could lead to new drugs for the disease.
Image courtesy of Youngchang Kim/Argonne National Laboratory

by ADAM BRUNS

Rich Bryden, director of information products at the Institute for Strategy and Competitiveness, designed and launched Harvard's Cluster Mapping Project, an effort that continues under the U.S. Economic Development Administration grant to make the cluster mapping website a hub for education, analysis, and professional community around cluster-based economic development. The team has tracked biopharma since the beginning, in part because of where Harvard is located.

"We have done a bit more work on that over time, because of the Boston-centric story," he says, noting that the cluster mapping effort is focused on the length and breadth of clusters, with trade orientation as important as the geographic footprint of operations.

Top States for Life Sciences Venture Capital Investments in 2015

Biotech Venture Capital Investments 2015

State Deals Total $
California 166 3,300,296,200
Massachusetts 103 2,027,567,300
Maryland 16 255,709,800
Washington 11 252,614,000
North Carolina 11 212,223,200
Pennsylvania 30 182,717,100
Texas 13 170,860,000
New York 15 158,790,900
Connecticut 14 135,319,000
Illinois 6 132,169,400

Medical Devices & Equipment Venture Capital Investments 2015

State Deals Total $
California 90 1,031,889,400
Massachusetts 35 548,773,900
Pennsylvania 25 150,011,700
Minnesota 8 129,835,300
Georgia 7 90,915,000
Washington 6 87,634,800
Florida 9 74,265,000
Missouri 8 65,901,600
Texas 12 65,044,400
New Jersey 12 62,960,000

Healthcare Services Venture Capital Investments 2015

State Deals Total $
California 24 338,501,800
New York 3 92,303,000
Georgia 2 60,000,000
New Hampshire 1 50,000,000
Pennsylvania 6 45,307,800
Maryland 3 40,296,800
Illinois 2 36,050,000
Massachusetts 4 33,202,900
Virginia 5 31,436,000
Texas 4 19,320,000
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, Thomson Reuters data

The team's most recent cluster-mapping rankings are based on the most recent comprehensive data sets available, from 2013. "We'll see the 2014 data in May of this year," says Bryden. Ranked in order of employment, the clusters in California, Illinois, New York, North Carolina and New Jersey top the state list. By economic area, the strongest clusters are in New York, Chicago, Los Angeles, San Jose and Boston.

New York's ecosystem is aided by incubators and accelerators such as that developed by Alexandria Real Estate Equities, and by groundbreaking occupancies. And sometimes the reasons for the locations have more to do with logistics than science.

The Durst Organization and The Port Authority of New York and New Jersey in early January announced the signing of a 26,500-sq.-ft. (2,462-sq.-m.) long-term lease with oncology-focused Progenics Pharmaceuticals, Inc., for build-to-suit space on the 47th floor of One World Trade Center in Lower Manhattan. Progenics is the first biotechnology firm to occupy space at the iconic, Class-A office tower.

“The outstanding transportation network will enable current employees to reach our new headquarters, while the vibrant lower Manhattan locale will be a source of new talent close to our collaborators in both the technology and medical fields," said Progenics CEO Mark Baker.

Something Ventured

The latest MoneyTree Report from the National Venture Capital Association and PwC, based on data from Thomson Reuters, shows that biotech "ended the year up 17 percent in dollars and relatively flat in deals for the full year 2015, compared with the previous year. In 2015, Life Sciences dollars were up 12 percent and deals were down 3 percent, compared with 2014."

Trailing only software in its level of funding during Q4 2015, biotech received

$1.5 billion going into 95 deals. Despite ranking second in terms of dollars invested, however, biotech did not secure any of the Top 10 deals of the quarter.

"Investments in the Life Sciences sector (Biotechnology and Medical Devices combined) during the fourth quarter accounted for $2 billion going into 172 deals," said the MoneyTree report. "Like in the previous quarter, Life Sciences investments accounted for 18 percent of all venture capital deployed to the startup ecosystem in the fourth quarter."

For the full year 2015, biotech saw $7.4 billion worth of deals, up from just over $6.3 billion in 2014, even as the number of deals dipped ever so slightly from 482 to 475. Medical devices & equipment drew just over $2.7 billion in both years, with the number of deals dropping from 324 to 308.  

Notably, MoneyTree chooses not to track healthcare services as part of life sciences, but as a separate sector. However, it's one worth watching — especially as campuses and areas devoted to healthcare begin to feature workspace assets dedicated to life sciences firms such as CROs, biotech and bioinformatics. The MoneyTree report shows that healthcare services venture capital deals grew from 51 in 2014 to 78 in 2015. Their aggregate value more than doubled, from $359.5 million to $838 million.

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



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