SEPTEMBER 2004
Bullish On Biotech (cover)
Alliance Helps Startups Set Roots Across the Pond (sidebar)
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MASSACHUSETTS SPOTLIGHT
Bullish On Biotech
by MARK AREND
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| Fujifilm Microdisks U.S.A. recently completed a 60,000-sq.-ft. (5,600-sq.-m.) expansion of its high-capacity tape cartridge manufacturing facility in Bedford, Mass. |
| A |
reas seeking to outshine Massachusetts as a center of biotechnology will be hard pressed to do so for the foreseeable future. With the economy back in growth mode, investment in the sector is on the rebound, including venture capital investment, which is central to the sector's vitality.
In fact, in the first quarter of 2004, biotech companies accounted for more than 30 percent of venture capital financing in Massachusetts, according to bioSTATus Q1 2004, a research report from Richards Barry Joyce & Partners, a Boston-based real estate advisory firm. The same report states that 22.3 percent -- more than a fifth -- of all 2003 biotechnology financing nationwide involved Massachusetts companies.
Already-established firms in the sector figure prominently too, and helped the biopharma sector trail only manufacturing in the Massachusetts Alliance for Economic Development's (MAED) mid-year 2004 report on prospect relocation assistance.
The Bay State's well-educated labor pool and access to R&D resources at dozens of colleges and universities are the investment magnets with the greatest pull. But they work on other industries besides biotechnology. Swiss medical device manufacturer Straumann AG is locating its first North American headquarters in Andover, creating more than 300 new manufacturing jobs over the next five years with a US$50-million investment. Straumann, which makes high-precision implants for tooth replacement and tissue-regeneration products, will consolidate its Waltham, Mass.-based U.S. management group at the new site along with production and development.
"The Andover location provides access to an important pool of scientific and skilled labor talent and enables us to house our key U.S. functions under one roof close to other leading companies in the medical device business," said CEO Gilbert Achermann at the May 2004 announcement. The U.S. division has seen sales increase 70 percent in the past 18 months. Straumann plans to increase the U.S. operation's contribution to sales from 25 percent to at least 35 percent by 2008.
In the high-tech arena, EMC Corp., headquartered in Hopkinton, just celebrated its 25th anniversary, and employs some 7,000 people in the state. But it's not the only data storage company finding the state hospitable to HQ operations.
3Com Corp. has just completed the relocation of its headquarters from Santa Clara, Calif., to Marlborough, Mass. The network systems provider's enterprise networking business already was located at the Marlborough site; that business line is now the company's core business. 3Com maintains a presence in Santa Clara, but the strategic importance of an East Coast base of operations was too much to ignore.
"This centralization will be instrumental to increasing efficiency in the day-to-day business decisions and processes that require cross-functional integration," explained 3Com CEO Bruce Claflin in May 2003, when the headquarters relocation was an-nounced. "In addition, two-thirds of 3Com's U.S. opportunity is on the East Coast and approximately half our sales are in Europe, meaning the majority of our customers and partners are more accessible from Marlborough than Santa Clara. Most of the major financial institutions that represent our investor base are also on the East Coast."
Fujifilm Microdisks U.S.A. (FMDA) completed a 60,000-sq.-ft. (5,600-sq.-m.) expansion of its manufacturing facility in Bedford, Mass., in July 2004. Originally built in 1989 at 75,000-sq. ft. (6,900 sq. m.) for making computer floppy disks, the facility now produces high-capacity tape cartridges for midrange and enterprise-scale data storage applications. The $35-million investment will result in approximately 100 new jobs.
"We decided to stay in Massachusetts for a number of reasons, one of which is the talent pool," says Larry Chiarella, vice president and general manager at FMDA. "There is good availability of engineering people. We use an automated manufacturing process, so it is important that we be able to attract people with skills in automation, not only from an engineering standpoint but also in terms of technicians. We need people who understand automation controls -- motors and drives and sensors and so forth. There is a good supply of those people here in Massachusetts." Similarly, Chiarella says his company needs machinery operators, and proximity to such industrial cities as Lowell and Lawrence makes it possible to fill that need.
State incentives also figured into the equation, says Chiarella. Bedford is within a greater Boston economic development target area in which the state offers up to a 5-percent incentive on capital investments. The state's economic development office has also been behind the development of a 600-acre (243-hectare) high-tech center near Hanscom Air Force Base where the expanded facility is located.
In addition, Chiarella adds, "Massachusetts uses the state university system to develop partnership programs to work with manufacturers. Programs include consulting services, training seminars, Six Sigma and other programs that are very effective and very helpful to manufacturers."
Sometimes the facilitated project is a training facility itself. An MAED-assisted project currently is in negotiation in Norwood for a 160,000-sq.-ft. (14,864-sq.-m.) "luxury automobile training campus" that will employ 180.
Chiarella credits Gov. Mitt Romney's administration with working hard to improve the state's business climate. "Initiatives are coming right from the governor's office to try to make Massachusetts more competitive for businesses. They are very proactive in that regard."
In fact, in the first quarter of 2004, biotech companies accounted for more than 30 percent of venture capital financing in Massachusetts, according to bioSTATus Q1 2004, a research report from Richards Barry Joyce & Partners, a Boston-based real estate advisory firm. The same report states that 22.3 percent -- more than a fifth -- of all 2003 biotechnology financing nationwide involved Massachusetts companies.
Already-established firms in the sector figure prominently too, and helped the biopharma sector trail only manufacturing in the Massachusetts Alliance for Economic Development's (MAED) mid-year 2004 report on prospect relocation assistance.
The Bay State's well-educated labor pool and access to R&D resources at dozens of colleges and universities are the investment magnets with the greatest pull. But they work on other industries besides biotechnology. Swiss medical device manufacturer Straumann AG is locating its first North American headquarters in Andover, creating more than 300 new manufacturing jobs over the next five years with a US$50-million investment. Straumann, which makes high-precision implants for tooth replacement and tissue-regeneration products, will consolidate its Waltham, Mass.-based U.S. management group at the new site along with production and development.
"The Andover location provides access to an important pool of scientific and skilled labor talent and enables us to house our key U.S. functions under one roof close to other leading companies in the medical device business," said CEO Gilbert Achermann at the May 2004 announcement. The U.S. division has seen sales increase 70 percent in the past 18 months. Straumann plans to increase the U.S. operation's contribution to sales from 25 percent to at least 35 percent by 2008.
In the high-tech arena, EMC Corp., headquartered in Hopkinton, just celebrated its 25th anniversary, and employs some 7,000 people in the state. But it's not the only data storage company finding the state hospitable to HQ operations.
3Com Corp. has just completed the relocation of its headquarters from Santa Clara, Calif., to Marlborough, Mass. The network systems provider's enterprise networking business already was located at the Marlborough site; that business line is now the company's core business. 3Com maintains a presence in Santa Clara, but the strategic importance of an East Coast base of operations was too much to ignore.
| "Initiatives are coming right from the governor's office to try to make Massachusetts more competitive for businesses."
-- Larry Chiarella,
Fujifilm Microdisks U.S.A. |
"This centralization will be instrumental to increasing efficiency in the day-to-day business decisions and processes that require cross-functional integration," explained 3Com CEO Bruce Claflin in May 2003, when the headquarters relocation was an-nounced. "In addition, two-thirds of 3Com's U.S. opportunity is on the East Coast and approximately half our sales are in Europe, meaning the majority of our customers and partners are more accessible from Marlborough than Santa Clara. Most of the major financial institutions that represent our investor base are also on the East Coast."
Fujifilm Microdisks U.S.A. (FMDA) completed a 60,000-sq.-ft. (5,600-sq.-m.) expansion of its manufacturing facility in Bedford, Mass., in July 2004. Originally built in 1989 at 75,000-sq. ft. (6,900 sq. m.) for making computer floppy disks, the facility now produces high-capacity tape cartridges for midrange and enterprise-scale data storage applications. The $35-million investment will result in approximately 100 new jobs.
"We decided to stay in Massachusetts for a number of reasons, one of which is the talent pool," says Larry Chiarella, vice president and general manager at FMDA. "There is good availability of engineering people. We use an automated manufacturing process, so it is important that we be able to attract people with skills in automation, not only from an engineering standpoint but also in terms of technicians. We need people who understand automation controls -- motors and drives and sensors and so forth. There is a good supply of those people here in Massachusetts." Similarly, Chiarella says his company needs machinery operators, and proximity to such industrial cities as Lowell and Lawrence makes it possible to fill that need.
Richards Barry Joyce & Partners www.rbjrealestate.com/biostatus.htm Massachusetts Dept. of Massachusetts Alliance for |
State incentives also figured into the equation, says Chiarella. Bedford is within a greater Boston economic development target area in which the state offers up to a 5-percent incentive on capital investments. The state's economic development office has also been behind the development of a 600-acre (243-hectare) high-tech center near Hanscom Air Force Base where the expanded facility is located.
In addition, Chiarella adds, "Massachusetts uses the state university system to develop partnership programs to work with manufacturers. Programs include consulting services, training seminars, Six Sigma and other programs that are very effective and very helpful to manufacturers."
Sometimes the facilitated project is a training facility itself. An MAED-assisted project currently is in negotiation in Norwood for a 160,000-sq.-ft. (14,864-sq.-m.) "luxury automobile training campus" that will employ 180.
Chiarella credits Gov. Mitt Romney's administration with working hard to improve the state's business climate. "Initiatives are coming right from the governor's office to try to make Massachusetts more competitive for businesses. They are very proactive in that regard."