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— Analysis —
When politicians and civic leaders gin up public support for the life sciences, inevitably there's gauzy talk of innovation, the future and wonderful cures for horrible diseases. Fixing aging sewers? Not so much. But one of the most ambitious state subsidy programs in the nation is aiming $1 billion up and down the biotechnology food chain in Massachusetts, including $13 million to replace pipes under the streets of Framingham, a Boston suburb. Everyone from academic researchers to tiny startups, from emerging commercial firms to giant biotechs, will gain, and in keeping with these days of shovel-ready stimulus, half the money is earmarked for infrastructure and construction. It's a lot of money for a relatively small industry, with about 44,000 of the state's total 3.2 million nonfarm workers. But it has oversize influence because of where it sits, in a web of connections to the region's powerful hospitals, research centers and universities, where professors often are more comfortable with entrepreneurship than their peers elsewhere.
-- Browse related stories from this regional report -- Route 128 revisited Potholes, bioengineering and public money The marriage of theory and practice High hopes for high tech The Massachusetts Life Sciences fund disbursement has gotten off to a fast start. In its first 10 months it has invested $46 million, which has drawn nearly $360 million in matching funds from private and other governmental sources, according to Massachusetts Life Sciences Center president and CEO Susan Windham-Bannister. "We're able to attract private capital that's sitting on the sidelines waiting for good investments," says Windham-Bannister. "They see what we can put in, and that creates leverage on their investment." A former healthcare industry consultant with a Ph.D. in health policy and management from Brandeis University, Windham-Bannister oversees the center, a quasi-governmental arm charged with disbursing the state funds in three ways. Over 10 years, it plans to hand out $250 million in tax incentives to for-profit firms, and $500 million for infrastructure projects. The state legislature has already picked $300 million worth of infrastructure projects, many in the state university system. But the center is the gatekeeper, prioritizing the release of funds based on the readiness of each project. The payouts began in December with $3.7 million for six academic research grants that corporate sponsors will match. The first round of loans totaling $3.4 million were just approved for seven private firms working on projects from genetic test kits to cancer drugs to wound-closure adhesives. The loans triggered $5.8 million in matching funds from private sources. But the bigger bucks -- and from certain quarters, the complaints -- are attached to the fund's infrastructure projects. The largest so far, the $13 million sewer upgrade in Framingham, helps Genzyme Corp. build a 230,000-square-foot biomanufacturing facility (biomanufacturing requires a large amount of water) for its lucrative enzyme replacement drugs. It has also pledged $10 million to renovate the world-famous marine laboratories at Woods Hole, drawing an additional $15 million from the Howard Hughes Medical Institute. A further $10 million goes to help finish a biosafety lab at Tufts University. As with the federal stimulus efforts, talk focuses on jobs -- keeping them and saving them. Windham-Bannister says one startup, RainDance Technologies Inc., has moved to the state from Connecticut because of the fund, and another firm, Organogenesis Inc. of Canton, says it will stay after a $7.4 million pledge from the fund to help build out a manufacturing plant. She's trying to persuade a Danish company to become the anchor tenant in a new suburban office park. Though a startup or two are just drops in the labor-market sea, Windham-Bannister claims each life-sciences job creates three to five more in the community, citing think-tank studies. (The U.S. Bureau of Labor Statistics declined to comment on the validity of "cluster" studies.) The job numbers become more significant when biotechs expand into commercial firms. But helping big biotechs has proven more controversial. Initially a supporter of the fund, a local electrical union is waging a "Stop Biotech Looting" campaign to protest subsidies of projects that benefit certain profitable firms. The union, IBEW Local 103, is singling out Genzyme and wielding the executive-pay cudgel against CEO Henri Termeer, who took home nearly $14 million last year, about one-quarter of it in cash, and sits on Gov. Deval Patrick's council of economic advisers. The union is also angry over the sewer upgrade in Framingham, without which Genzyme couldn't build a new plant. The union's business agent, Lou Antonellis, says Genzyme should pay for the upgrade. Antonellis wants companies benefiting from the state's largess to stop using contractors who hire out-of-state workers and who don't provide healthcare. Asked whether he wants specific rules or quotas for hiring union workers, Antonellis says, "It's not just a union-nonunion issue; it's about health insurance too." Life Sciences Center officials said they're creating fair-wage and union jobs. All loan and grant applicants must answer several questions about labor practices. The center's headquarters in Waltham were built with union labor -- "and we paid a premium," spokesman Angus McQuilken says. The union campaign has forced Patrick, who made the $1 billion fund a personal crusade, to take a public stance. He spoke in mid-April at the Massachusetts Biotechnology Council's annual meeting and chided executives to work more closely with organized labor. "I ask you as a partner, a friend and as your governor: Give unions a fair shake," he told the crowd, according to local news reports. Patrick even used a bit of political theater, inviting a handful of picketers from outside the meeting to join him at the podium. Genzyme spokesman John Lacey says the sewer upgrade is "not Genzyme specific." That's technically true: Framingham has been making improvements to its aging sewer system for some time, in part to help with what the deputy director of public works, Tom Holder, calls "sanitary sewer overflows," or "SSOs." But the portion funded by the Life Science Fund's $12.9 million is specifically meant to accommodate Genzyme's new manufacturing plant. If other tenants join Genzyme in that area of the office park, they will benefit from the improvements, too. Holder has already warned contractors working on the sewer project to expect protests at the work site. A main component of the upgraded system is a pump station being built at a plant in Connecticut. Along with the federal stimulus package's budget boost for the National Institutes of Health, the Massachusetts fund should cushion early-stage research from the recession. As everywhere else, venture capital funding in the area is down, and initial public offerings are nonexistent. "When we're talking about capital formation, we've got to flip over every rock," says Robert Coughlin, president of the Massaschusetts Biotechnology Council, which helps startups that spin out of government-funded labs connect with prospective funders. A former state lawmaker, then business development official in Patrick's administration, Coughlin paid a $10,000 fine to settle conflict-of-interest charges that stemmed from his running for the MBC job in 2007. (After he put his hat into the ring, he continued to work on biotech-related matters as a state undersecretary). The MBC was already reeling from the resignation of its previous chief, Thomas Finneran, the former speaker of the state House of Representatives who pleaded guilty to charges of obstruction of justice that dated back to his political work in a 2001 redistricting plan. Finneran was MBC chief from 2004 to 2007. The relationships illustrate how tightly knit the life sciences and political worlds are in Massachusetts. The secretary of the Executive Office of Housing and Economic Development, where MBC's Coughlin worked previously, is a co-chair of the Life Science Center. Another center board member, Vertex Pharmaceuticals Inc. founder Joshua Boger, is chairman of the industry's national lobbying group, BIO. Despite all the close ties, the Life Sciences Center says its wary of conflicts of interest, bringing in grant and loan application reviewers from out of state. Ultimately, the state's secretary of administration and finance must also sign off before any money goes out the door, a reminder that the center operates at the pleasure of the state's political machine. State lawmakers have already cut 40% of the center's 2009 $25 million allocation for investments. If the economy continues to slump, the question might be whether the center can spend the $1 billion over 10 years. Windham-Bannister isn't worried. "If we don't hit it, we'll come close," she says. Comments |
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