Greater Boston — particularly Kendall Square in Cambridge and more recently the Seaport District — has become a global leader in the biotech industry over the past decade and a half, but do the hundreds of local layoffs signify a threat to what has become a critical piece of Massachusetts' economy?
Likely not, say industry leaders, rather, they explain that the biotech field as a whole finds itself in a business cycle that is bringing a wave of layoffs for a variety of reasons. Despite the layoffs, Massachusetts was able to offset the job losses with new ones in 2023, according to a new industry snapshot released on Tuesday by MassBio.
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Companies created nearly 3,000 net jobs in the biotech field in Massachusetts in 2023, according to the snapshot report. And while this growth was slower than prior years, it's still a sign of a positive trajectory in the Bay State, industry leaders say.
Still, challenges threaten Massachusetts' dominance in the field — the state has a "target" on its back as competing states like North Carolina and Texas work to attract biotech companies with generous incentive programs. Many in the industry hope that a third reauthorization is passed by the state legislature of the Life Sciences Initiative — an incentive program that debuted in 2008 and is widely credited for paving the way for Massachusetts' dominance in the industry today.
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"There is a lot at stake," Massachusetts Secretary of Economic Development Yvonne Hao said. "When you're number one, like we are right now, you have a target on your back, and everybody is trying to catch up."
Mass. sees growth despite industry challenges
MassBio is a group representing 1,700 organizations in the biotech field that advocates for the industry both on Beacon Hill and on Capitol Hill. The group releases an annual snapshot for how the industry is performing in Massachusetts, their latest of which was released on Tuesday.
"While no one will ever say that 2023 was a banner year for this industry, what's great to show is that even for a down year for the biopharma industry in Massachusetts, we still added almost 3,000 net new jobs to the economy of Massachusetts," Head of External Affairs for MassBio Ben Bradford said in an interview with NBC10 Boston.
The report showed that despite layoffs, the biotech workforce grew by 2.6% in Massachusetts during calendar year 2023. While the Commonwealth lost 229 jobs in the biomanufacturing sector, research and development alone accounted for 2,359 new jobs in the state. MassBio highlighted that according to their calculations, Massachusetts is now only 900 total R&D jobs behind California.
"When you consider California is seven times the size of Massachusetts, that puts us in pretty good company," Bradford said. "It's great news."
Along with that "great news," though, came some headlines of layoffs at Massachusetts biotech companies as well. Those headlines have continued into 2024. According to the Boston Business Journal, 12 biotech companies announced plans to cut more than 1,810 jobs in the second quarter of 2024. Most of the recent cuts were at Takeda Pharmaceuticals Inc., Amylyx Pharmaceuticals Inc. and Ginkgo Bioworks, the business journal reported.
"We're at a really interesting inflection point in biotech," Boston Business Journal Executive Editor Doug Banks said. "What we have now is a crop of biotechnology companies that have been growing along...They're at a time where if their drug doesn't pass the FDA, if it doesn't get an approval, then there's really no runway for them to move forward. And so you're seeing a lot of the job cuts."
The biotech industry is known for developing novel drugs and treatments, which can make it a particularly risky business, since these drugs may fail. Another obstacle for the industry right now is a more limited pool of venture capital, as investors are tending toward a more risk-averse approach in the current market, Banks explained, amid other factors.
"If that [funding] was available, companies wouldn't have to lay off because they would just go back to the public markets, get more money and start over," Banks said. "They would pivot."
Rather than a cause for alarm, Banks called the recent wave of layoffs "evidence of a maturing," pointing out that while lost jobs make big headlines, many companies have been quietly hiring, as evidenced in the net job growth Massachusetts saw during 2023.
"There's no reason to think that the biotech community here in Boston is not going to continue to grow," Banks said. "It is growing. We are adding jobs. There are new companies."
Another metric that has been generating eerie headlines are vacancy rates in lab and manufacturing space — which have reached an all time high in the area, according to the MassBio snapshot.
However, total square footage has reached 62.1 million, with new projects coming online amid the current "inflection point" and not long after availability hit a lot of .7% two years ago.
"We will still be the leader for the foreseeable future," Banks continued later. "But if we don't show that we want to continue to be a place for biotech communities to grow at some point, we do have a danger of losing them."
'When you're number one... you have a target on your back'
Massachusetts did not become a — if not the — global leader in biotech overnight.
Secretary of the Executive Office of Economic Development under the Healey Administration Yvonne Hao explained that a lot of factors have come together to make Massachusetts such a dominant force in the field.
But with that success comes targeted competition from other states and countries, she said.
Hao traced the massive growth in the local industry over the past decade plus to 2008, when former Governor Deval Patrick and his administration saw an opportunity amid a paralyzing recession.
"There was a bunch of new science coming out, a bunch of things coming out of Harvard Medical School and all of our different schools," Hao said of the time. "And we had the ecosystem and all the ingredients here. But but we wanted to accelerate it."
It was accelerated a $1-billion, 10-year package known as the Life Sciences Initiative, which directed big funding for grants for Massachusetts researchers, infrastructure, tax incentives and more to bolster the business in the Bay State.
"I think there was a lot of people who were very skeptical, and it was a big risk," Hao said. "And what's amazing now is look, flash forward to where we are today. It really worked in so many ways, and it has been such a success story."
Former Gov. Charlie Baker signed off on over $600 million package in 2018 as a continuation over a five year period, and lawmakers in 2023 extended the program until 2025.
"It is quite a success story, but it didn't happen on its own or by accident," Hao said. "It took the convening and working together across ecosystem, across private and public sector to really make it happen. So we're very, very grateful."
Hao said that other states are now working hard to catch up to what Massachusetts has, and are being aggressive to recruit companies. States like North Carolina, Texas and Florida have been growing their local biotech industries in recent years. Aside from the incentives, these states also generally can offer a cheaper cost of living and more available land for developing large plants.
"When I go out and meet with life sciences companies in Massachusetts, they all say the same thing — Massachusetts is where they want to be," Hao said. "But by the way, every day, every week, every month, they're getting calls from other states and they're getting lots of incentives thrown at them."
Hao said there is a lot at stake on Beacon Hill with Healey's proposal to reauthorize the Life Sciences Initiative for another 10 years with another $1 billion in funding, a package she sees as critical in maintaining Massachusetts' position in the face of rising competition from other states.
"We don't need to match them on everything, Hao said. "Because we have so many other great things about our state that are so special and unique, but we can't have zero."
Building opportunity to the west
Central Massachusetts, in particular Worcester County, is an important part of state's answer to rising competition from lower-cost states.
A growing effort is underway to establish Central Massachusetts as a global biomanufacturing hub. It has a more competitive cost of living than Greater Boston, more land available for the development of manufacturing plants, and a key advantage over southern states for biotech companies.
"We also have this incredible proximity to Cambridge and this incredibly specialized talent pool that the industry really needs," President and CEO of Massachusetts Biomedical Initiatives Jon Weaver said.
"In Boston and Cambridge, we’re really the world leader in developing the recipe," Weaver said. "Here in central Massachusetts, we have the opportunity to implement those recipes and be able to bring drugs directly to patients."
Massachusetts Biomedical Initiatives is a 40-year-old nonprofit based in Worcester that serves as an incubator and support system to bring companies from "concept to clinical trial." Their facility in the booming Gateway Park section of Worcester provides lower-cost lab and office space for startups to get off the ground.
"The incubator model is really critical to a company’s ability to start a company," Weaver said. "Without an incubator, they have to raise millions and millions of dollars, operate more space they were ready for, have complicated buildouts, have more staff and teams than they need."
Central Massachusetts has become a top 15 life science talent cluster in the U.S. independent of Greater Boston.
MBI also leads economic development efforts to recruit new people into the field in the region.
"These jobs can be really accessible — we’re working with a lot of our academic partners to create eight- to-10 week certificate programs that will allow new people to get into the industry," Weaver said. "People who didn’t think biology was going to be a part of their future because they didn’t have a bachelor's or a master's or a PhD can enter this industry with an eight-to-10 week certificate and a lot of hard work."
That effort aligns with one of the "reflections" Sec. Hao said that Massachusetts has had — that the local biotech field has been focused on "highly-trained, specialized scientists," and was not as "intentional" about attracting manufacturing jobs that don't necessarily need a college degree, but have great potential for upward movement.
More efforts are underway to boost those manufacturing jobs, and central Mass. — as well as other regions of the state outside of Greater Boston — is a big part of the equation.
"Part of our plans in our Regional Biomanufacturing Strategy is to build out a regional workforce training center that'll help make sure the talent the industry needs to be successful is there when they need it," Weaver said.
MBI released its strategy for central Massachusetts in July, and in addition to closing workforce gaps, the report calls for pathways to further support start up companies and addressing development issues in the area where "market rate rents struggle to justify the cost of construction."
These types of pathways for local startups have proven critical for founders like Shayne Byrne, who has a space in MBI for his fledgling company, Codomax.
His company is working on a new way for manufacturers to improve protein production.
The Templeton, Mass., native is excited to be bringing his ideas to life in an incubations space at MBI.
"The MBI team kind of acts as an extension of our team, where they will bend over backwards for us," Byrne said. "They're trying to help us in anyway possible and try to see us succeed. And it's really great because we share the same mission that MBI shares."
According to MBI, nearly a quarter of biomanufacturing jobs in Massachusetts are in Worcester County, with central Massachusetts expected to see upwards of 1,200 additional industry jobs over the next two to three years.
