Boston’s tech scene is booming, but there’s one problem: It needs more qualified tech talent to meet demand.
To call Boston a hub for biotech would almost be an understatement. After all, the biotech industry can trace its roots to the Boston area – Cambridge specifically – with Beantown standing alongside San Francisco as the first places biotech began gathering major momentum in the 1980s and ‘90s. Now, the Boston area houses more than 1,100 biotech and biopharma companies, academic centers, and life-science organizations.
The amazing thing, then, is that even with Boston’s deeply established history, the Massachusetts city’s biotech industry has never been hotter.
We took a closer look at this “BioBoom” and what it might mean for the city’s future.
Jobs Abound, and Employers are Competing Over the Best Candidates
A look at the sheer number of people employed in Massachusetts’ biotech industry illustrates just how rapid the recent growth has been, fueled largely by the vast expansion of the city’s biopharma industry.
Biotech industry jobs grew by 28 percent from 2008 to 2017, and by 4.3 percent in that final year alone. Industry employees – a number that surpassed 70,000 in 2018 – averaged a steep annual wage of $149,731, meaning the Massachusetts biotech workforce brought home $10.4 billion total.
In that environment, those working in Boston’s biotech industry aren’t just finding high wages and abundant opportunity, but other incentives.
According to the Boston Globe, perks offered in the local biotechnology sector include 100 percent company-paid health insurance, unlimited vacation, free catered lunches, and money to pay back student loans.
Neon Therapeutics, a startup developing cancer vaccines, offers its employees Friday afternoons off in the summer, weekly messages, extensive dental insurance, and a “life services concierge” who can offer help with all sorts of tasks, like finding a dog walker or a solid financial planner.
“When we make a job offer to an employee, they have three other offers that they’re considering,” Teresa Regan, Vice-President of Human Resources at Neon, told the Globe.
“We do the benefits because it’s competitive, but also because we think it’s the right thing to do.”
Venture Funding is High and Still Rising
Venture investment in Massachusetts biopharma companies in 2017 was $3.1 billion – meaning 37 percent of all biopharma VC dollars went to companies in that state. In the first two quarters of 2018 alone, the biopharma industry raised another $2.7 billion. Combining biopharma with life sciences companies, Massachusetts-based organizations raised $3.6 billion in VC investment in 2017.
There are plenty of recent examples to choose from. Relay Therapeutics recently secured $400 million in Series C financing, Medicare Advantage business Devoted Health raised $300 million in a Series B round in fall 2018, while WuXI NextCODE – a global platform for genomic data – announced the completion of $200 million in Series C financing in November 2018. And in October, Bain Capital and Pfizer announced the creation of the Boston-based Cerevel Therapeutics, devoted to developing drugs for central nervous system disorders, with a $350 million funding commitment.
Although significant investment pours in from outside – in 2017, 60 percent of investment in Massachusetts biopharma companies came from out of state – it helps that there are well-established venture capital firms locally. F-Prime Capital (formerly Fidelity Biosciences), for instance, was among the first VC companies to focus on “biopharmaceuticals, medtech, and healthcare IT/services.”
Some investors view the Boston market as a well-kept secret.
“Boston often gets dismissed as a has-been startup city. But the successes are often overlooked and don’t get the same attention as less successful, but more hypey companies in San Francisco,” Blake Bartlett, a partner at Boston-based venture firm OpenView, told Crunchbase News.
Some of the most high-profile recent exits in Massachusetts have been focused in the biotech industry.
In a deal that was deemed to be “already shaking up the drugstore industry,” Amazon acquired the online pharmacy PillPack for just under $1 billion in June 2018. Moderna Therapeutics also recently made headlines with a historic IPO in which it raised $600 million – the largest amount in biotech history – to set up a roughly $7.5 billion valuation.
In other major recent acquisitions and IPOs, Teledoc spent $440 million to acquire digital healthcare company Best Doctors in 2017, while Rubius Therapeutics raised $241 million in IPO in July 2018 – a record until it was surpassed by Moderna.
More Companies Are Coming to Town
Seemingly, Boston’s BioBoom is only attracting more biotech companies to town.
Many big pharmaceutical and medical companies – including Genzyme, Novartis, and Baxter – are doing as Pfizer did and looking to Boston’s startups to handle R&D for a lower cost. Unsurprisingly, Boston was also announced as the home for the still-unnamed but closely watched new healthcare venture from Amazon, Berkshire Hathaway, and JPMorgan.
In fact, over 12 million square feet of commercial lab space has been added to Massachusetts from 2009 to 2018, representing a 71 percent increase.
Government support has helped that growth along. In fact, in 2017, more than 10 percent of all National Institutes of Health funding went to Massachusetts organizations, making the state by far the leader in funding per capita at $396 – far more than second-place Maryland at $266. Five of the top six NIH-funded hospitals are in Boston, and Massachusetts receives 57 percent of all NIH funding to independent hospitals.
That base of hospitals – as well as the Boston area’s litany of famed educational institutions – presents a glut of opportunities for research, another reason Massachusetts is such a popular location for biotech.
What it Means for the Future of Boston
It’s natural to be skeptical about whether this level of growth can be sustained, but there are plenty of encouraging signs.
Every year, FierceBiotech publishes the Fierce 15 list of the world’s most promising biotech companies.
In 2018’s list, six of the 15 companies were based in the greater Boston area, including Arrakis Therapeutics, Beam Therapeutics, Jnana Therapeutics, Kronos Bio, Pandion Therapeutics, and Compass Therapeutics.
That was hardly an anomaly; Boston-area startups claimed six of 15 spots in 2017 and 2016 as well.
Although Boston’s biotech and biopharma industries will face the same growing pains that challenge any city where rapid growth occurs, those on the inside are optimistic that the foundation is in place for Boston as a biotech hub for a long time to come.
“We often hear of obstacles that might face large companies when considering Boston as a growth platform — high costs for labor, taxes, and rent. But Boston has shown that, in the global competition for biotech and pharmaceutical jobs, we can compete successfully,” wrote biomedical entrepreneur Christoph Westphal.
“Other cities that vie with us — San Francisco, London, Paris, the New York/New Jersey region, cities in Switzerland or Germany — often have more significant hurdles of their own. In health care, we have shown that Boston can be a key global player. We look forward to the day when this is also true for other innovation-based industries.”