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Boston area proves a lure for biotech sector

From digitalMass.com
September 18, 2002

By John Dodge

Avaki Corp. chief technology officer Andrew Grimshaw estimates that a third of his customers are within walking distance of his office at One Memorial Drive in Cambridge's Kendall Square.

For the 42-year-old Grimshaw, who does a quarter million miles of plane time annually, such generous proximity can't be overappreciated. But the need for closeness in the tight-knit life sciences industry goes well beyond convenience. Biotech organizations tend to thrive when they're part of a localized ecosystem that comprises customers, talent pools, thought leaders, research centers, hospitals, and academia.

Customers from around the country either come to or pass through Boston and put Avaki on their itineraries. Across the Charles River in Boston are major intellectual property law firms, another essential part of the life sciences ecosystem.

Grimshaw, an Indiana native, treks to Cambridge from his Charlottesville, Va., home every week, but he still would not have put his company anywhere else. Avaki develops software that allows thousands of computers and digital devices to use their collective power to run large- scale life sciences projects. Grimshaw developed the software at the University of Virginia, where he remains a professor of computer science and director of the Institute of Parallel Computation.

The Boston area's "advantages are pretty significant," Grimshaw says. "You have a large pool of talent used to start-ups. There's a lot of venture capital firms around and they like their companies nearby. From our vertical position [serving the life sciences], Cambridge is arguably among the top three places in country."

Top three? Try number one or two, according to a study released by the Brookings Institution in June. The Boston area ranked first in research dollars from the National Institutes of Health and, separately, through company alliances.

It placed second in life sciences company research and development employment (behind the New York/northern New Jersey area with its heavy concentration of pharmaceutical companies) and second in biological science PhDs (behind Washington).

"By almost all measures, Boston and San Francisco stand out as the strongest biotech regions in the United States," the Brookings report concluded. What comes up time and again is biotech's highly concentrated nature.

"As much as 20 percent of our business could come from the Boston area," estimates Ken Hrusovsky, president and CEO of Zymark Corp. in Hopkinton. Zymark manufactures robotics and laboratory automation equipment. "The downside was three years ago when the computer industry and dot-coms were peaking and grabbing a larger proportion of venture capital. That is starting to turn some [toward life sciences companies]."

Few executives, especially those native to the area, would question their decisions to locate biotech companies here. Many say the benefits outweigh the often bearish commutes, the high cost of living, and politics as nasty as the winters.

"We've worked with a lot of people who are relocating," says Adelene Perkins, chief business officer at Infinity Pharmaceuticals Inc. "Sometimes, there's an initial sense that it's a lot more expensive here, but when they get into surrounding communities, it's quite affordable. All of the thought leaders in clinical practice on discovery research are right across street [at Boston Medical Center]."

Avaki CEO Tim Yeaton discounts his 45-mile commute from Nashua to Cambridge. "I am the poster child for the long commute," he says.

That a biotech ecosystem requires all the parts ???academia, access to capital, top hospitals, quality of life, lots of PhDs, talent willing to relocate to the area ???raises the bar for areas aspiring to become biotech hotbeds. They envy Boston, but shy away from making direct comparisons.

"We're developing our own niche with Roswell [Cancer Institute] and UB [University of Buffalo]. To me, that's more important. We're not going to be the next Boston," concedes Buffalo Mayor Anthony Masiello.

The mayor attended the launch of a Dell-based supercomputer at UB two weeks ago. More than $500 million in private and public money will be spent in the next three years to create the Center for Bioinformatics Excellence in the Buffalo-Niagara region.

Buffalo's "show me the money" attitude cuts to the key point. Many regions can claim low cost of living, clean air, great fishing, and other natural assets.

But absent a capital infrastructure, they have big problems funding broad-based biotech initiatives.

Rubicon Genomics Inc. president and CEO Fred G. Beyerlein crows about the quality of the life in Ann Arbor, Mich., home of the state university and near pharmaceutical giants such as Upjohn and Warner Lambert. But one thing is missing.

"What differentiates the area from Boston is its access to funds," says Beyerlein, a New Jersey native. "It's an obvious choice if you had to put money in a company outside Detroit or 13 miles away [from you], especially after 9/11. The guys on Milk Street can jump in a cab and go to Cambridge and see three companies they've put money in. The general fund-raising atmosphere has been described by a friend of mine as nuclear winter. So our story has to be twice as compelling [as companies closer to funding sources]."

That's not to say biotech executives from elsewhere don't speak about their headquarter cities with affection and pride. Just ask chief financial officer Steve Riebel of BioNumerik Pharmaceuticals Inc. about San Antonio.

"Our founder did a lot of research and looked at very successful companies," Riebel says. "He found really big companies started in areas that were not big in their industry. When you go into an area that's big in the industry, everyone starts thinking alike. He wanted a different type of thought process and didn't want to worry about losing employees to competitors."

Recruiting MDs and PhDs to San Antonio has not been a problem, he claims. "We've recruited people from Boston and New York. It's very entrepreneurial in Texas because not a lot of roadblocks are put in your way."

But for Boston, the biotech refrain is much simpler: proximity to partners, and be here or in Silicon Valley.

"When we looked at the entrepreneurial ecosystem, we found more than three generations of entrepreneurs going back to Wang, Computervision, Wellfleet, Cascade and Digital Equipment," says Jeffrey A. Masucci, chief technology officer and a founder at computer networking company Quantum Bridge Communications Inc. in Andover. "There's the financial infrastructure and you can lean on people in the industry."

A native of Gulfport, Miss., Masucci prefaces Boston's appeal with a well-worn Yankee admonition:

"You get what you pay for. You live in the South and have a low cost of living, but the opportunities are low. Boston has high cost of living, but your opportunities and salaries are much higher."

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