New England Regional Focus: How Public Money Is Keeping MedTech Alive

The Massachusetts Life Sciences Initiative helps support one of the United States' three major medical device hubs. Find out how it's doing, and more.

Massachusetts appears to be having some success using public funds to support its medical device industry and other life science companies—with potential benefits for New England as a whole.

Inaugurated in 2008, the 10-year Massachusetts Life Sciences Initiative is administered by the Massachusetts Life Sciences Center (MSLC). It reached its halfway point last summer and has, as of MSLC's Fiscal Year 2013 Annual Report, directly invested or committed almost $468 million. This has attracted more than $1.2 billion in additional third-party investments.

"That's obviously starting to reap benefits," Mark Bonifacio, principal and owner of Bonifacio Consulting Services (Natick), says of the initiative.

MSLC reports that, in the first five weeks of 2014, they had:

  • Awarded an $8 million capital grant to support the Center for Personalized Cancer Therapy on the University of Massachusetts Boston campus.
  • Broken ground for a new 250,000-sq ft building in Cambridge to be occupied by Takeda Pharmaceuticals.
  • Opened Halifax Biomedical Inc.'s first U.S .office at the Cambridge Innovation Center in Cambridge.
  • Opened Cryogenetics' new laboratory and the company's U.S. division, Cryogenetics Inc., in Woburn.
  • Opened Vertex Pharmaceutical’s new 1.1 million-sqare-foot global headquarters in Boston.

MSLC says in its Annual Report that its company recruitment efforts have continued to bear substantial fruit, with nearly 30 companies, large and small, announcing plans to expand within or into Massachusetts during its fiscal year 2013. Examples include Israel-based medical device company ARGO and Foundation Medicine, a native Massachusetts biotechnology and MLSC portfolio company. MLSC partnered with many of these companies to support their integration into the state’s life sciences community. Also among these developments, Johnson & Johnson announced the opening of its Boston Innovation Center in Cambridge.

A common problem with building an innovation-based economy is that early stage companies need access to capital, but the capital in the form of large companies and venture capital outfits does not arrive until there are a bunch of attractive early stage companies.

Massachusetts' strategy has been to use some public money to create a more attractive setting for the VC and large companeis

Large companies are “attracted to a region based on the presence of innovative, small, early-stage companies that they can acquire, partner with or license technologies from ... Large companies want a front row-seat to the innovation that is happening in the early-stage environment,"  Northeastern University economists Barry Bluestone and Alan Clayton-Matthews say in a March 2013 report for The Boston Foundation.

The report cited MLSC’s investments in early-stage companies as a critical factor in the success Massachusetts has at attracting major global companies to expand and invest in the state.

One such early-stage company is MC10 (Cambridge), which is developing flexible electronic circuits that can stretch, bend and twist seamlessly with the human body and the natural world. The company says it is pioneering technology that will protect our troops, treat heart arrhythmias, monitor a sleeping baby’s temperature, and maybe one day prevent brain seizures. 

About $2 has been spent in the pharmaceuticals and biotech fields for every $1 spent on devices, but this also has paid off. In terms of major companies, Bristol-Myers Squibb has announced plans for a 350-person, $250 million expansion of the company’s large-scale biologics manufacturing facility in Devens. And when Roche acquired Consitution Medical Investors Inc., based in Westborough, and announced plans to make Boston their Center of Excellence in Hematology, it marked a milestone – now, all of the world’s 10 largest biopharma companies have a presence in Massachusetts.

More than 2500 jobs have been created since the inauguration of tax incentives authorized under the Initiative to grow the Massachusetts life sciences sector, at a public cost of more than $22,000 per job, according to the Boston Foundation report. The report projects that each dollar in tax incentives awarded will generate $1.66 in added tax revenue, so the initiative is also a sound investment of taxpayer dollars.

According to Bureau of Labor Statistics (BLS) figures, Massachusetts' employment in life sciences has increased by 27% since 2001. This compares with California's increase of 18%. And Minnesota didn't even make the chart, which showed only the top eight percentage increases.

Half of the Initiative's $1 billion is earmarked for capital projects, which include investments in the state's educational infrastructure. In FY 2013, the University of Massachusetts Amherst was awarded a grant of $95 million, MLSC’s largest grant to date. It will fund a substantial portion of the university’s new $157 million Life Sciences Laboratories, which will house three new research centers. Eight other grants, ranging from $1.2 million to $6 million, were also awarded in fiscal year 2013, to institutions ranging from Northern Essex Community College to Harvard Medical School.

According to MassMEDIC, which says it is the largest trade organization for medical device manufacturers in the state, Massachusetts is home to more than 400 medical device companies, including several major surgical and medical instrument manufacturers. These range from large multibillion-dollar companies—such as Boston Scientific (Natick), Covidien (Mansfield), C.R. Bard (Lowell), PerkinElmer (Waltham), and Philips Healthcare (Andover)—to a flock of tiny startups struggling to make their first nickel. In the biotech realm, EMD Millipore is headquartered in Billerica. The company has some 10,000 employees in 67 countries and a portfolio of more than 40,000 products.

MassMEDIC says the Bay State is the second largest employer of people in the medical device industry behind only California, employing 24,268 within seven medical device manufacturing categories. Further, the Massachusetts medical device industry is responsible for creating more than 80,000 jobs in related industries in the state. While heavily concentrated in eastern Massachusetts, medical device firms are present in almost all regions of the state.

But MSLC has not been the sole source of government funding; the National Institutes of Health (NIH) opened its purse strings in Massachusetts to the tune of nearly $250 million in its FY 2014. Leading research hospitals in the state receiving NIH grants include Massachusetts General Hospital, which says it “operates the largest hospital-based research program in the United States,” nearly $35 million; Brigham and Women's Hospital, almost $39 million; the Dana-Farber Cancer Institute, over $17 million; and Massachusetts Eye and Ear, a Harvard Medical School teaching hospital, more than $2 million. These institutions are all in the Boston/Cambridge area.

Also receiving funding from NIH were such institutions as Harvard University, almost $8 million; and its Medical School, the third-oldest school of medicine in the nation (founded in 1782), more than $12 million; Harvard's School of Public Health received more than $25 million. Massachusetts Institute of Technology (MIT) was granted $8 million, and Brandeis University, also known for its research department, received $4 million.

Bonifacio says it's not just the venture capital money that is driving the hub, but also the world-renowned research institutions. "That's what makes it attractive for companies to come here, because the talent is here as well."

MassMEDIC says that Massachusetts medical device firms received $286 million, or 12 percent of national medical device venture funds, in 2010.  According to Price Waterhouse Coopers Moneytree figures, by 2012 this had climbed to $444 million. Interestingly, though biotech venture capital funding continued to grow in 2013, investments in medical devices declined to $383 million. This is also evident in the corresponding California numbers. So although it may be a one-year anomaly, it may also represent the beginning of a trend.

MassMEDIC further says that over the past decade, Massachusetts medical device exports have been growing at more than twice the rate of the state’s exports as a whole. They make up more than 10 percent of the state’s total exports, and represent $1 out of every $10 of U.S. medical device exports.

Worcester anchors the west end of Massachusetts' well-known medtech corridor and is home to 10 colleges and universities, including the University of Massachusetts Medical School, Worcester Polytechnic Institute (WPI), Massachusetts College of Pharmacy and Health Sciences, and Tufts Cummings School of Veterinary Medicine.

West of the Boston-Worcester corridor, a Knowledge Corridor is said to extend down to Hartford, CT. In  Amherst, the University of Massachusetts(UMASS) Polymer Science and Engineering Department is one of the largest academic centers for polymer research in the world. Western New England Universityalso has a prestigious College of EngineeringBaystate Medical Centerin Springfield has its own research activities and also “collaborates with the University of Massachusetts Amherst to bring the benefits of biomedical technology and research to the region.”

Other resources for the state's medtech industry include the Massachusetts Biotechnology Council(MassBio), a not-for-profit organization that represents and provides services and support for the Massachusetts biotechnology industry. MassBio says it is the nation’s oldest biotechnology trade association, founded in 1985. Massachusetts Biomedical Initiatives, Inc. (MBI) is a private, independent economic development organization dedicated to promoting the growth of start-up biomedical companies. It has business incubator commercialization facilities located in Worcester and claims a 75% success rate over the last decade. Though it is not exclusively devoted to medical technology, the Western Massachusetts Economic Development Council provides support for companies that have, or are considering, investments in our region.

According to a 2013 report by MBI, just under 2.6 million square feet of commercial lab space have been added to the state's inventory since 2007 and over 2 million square feet of new lab space were under construction at the time of the report. As the state has the highest concentration of medical and biological technology workers in the country, these new facilities will provide employment and will help keep Massachusetts in second place in the country. As Bonifacio puts it, Massachusetts “ remains a very viable hub for medical device development."

Traveling down the Knowledge Corridor, one arrives in Connecticut. Becton, Dickinson and Co. operates a manufacturing facility in Canaan. Elsewhere in Connecticut, Covidien has facilities in North Haven. On the pharma side, Pfizer occupies a 160-acre site with a 2.8 million square foot R&D facility in Groton, and Bristol-Meyers Squibb's Wallingford R&D facility boasts 1 million square feet dedicated to drug discovery and drug development activities.

On the academic research side of the medical technology space, the University of Connecticut (UConn) School of Medicine and Health Center and Yale University are the big fishes in the Connecticut pond. UConn's main campus is in Storrs, about 25 miles east of Hartford. The School of Medicine, part of the UConn Health Center, is in Farmington, just west of Hartford. In New Haven, Yale's School of Medicine has been “educating leaders, caring for patients, and investigating the scientific basis of health and disease for nearly 200 years.” Among its 27 departments are one of the nation’s oldest schools of public health, and the internationally recognized Child Study Center, founded in 1911.

In 2011, the Connecticut Legislature approved Bioscience Connecticut, an $864 million project proposed by Gov. Dannel P. Malloy to renovate and expand the UConn Health Center. This initiative includes the construction of a new patient tower and outpatient center on UConn's Farmington campus; an expansion of small-business incubator space; and renovations to John Dempsey Hospital and its research labs.  When complete, it will allow an increase in the size of the University's medical and dental schools and generate long-term sustainable economic growth for Connecticut based on bioscience research, entrepreneurship, and commercialization.

The Connecticut Technology Council(CTC) is a statewide association of technology oriented companies and institutions. The council seeks to provide leadership in areas of policy advocacy, community building and assistance for growing companies. CTC also hosts on its Web site the Alliance for Connecticut Technology(ACT), an umbrella group of 14 organizations who are working together in a collaborative spirit to promote the acceleration of innovation and technology in Connecticut.

Headquartered in Maine, Idexx Laboratories employs over 4700 people in more than 60 locations around the world. Idexx is a global market leader in diagnostics, microbiology testing and information technology solutions, and the top provider of diagnostic tests and health-monitoring systems for milk safety and production in animal health.

Invest in Maine, the state's business development organization, says that Maine companies have expertise in genetics, genomics, and antibodies/diagnostics. Maine’s biomedical companies not only conduct R&D, but are able to provide full service development and manufacturing with the ability to ship around the world. Meridian Life Science Inc. (Saco, ME) offers contract manufacturing of proteins and other biologicals for biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines.

Maine supports established biotech companies as well as helping firms with new technologies in getting them to market. Founded in 1874, Maine Medical Center(Portland) is a teaching hospital and  is the largest hospital in northern New England. Its Office of Technology Transfer assists researchers who may have discovered a new technology, be it a process or a material, and facilitates by protecting, marketing, and negotiating the sale of rights of commercially viable intellectual property to partners that can bring that property to market.

With 250 workers, BioTek Instruments in Winooski, Vermont, may be one of that state's biggest medtech companies. The privately-held bioscience firm specializes in microplate readers. BioTek says its instruments are used in labs across the U.S. and around the world; the company makes all of its products in Vermont but maintains sales and service offices in 13 countries.

In New Hampshire, Dartmouth Medical School is the fourth-oldest medical school in the country. Founded in 1797 and located in Hanover, Dartmouth's Geisel School of Medicine is a major research institution which conducts basic research, clinical trials, health policy analysis, and more. EMD Millipore operates a manufacturing facility in Jaffrey, NH, and a number of New Hampshire contract manufacturers serve the medical device industry.

In Rhode Island, the big news in the medical technology industry may be Ximedica Inc. Headquartered in Providence, the design firm also has offices in St. Paul, MN; and Hong Kong.