Someone Needs to Rank U.S. Biotech Hubs, For Real

3/4/13Follow @xconomy

[Updated: 11:40 am PT] It’s time for a challenge:

Will somebody please come out with a deeply researched and credible report that ranks U.S. regional biotech clusters, on the criteria that matter the most?

I’m feeling compelled to issue this challenge after going over the latest deeply flawed report on this subject, from real estate firm Jones Lang LaSalle. Back in the day before social media, guys like me in the press would take a 1- or 2-minute look at such a report, and click the delete button. That would be the end of it. But now that everybody’s a publisher, these kind of half-baked analyses tend to be widely shared and commented on without much critical review.

This question about U.S. biotech clusters matters to a lot of people, because years of research in business and economics tells us that the clustering effect is essential for complex industries like biotech. The network of researchers, venture capitalists, entrepreneurs, business executives, service providers and more all need to be able to collaborate, preferably in close proximity to one another, to achieve hard goals like developing a new drug or diagnostic.

When certain regions are good at putting together all the necessary ingredients, it’s an encouraging sign for the future of an entire regional economy. Economists, and elected officials, look to such reports for guidance on how their region is performing, and what could be done to improve.

So, what’s wrong with this study? The report, which I’m sure many of you have seen by now, ranked the top 21 regional biotech clusters in the U.S., and compiled data from other emerging hubs around the world. It concluded that Greater Boston is the No. 1 biotech hotspot, followed by San Diego, and the San Francisco Bay Area. Raleigh-Durham, NC and Philadelphia, PA rounded out the top five.

Predictably, the folks in Boston cheered “We’re No. 1!” The good folks of San Diego chimed in as well, saying “Yay, we’re No. 2, we beat SF.”

Now, I like San Diego a lot, and have made many reporting trips there since 2008 when I started Xconomy’s bureau there with Bruce Bigelow. I personally enjoy reporting on a lot of great entrepreneurs and companies there. There are some truly innovative, world-changing companies doing business there, like Illumina.

But sorry, San Diegans, this study is bogus.

This report measured regional biotech activity on a weighted analysis of four criteria. The authors considered the percentage of a region’s population employed in life sciences, based on 2011 data from the U.S. Bureau of Labor Statistics. The second criterion was the number of life sciences establishments, also based on BLS data.

The other two factors were venture capital financing, and basic research support from the National Institutes of Health. The authors of the report put a little more weight on the employment data, and a little less on the number of establishments, before producing a weighted composite score that enabled them to arrive at their rankings.

There are all kinds of flaws in this analysis. For starters, … Next Page »

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  • defrajac

    Great article! In the list of criteria you are proposing to rank the clusters, I would like to see also the number of companies after 3-5 years from their inception. This survival rate will give a sense of how the cluster “incubate” its own companies and how the hub could be conducive of creating a possible anchor tenant or not.

  • Whalley

    Related to #15, it would also be good to see the number of people treated and/or benefitted by the approved products.

  • Oracle at Delphi

    Sounds like a good project for BIO in DC

  • Imran Nasrullah

    You should check out MassBio’s 2015 Report which was conducted by Delloitte and LEK. The did a comprehensive study of not just US clusters but also global clusters.

  • http://www.xconomy.com/ Luke Timmerman

    Thanks for the great suggestions of other criteria to put into the regional biotech cluster ranikings. I’ve heard 3 new criteria worth adding:

    1. The 5-year survival rate of biotech startups

    2. The ratio of new companies started vs. the # of employees in the cluster. (A measure of a region’s entrepreneurial spirit.)

    3.The total number of seasoned, VC-backed biotech entrepreneurs. (A measure of a region’s entrepreneurial depth).

    Imran—I also looked at the MassBio 2015 report, which is decent, but a little outdated from 2009. It says SF has the largest concentration and diversity of life science companies.

    http://www.massbio.org/writable/files/2015_Report/full_2015_report_for_distribution.pdf

    • AJP

      Or the one that really matters to people in the industry: median length of time it takes to get re-employed in the same area after loss of a job.

  • http://profiles.google.com/scbaker813 Shawn Baker

    I agree that putting San Diego ahead of the Bay Area is kind of ridiculous, but I’d still only drop them to #3. To your list, I would add something about ‘density’. That’s one of the things I really like about San Diego – the vast majority of companies and research institutions are within a 5 minute drive of each other (and the ocean!). And Life/Invitrogen is only 30 minutes away. My understanding is that Boston/Cambridge is even more concentrated. The Bay Area, not so much. It could be a two hour drive from one meeting to the next.

    • realposter

      it also doesn’t make sense that Westchester/New Haven is separated from NYC/New Jersey.

  • http://www.xconomy.com/ Luke Timmerman

    Shawn — I agree that density is an important factor. This is one big advantage that Boston/Cambridge has over the Bay Area, and it’s why I think Boston is poised to overtake SF in the future. SD has decent density on the Torrey Pines Mesa, but you still need a rental car to get anywhere. The mini clusters of Sorrento Valley, the La Jolla Town Center where Illumina/Amylin are, Carlsbad—they are fairly close, but still require getting in a car.

    Transportation in SD needs a lot of work. One time I was in SD and really struggled to find a Zipcar for hourly rental, which I take for granted is easy to find anywhere in Seattle, Boston, or SF. Airport is tiny, and there aren’t any cheap/frequent/fast trains either. This basic infrastructure and density of land use is really helping Boston.

    http://www.xconomy.com/national/2012/10/08/watch-out-sf-boston-is-becoming-biotechs-no-1-cluster/

    • http://profiles.google.com/scbaker813 Shawn Baker

      Luke, that all certainly makes sense, but you’re coming at this from an outsider’s point of view. I’m thinking about it from a person who lives and works here. It’s true that you mostly can’t walk from place to place, you can very easily drive there (and everyone has a car – it’s just how California is). I don’t know why Zipcar isn’t here in San Diego, but that seems like a pretty minor inconvenience (but then I always rent, even when going to SF or Seattle.)
      SD doesn’t have the density of Boston, and I hope it never does. It’s why I live here and not there.

      • andypipkinuk

        Car2Go is the same as Zipcar and I see their cars all over Central SD. Not sure why they don’t expand the area to UCSD or SDSU

    • http://www.facebook.com/dr.richardlin Richard Lin

      > SD has decent density on the Torrey Pines Mesa, but you still need a rental car to get anywhere.

      True. But if you do have a car, you can reach almost all of San Diego biotech within a 10-15 min. drive from the Torrey Pines area.

      The fact is that all these biotech hubs are of different flavors and there are no easy way to ‘rank’ them. In addition to a lot of under-the-radar entrepreneurs (many companies with less than 5 people), there are many small service and reagent companies. I used to work for a 10 people start up and we didn’t even bother register a business license with the city.

      In recent years, there are increasing number of garage entrepreneurs also. In the last couple of years, we always had 2-3 small companies incubating within my company.

  • Argo

    Here is a great report from MassBio looking at clusters and employment

    http://www.massbio.org/writable/editor_files/industry_snapshot_2012_final.pdf

  • http://twitter.com/cassiearnold Cassie Arnold

    I’ve worked on a lot of the cluster reports to one degree or another and the vast majority suffer from bias of various sorts. I was amazed by the degree to which the economists and researchers are willing to adjust to meet the needs of the sponsors. Density is an important factor, but it can be very subjective — is the need to use a car in San Diego really relevant compared to driving from Emeryville to Mountain View? Should biotech, device, tools, or mHealth clusters be considered separately?

    • realposter

      Very good points. Some of the regions don’t make sense to me. How is “Central & Southern Florida” one region? Also how can maryland/DC/Arlington be one region – but New Jersey/NYC be separated from Westchester/New Haven…?

  • http://twitter.com/sheffi Jonathan Sheffi

    Great post. What about a metric that reflects the density of major research universities, which supply lots of ideas and talent to a region? One of the things that makes Boston great for life sciences is the co-location of MIT, Harvard, Tufts, BU, and others. Same for Stanford, Berkeley, and UCSF. Same for Duke, UNC, and NC State. Is there a metric that can accurately reflect that? Or would we just lean back on NIH funding as a proxy?

    • enlace_quimico

      A metric reflecting the density of institutions and thus dollars is very important to ranking biotech hubs. Consider the Torrey Pines Mesa in San Diego. Institutes within a 2 (!) mile radius include UC San Diego, The Sanford-Burnham, Salk, and Scripps Research Institutes, Novartis, Pfizer, and Illumina. Also, the Sanford consortium and Venter Institute just sprung up on the same stretch of road. People literally walk samples across the street from each other around here. In the Bay Area, you have to take a boat from Berkeley to Stanford (I’m joking of course).

  • Karp

    Look at your definition of “bio tech” first and foremost. Then look to the Midwest, Michigan specifically, and their University Research Corridor (URC) and the presence of the only satellite U.S. patent office in Detroit. Start ups, an agriculture mega university (MSU), a medical mega university (UM) and the 2nd most agriculturally diverse state in the U.S. Check out pineneedlepeople.com and add Michigan to your list of leaders. A new revolution….after all, we did it once before.

  • Erin Bovee

    It is refreshing to see how the Global Cluster Report is starting an important dialogue about the best way to quantify and qualify the economic dynamics impacting the life sciences community. We welcome constructive feedback on our analysis as it provides new insights to consider for future reports. You can access the full report, which details our methodology and the myriad of variables considered in greater detail here: http://www.joneslanglasalle.com/Pages/Life-Sciences-Cluster-Report.aspx

    Please contact me directly for more information about our analysis.
    Erin Bovee
    Life Sciences Senior Research Analyst and report author
    erin.bovee@am.jll.com

  • queenofzen

    thank you for an important and objective article

  • LCP

    Along the lines AJP suggests, I would like to see how hubs
    rank in terms of employee opportunities. How many job opening are there at any
    given time and in what specialties? In other words, within a hub, what types of
    professionals are most sought after (e.g., research scientists, biostatisticians,
    software engineers, lab technicians, marketing people, science, medical, and
    tech writers)? Also, how long do job requisitions typically remain open for
    various roles?

  • yang xie

    Great points, Luke! Another factor we might want to consider is the rate at which all factors are changing from the past. Such could offer a perspective to how the future holds for the region, if someone wants to land there afresh. All things aside, it is important to remind http://www.xconomy.com/san-diego/2013/02/27/san-diegos-biotech-leaders-of-tomorrow-we-are-the-wildcatters/?single_page=true that common merits should not trump personal preferences-what matters to YOU most should gain the priority when considering career options.

  • marycanady

    Nice, frank assessment Luke. San Diego isn’t 7th or 2nd as the two LaSalle reports suggest, but 3rd or 4th I suspect. We did a quick study based on the number of people on LinkedIn designating Biotechnology, Pharmaceutical, or Medical device as their industry (linked below). When only Biotechnology is measured, Boston, San Francisco, New York, and San Diego are the top four in that order. In the end, however, I’m not sure how important the ranking is, but that we all understand the differences between the regions towards the end of working together more closely.

    West vs. East Coast Life Science Hubs, Which are Bigger? Analysis of LinkedIn Data http://bit.ly/SIKkM2

  • Velamoor V

    Let us take a step back and ask, Why such a ranking is important? So a certain region can toot their horn? or someone can showcase their statistical skills with nice graphs & charts? Neither of those acts are despicable by any means but what is our ultimate goal for doing such an analysis? Any hub is created when there is wealth in the region and that wealth result in investments or the wealthy lobby to create a certain hub so they can multiply that wealth. While there are advantages for an entrepreneur or a company to already be in a ‘successful hub’, what ultimately determines success is what they create. Can we just let the companies do what they are good at- ‘create’? May be we can agree that such an analysis if conducted be just a good bed-time reading material. Nothing more and nothing less.