Massachusetts leaders want to make the commonwealth a hub for not just the research of drugs, but for the manufacturing of drugs.
It’s a goal that’s seen progress in stops and starts before. The Genetics Institute Inc., the legendary Cambridge company that pioneered biomedical research in the early 1980s, set up shop in Andover some 50 years ago. That concentration of expertise helped bring about the area’s current biomanufacturing marketplace, spearheaded by companies like Pfizer Inc. (NYSE: PFE) and Sarepta Therapeutics Inc. (Nasdaq: SRPT).
But momentum has since slowed, even as the state continues to attract researchers. Between 2018 and 2022, R&D jobs in the state grew by more than 60%, from 39,365 to 63,209, according to data compiled by the Massachusetts Biotechnology Council.
Biomanufacturing jobs grew by less than 5% during that time, from 10,148 to 10,607.
Politicians, academics and industry leaders are all trying to get their heads around how best to build the state’s prominence in that sector of the drug industry. They’ve had moderate success: In the last couple of years, several high-profile biopharmaceutical companies have set up biomanufacturing plants in Massachusetts, fueled by a combination of tax incentives, workforce training programs and public-private partnerships.
If Massachusetts is to maintain its edge in the life sciences, experts say, leaders will need to act now to bring more biomanufacturing here, or risk losing out to competitors like Texas and North Carolina.
“The commonwealth’s leaders see this as sort of the next iteration of the life sciences revolution in Massachusetts,” said Tom DiLenge, senior partner of global public policy, regulatory and governmental strategy at Cambridge venture firm Flagship Pioneering. “It’s really critical. When you’re thinking about these new modalities — like RNA, DNA, viral vectors, cell and gene therapies — you have to have those types of manufacturing more closely integrated with R&D. We think for Massachusetts to stay at the forefront of those advanced new modalities, we’re going to have to figure out this biomanufacturing piece.”
The cost of doing business
Drug development is never cheap, but manufacturing new drug components is particularly expensive.
DiLenge estimates that costs for chemistry, manufacturing and controls (CMC) facilities can exceed $1,000 a square foot — about triple the cost for an R&D lab. That’s because CMC sites have particular needs, like special air systems and public utility upgrades.
Additionally, the cost of utilities in Massachusetts is among the highest in the nation, with an average monthly commercial bill of $779.31 in 2021, per the U.S. Energy Information Administration. That’s more costly than all but six other states. Commercial construction costs, meanwhile, are the fourth-highest in the nation, according to an April estimate from software platform 1build.
The financials make Massachusetts more vulnerable to competition.
“I see what’s on the ground, and I see that companies aren’t making their stuff in Massachusetts,” said Johannes Fruehauf, co-founder and president of incubator network LabCentral. “The things we know have been made with public efforts and quasi-public efforts aren’t game-changing, catalytic, strong. That’s my frustration, because I’m rooting for Massachusetts. I want our state to be the place.”
Ultragenyx Pharmaceutical Inc. (Nasdaq: RARE) recently opened a new cell and gene therapy manufacturing facility in Bedford, a 110,000-square-foot buildout on a 10.7-acre site that will eventually employ 120 workers. The company also considered California (where Ultragenyx is based) and North Carolina, whose Research Triangle Park is an established biomanufacturing hub.
The calculus ultimately came down to this: North Carolina might be cheaper, but Bedford would be a short drive or train ride from Ultragenyx’s existing cell and gene therapy research groups in Woburn and Cambridge.
“We did sort of a cursory look to understand, were we missing something really big here? Was the tradeoff worth it for us? We want the proximity — that’s really highly important for us — but if someone would give it to us for one-10th the price, we’d look into that,” said Dennis Huang, the company’s chief technical operations officer. “It was pretty obvious to us that the financial advantages … external to the commonwealth really didn’t override the proximity and the need for the tech transfer piece.”
The Ultragenyx facility will be focused exclusively on cell and gene therapies, new forms of biotechnology that have only just begun to net FDA approvals. For cutting-edge medicines like that, there’s a benefit to physical proximity. Manufacturing teams can quickly tap the expertise of the researchers who created the drugs and get facetime with local clients.
David Connolly, director of engineering, capacity expansion and new capabilities at Rentschler Biopharma, said that was the case behind the contract biomanufacturing organization’s decision to expand in Milford.
“The clients were requesting it. They wanted to have manufacturing close to home,” he said.
After a medicine gets more established, however, it gets easier for manufacturers to move farther away. That’s what happened when Biogen Inc. (Nasdaq: BIIB) moved its recombinant protein manufacturing to North Carolina more than 20 years ago, and Huang believes that it’s a risk Massachusetts faces today.
“Biogen is a great example of biotech in Massachusetts. They built the first biomanufacturing plant in Cambridge and Kendall Square, and then you saw them evolving to build in North Carolina. I do think that trend is going to exist for new technology X, new technology Y, new technology Z,” Huang said.
Change on the horizon?
This year, Gov. Maura Healey is set to reauthorize the Massachusetts Life Sciences Initiative, paving the way for a third iteration of a multimillion-dollar spending bill to incentivize the growth of the state’s biopharmaceutical industry.
Healey’s predecessor, Gov. Deval Patrick, launched the Life Sciences Initiative back in 2008, authorizing $1 billion for capital spending, tax incentives and other programs, including the Massachusetts Life Sciences Center (MLSC). A decade later, Gov. Charlie Baker built on the program with $473 million in new capital authorizations over five years and up to $300 million in tax incentives over 10.
Healey has said she plans to reauthorize the program, but has yet to say how much she wants to spend. Some industry leaders think that this time around, the initiative could provide the perfect platform to create some new biomanufacturing-specific programs.
There’s currently a tapestry of state-sponsored programs that companies and the cities and towns that host them can apply for through MassWorks, MassDevelopment, the MLSC and other public and quasi-public organizations.
They mostly tend to top out in the six figures, or maybe a couple million dollars at most. As a point of comparison, Flagship Pioneering, which is plotting a biomanufacturing park of sorts at the old Philips Healthcare facility in Andover, is likely looking at an investment in the range of $400 million.
Flagship did recently secure a Tax Increment Financing, or TIF, agreement worth up to $20 million with the Town of Andover. That’s “the first step in the process of evaluating the feasibility of this project,” DiLenge said.
Many recent manufacturing developments involved TIFs and other forms of public assistance. Ultragenyx, for instance, secured a nine-year TIF with Bedford in 2020, when it was first planning the cell and gene therapy site. Rentschler Biopharma got a 12-year, $1.2 million TIF with the Town of Milford around the same time, when it was looking to expand on its existing facility.
Moderna Inc. (Nasdaq: MRNA), often cited as an example of local biotech innovation, has received multiple tax incentives to set up manufacturing operations in Massachusetts. Those include a 20-year, $12.6 million TIF from Marlborough and a $3.1 million tax break from the MLSC, both approved earlier this year.
One industry leader pointed out that when Moderna undertook those projects, it was flush with cash from its Covid-19 vaccine. “If they didn’t have all that money from the Covid vaccine, it would have been extremely hard,” the executive said.
There are signs of change among public officials. When Moderna got its $3.1 million tax break through the MLSC earlier this year, 42 other companies received similar incentives. Many are explicitly for manufacturing jobs.
Bristol Meyers Squibb Company (NYSE: BMY), for instance, will receive $1.2 million for 77 jobs in Boston and Devens, the latter of which is home to the company’s growing manufacturing facility. Charles River Laboratories Inc. will get $1.5 million for 98 jobs in Wilmington, another manufacturing site. Nova Biomedical Corporation will receive $1.1 million for 75 jobs in Waltham, home to its corporate headquarters and manufacturing division.
To help with workforce development, Healey last month announced a $50 million job-training program for clean energy, healthcare and advanced manufacturing, along with a program called “Pathmaker” designed to fund partnerships between life sciences companies and training providers.
“(We want) to make sure that we are working directly with employers and companies and prospective companies about growth opportunities here,” Healey told the Business Journal in a June interview. “We’re all about reducing any barriers to growth in terms of manufacturing. It’s absolutely something we want to lean into.”
Still, there are speed bumps. Last month, a biopharma firm called Continuus Inc. scrapped plans to build an end-to-end manufacturing facility in Woburn, citing unexpected budgetary concerts. The company had secured a $69.3 million grant from the U.S. Department of Defense and Department of Health and Human Services in early 2021 to help fund the site, which was initially estimated to cost $125 million.
But Continuus’ proposed building was subject to federal regulations that stalled the permitting process, CEO Salvatore Mascia told the Business Journal. The company considered moving the project to Devens, but the delay, coupled with inflation, caused a “significant increase” to the cost, according to Mascia. The company still plans to build elsewhere around Woburn, but offered no timeline.
Industry leaders say what they need — in addition to funds — is help cutting through some of the red tape.
“For us, most of the obstacles, or bigger challenges, were really around what I would call infrastructure,” such as water and roads, Huang said of Ultragenyx’s Bedford buildout. “That turned out to be where we needed the most help.”
In some cases, city and town leaders have to take the lead rather than the companies they’re trying to attract. Bedford officials helped Ultragenyx by applying for a $500,000 MassWorks grant, which helped pay for an expanded pump station, 2,500 feet of sewer mains and 1,230 feet of gravity sewer piping.
That kind of public investment is crucial for biomanufacturing, said Paul Materazzo, Andover’s director of planning and land use. Materazzo’s office facilitated the TIF agreement with Flagship, as well as permitting processes for other biomanufacturing facilities in town, including Pfizer’s.
“What we’ve been able to do over the last few years is examine our existing zoning and recalibrate it to allow for these companies to grow and thrive in Andover. Not just by clarifying different requirements in the zoning, but allowing for the expedited permitting processes to move forward,” Materazzo said. “Pfizer moved forward with a 190,000-square-foot addition. Our planning board, because it knows these types of developments, has been able to facilitate the permitting of that project with about two meetings.”
Other states are trying to capitalize on the drug industry’s Covid-driven momentum. In Texas, Gov. Greg Abbott recently signed a bill to exempt certain taxes on equipment or inventory held by medical and biomedical manufacturers. The bill, which needs the approval of voters in November, “will be a game changer for life science companies in Texas,” said Texas Healthcare and Bioscience Institute president and CEO Victoria Ford.
“Within the biomanufacturing area, there’s some places Massachusetts has some clear advantages,” Huang said. “Without some of the other improvements with regard to infrastructure and job-training … that equation starts to shift for many companies. That’s something that Massachusetts is going to have to come to grips with, because it’s unlikely to ever be cheaper than Texas, for instance, based on pure operating costs.”