A Critical Alliance: The Biotechnology & Pharmaceutical …

              A Critical Alliance: The Biotechnology & Pharmaceutical
                              Industries in Massachusetts
The Massachusetts High Technology Council, through its Biopharma Initiative, is working to make Massachusetts
more competitive for all life sciences employers. MHTC commissioned the University of Massachusetts Donahue
Institute to study the deep and unique relationships between biopharmaceutical employers and the state's smaller
biotech firms. To view full report, please visit www.mhtc.org.

The study reveals that more than ever pharmaceutical and biotech employers are interconnected and interdependent.
These findings reveal a need to pursue a state and federal agenda that fosters growth for all Massachusetts life
science employers and to oppose harmful policies ­ like those imposing government price controls ­ that
threaten biopharmaceutical growth and the drug discovery process.

Bio-Pharma Alliances: Delivering on Biotech Growth and Drug Discovery

From 2000-2006, a sample section of 13 of the leading pharmaceutical firms with Massachusetts locations
invested more than $13.4 billion in 357 alliances with state biotech companies ­ far outpacing the amount of
annual venture capital investment in Massachusetts biotech firms. This $13.4 billion total is not comprehensive; the
total impact of all biopharmaceutical investment in Massachusetts biotech firms would be much higher.

Donahue estimates that the downstream value of these alliances is an additional $14.7 billion ­ bringing the potential
total long-term value of these alliances to more than $28 billion.

Nearly half of these alliances (175 of 357) occurred during the early stages of drug discovery or preclinical
research when resources are most scarce. More than half of the alliances are categorized as full collaborations:
extensive partnerships between two firms involving research, development and commercialization phases.

Biopharma Economic Trends: Is Leadership Position Threatened?

The Massachusetts biopharmaceutical sector experienced 44% job growth (from 33,619 to 48,242 jobs) from 1998-
2004, but competitor states and the nation as a whole (57%) added biopharma jobs at much higher rates. Overall,
Massachusetts slipped from fifth to seventh in total biopharma employment.

Massachusetts has the highest wages per worker of any state at more than $98,000 a year, more than $8000
above second ranked New Jersey and more than 25% above the national average.

Massachusetts more than doubled the amount of venture capital investment received by state biotech firms
from 1998-2004 and at $561 million is a strong second to California. However, other states and the national average
grew at higher rates that Massachusetts. Massachusetts has the highest per biopharmaceutical employee venture
capital funding of any state at more than $11,000 per employee.

Despite the threat of a shrinking pool of federal research funds in the future, Massachusetts ­ at more than $2.2
billion in 2004 ­ receives the second most National Institutes of Health grant award funding in the nation and
nearly doubled its award total from 1998.

A survey of the state's leading biopharmaceutical executives showed that despite an availability of skilled
workers and proximity to world-class research partners, Massachusetts, in comparison to other states, was not
always effective in meeting business needs. The executives called for state government to work for an enhanced
local permitting process, improved K-12 public STEM education, and to oppose any government price controls
on prescription drugs.