IT, Biotech Positioning in Massachusetts

Many states and communities are focusing their limited technology-based economic development funds toward cluster development, concentrating on those sectors in which some assemblage already exists within the jurisdiction. Proponents of the approach suggest the public sector is able to maximize its investments in those areas already showing some strength.

But what does a state with a new governor do when it is one of the top states in the country for two of the sexier tech sectors – biotechnology and information technology – and public resources are growing more scarce?

In Massachusetts, perhaps fearing an either/or option in public policy direction awaits, both sectors recently issued studies charting the potential benefits or risks impact of state action or inaction. MassBiotech 2010: Achieving Global Leadership in the Life Sciences Economy has implications for any state or region hoping to develop a life sciences economic cluster. Similarly, The Telecommunications Industry in Massachusetts: A Time of Transition identifies common issues affecting future growth of the telecom industry. Both study's findings, policy recommendations and suggestions for the companies within each sector have value throughout the country.

MassBiotech 2010 argues the Massachusetts industry could be responsible for creating as many as 150,000 new jobs by 2010, with one-third directly in the biotech industry and the rest in related business services. The state already is home to 280 biotech companies, 230 of which were founded in Massachusetts, and about 18,000 biotech workers. In 2001, these companies accounted for $6.7 billion in revenue and 8 percent of the global drug development pipeline, the study asserts. The state's biotech industry in 2001 also was responsible for 27 percent of the $8.5 billion spent by the state's public companies on R&D, 15 percent of the venture capital funds raised, and 18 percent of all patents filed.

Whether the state's biotech jobs will stay in Massachusetts remains an open question, however. Massachusetts has a relatively poor record in retaining the manufacturing jobs that result when a new drug is approved for the marketplace, the study contends. States such as California and North Carolina, the researchers say, are better organized to capture new biotech development and jobs. Also, Massachusetts, while enjoying double-digit rates of growth and the arrival of major new employers, has witnessed its share of national biotech jobs decline over the last five years.

Massachusetts needs to address several challenges to stay competitive with other regions, according to MassBiotech 2010. The authors call on the state government to work with local communities to speed the zoning and permitting process for biotech development. In the same vein, industry and academic leaders in the life sciences community are called upon to organize clear leadership focusing on the success of the life sciences as a whole.

MassBiotech 2010 was conducted by The Boston Consulting Group and the Massachusetts Biotechnology Council, a nonprofit association of about 400 biotechnology companies, academic institutions, agencies and service organizations. It is available at http://www.massbiotech2010.org/.

Released by the Massachusetts Telecommunications Council, The Telecommunications Industry in Massachusetts puts telecom employment in Massachusetts at 131,790, an increase of 40 percent since 1998 and 135 percent since 1993. In the second quarter of 1998, the industry employed 93,988. Since 1995, telecommunications companies have been on the receiving end of $12.8 billion in venture capital investments, the report states. And, since 1998, 80 percent of the industry's job growth has been in firms with fewer than 250 employees.

Communications services, the largest segment of the industry, will be key to continued growth in overall telecommunications employment, according to the study. The sector accounts for 37 percent of total industry employment. Jobs in communications services have almost doubled since 1998, going from 24,660 to 49,135. During the same period, communications equipment manufacturing – the second largest segment of the industry – fell from 24,392 jobs in 1998 to 24,137 in 2002, a loss of nearly 1,600 jobs. In the last year alone, the sector has undergone a 6 percent decrease in employment.

Recognizing the telecom industry is in a period of transition, focus groups participating in the study convened to identify issues expected to impact the industry's future in Massachusetts. Broadly speaking, the issues identified include increased broadband deployment, ongoing support for workforce development, a substantial monetary commitment to R&D efforts, and regulatory and tax policies that encourage competition.

Educational development also is cited as a key issue for the telecom industry. The study notes only 6 percent of Massachusetts students taking the SAT in 2001 expressed an interest in engineering or computer science. In addition, only about half of all engineers who graduate from the state's colleges and universities have stayed in-state to pursue careers. Designing schools that can accommodate best practice in instruction such as project-based learning and technology would help address the industry's workforce needs, the study concludes.

The Telecommunications Industry in Massachusetts was developed with economic research support from the UMass Donahue Institute. The Massachusetts Telecommunications Council includes approximately 250 telecommunications, Internet, data communications and affiliated organizations throughout the Commonwealth and New England. The report is available at: http://www.masstel.org/industry/whitepapers.html