A risky business; Patrick's biotech plan plays favorites
BYLINE: By JAY FITZGERALD
Gov. Deval Patrick's ambitious $1 billion plan to promote the state's life-sciences industry is raising questions about whether it makes sense to spend so much money on a sector that accounts for only a fraction of Massachusetts' overall work force.
Some critics argue that Patrick's plan would use taxpayer money to fund a favored industry, one that by some estimates employs just 30,000 to 35,000 workers. They add that what's really needed to attract jobs - in biotech and other industries - is an improved business climate.
Few dispute the importance of Massachusetts' growing biotech and life sciences industries, both to the future of the region's economy as well as for medical advances that could vastly improve the quality of human life.
Though most economists and business observers praise aspects of Patrick's proposal, some note that state government doesn't have a good track record of boosting specific industries and that funds could be spent in other areas to promote overall economic growth in Massachusetts.
``This is just a piece of our economy,'' said Andre Mayer, economic director of Associated Industries of Massachusetts, referring to the biotech industry..
Last month, Patrick attracted statewide and even nationwide attention by dramatically unveiling his life sciences initiative, a 10-year plan to boost the biotech industry, at the giant 2007 BIO International Convention in Boston. He said Massachusetts wouldn't sit by as states such as California and North Carolina try to steal existing or potential jobs from the Bay State.
Patrick said his plan would help life-sciences companies and universities with research grants and low-interest loans for capital expansion, while also creating a new stem-cell research and storage center at the University of Massachusetts.
The Patrick administration says that nearly one out of seven of the state's more than three million jobs are tied to the life sciences and that its health is critical to the future of Massachusetts.
But that number includes all health-care jobs, including those positions at hospitals, nursing homes and other medical facilities.
The actual biotech and pharmaceutical sector - viewed as companies trying to develop new drugs for markets - is much smaller.
Experts estimate that the biotech sector employs about 30,000 to 35,000 workers in Massachusetts.
Andrew Sum, director of Northeastern University's Center for Labor Market Studies, who is currently studying the biotech industry, defines the industry differently. He includes medical-device and other related companies that bring the total work force to about 75,000 positions.
But that's still far fewer than the 180,000 workers in the financial sector or the 232,000 in the hospitality industry.
The top 25 largest biotech companies in Massachusetts combined, according to the 2007 Boston Business Journal's Book of Lists, employ fewer than 16,000 workers in the state.
By comparison, the Stop & Shop supermarket chain alone has more than 22,000 workers in the Bay State. Massachusetts General Hospital has more than 20,000. Both Fidelity Investments and Raytheon employ more than 12,000 workers in the state, according to the BBJ's list.
Sum notes that the biotech industry was one of the few sectors to see actual jobs growth during the recent recession - with nearly 10,000 new jobs created from 2000 through 2005.
He also said that the state's exports of products and services increased during those same years, largely due to the overseas sales of biotech and pharmaceutical products developed by Massachusetts companies.
Joshua Boger, chief executive of Vertex Pharmaceuticals, pointed to the ripple effect that a growing biotech sector has on other businesses and the overall medical advances it promotes in general. He said the $100-million-per-year price tag for Patrick's 10-year plan is ``modest'' within a state budget of about $30 billion.
``It makes sense to invest in it,'' said Mike Webb, chairman of the Massachusetts Biotech Council and chief executive of the local start-up firm Ascent Therapeutics. ``The life-sciences industry cluster is forecast to grow fast over the next decades.''
Others note that biotech jobs also pay much better than many other sectors. One recent UMass Donahue Institute study calculated that the average biotech worker made about $98,500 a year in 2004. Comparatively, the U.S. Bureau of Labor Statistics estimated the average worker in Massachusetts made about $49,200, according to information provided by the Massachusetts Biotech Council.
All of the positive jobs-growth, export and salary numbers create a ``multiplier effect'' that greatly enhances the importance of the biotech industry and justifies aggressive support by the state, Sum said.
But not everyone is convinced that backing one industry, and arguably giving it preferential treatment, is the answer.
Jim Stergios, executive director of the conservative Pioneer Institute, said Patrick is ``absolutely right on'' by proposing state research grants to make up for recent cuts in National Institutes of Health funding.
But he questioned whether the state should be getting involved in giving venture capital-like funds or tax credits to specific companies. Stergios warned the state is ill-equipped to determine what firms should receive funding.
Northeastern's Sum said a much more important and effective approach would be to improve education and job training so that biotech companies have a steady supply of well-trained workers.
But Bob Coughlin, Patrick's undersecretary of business development, said the administration is committed to helping firms ``bridge the funding gap'' that occurs in between the time that a company is young and when it's about to go to market with a product. He said the administration is still working on details of its plan before officially filing it later this year.
As for criticism that too much emphasis is being put on one industry with the life sciences initiative, Coughlin said the administration is determined to help all industries. It's currently pushing for help for the alternative-energy, film and other sectors, he said.
Still, it's hard to argue that other industries in the state have received anything rivaling the high-profile, $1 billion life sciences initiative unveiled by Patrick.
AIM's Mayer said Patrick deserves credit for aggressively backing the biotech sector, particularly after former Gov. Mitt Romney sent a negative message to the bio-pharmaceutical world by backing restrictions on stem-cell research. Patrick has since reversed some of Romney's policies, Mayer said.
But past efforts by the state to promote a specific industry have had mixed results and call into question whether it's wise to tilt too much in favor of one sector, he said.
GRAPHIC: Worth a billion?
Biotech companies employ an estimated 30,000 to 35,000 workers in Massachusetts. The number rises to more than 75,000 when medical devices and instruments, biological research and testing and medical laboratories are factored in. Still, the number of jobs in those fields is dwarfed by Bay State employment in numerous other industries including*:
Construction: 131,662
Retail trade: 355,251
Finance and insurance: 182,715
Educational services: 111,056
Accomodation and food services, 232,951
(*Employment numbers are from 2004)
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biotech and medical device jobs
Drugs & Pharmaceuticals**: 7,771
Medical devices and instruments: 21,303
Physical, engineering and biological research 35,192
Testing & Medical Laboratories: 10,808
Total: 75,074
Average salary of a biopharmaceutical worker in Massachusetts**: $98,500.
Average employee salary in Massachusetts: $49,244
(*numbers are for 2004)
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(Source: U.S. Bureau of Labor Statistics' census of employment and earnings)
Northeastern University Center for Labor Market Studies, Massachusetts Biotech Council.)
STAFF GRAPHIC BY SARAH DUBOIS