World's Largest Biotech Hubs: Boston and the San Francisco Bay

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Several trips to Boston this year to visit multiple companies piqued my interest about how the biotechnology industry in this area compared with the San Francisco Bay Area where I have worked for most of my career. Of course, I was aware the Boston region, especially Cambridge, hosts a large biotech community. However, there are a number of biotech clusters in the US, and my experience was that, while there is certainly a focus of biotech businesses in these areas, the breadth and depth of biotech in the San Francisco area functioned at a whole different level.

However, recent trips to Boston made it clear that the number of, small startups, large established pharmaceuticals, incubators sites, large biotech-focused research institutions, really rival the situation in the San Francisco area. It prompted my curiosity as to how the details of the two regions compare.

How Big is Biotech in San Francisco and Boston?

The regions around the San Francisco Bay and Boston employ about 50,000 people in bioscience-related jobs. However, most of the biotech jobs in Massachusetts appear to be more narrowly focused on pharmaceutical and biotech drug discovery. From the data at the Bureau of Labor and Statistics, in 2010 around 28,000 Massachusetts jobs—half the bioscience jobs—were focused on and biotech drug discovery. However, only about a quarter (15,000) of the San Francisco Bay area jobs were in the category. It appears Massachusetts has almost twice as many people working in drug discovery and development.

This disparity is also obvious when you look at the largest biotech companies in Massachusetts. Sanofi, ​Pfizer, Biogen-Idec, Novartis all major pharmaceutical companies with large research centers just outside Boston, employ over 10,000 people alone. These four companies make up the bulk of the difference in the employment numbers between Massachusetts and the San Francisco biotech clusters.

Boston Biotech Focuses on Drug Discovery and Development

This disparity between pharmaceutical-focused Massachusetts and the broader biotech segment in California is also reflected in the 897 new potential drugs in development or trials mentioned in the Massachusetts Biotechnology Council 2011 Industry snapshot versus the 699 touted in a California Biomedical Industry 2012 report for the entire state, not just the San Francisco Bay region.

San Francisco Biotech Has a Broad Base

However, the San Francisco Bay does appear to have a more diverse biotech community than Massachusetts with more companies overall. The exact number of companies is difficult to quantify as there are many small private enterprises. However, the Lab Rat website, which has a pretty comprehensive list of bioscience-related companies, lists 195 bio companies in Massachusetts and 240 around the San Francisco Bay. Since the employment numbers are similar between Massachusetts and the San Francisco Bay Area, this means the there is has a much higher proportion of small biotech companies around the San Francisco Bay.

Venture Investment in San Francisco Biotech Larger than Massachusetts

The prevalence of small biotech in the San Francisco isn't surprising for anyone familiar with the quantity of venture investment in this area. Based on a PricewaterhouseCoopers MoneyTree Report, approximately $2.3 billion was invested in San Francisco Bay area biotechnology and medical device companies in 2011, but only a little over half that, or $1.3 billion, was invested in the same sectors in Massachusetts. Though, almost all the Massachusetts investments were in biotechnology, not medical diagnostic, companies.

Strictly in the biotech sector, San Francisco only has slightly more investment in this sector. It was the medical device sector where San Francisco companies drew over three times more capital than Massachusetts. This difference likely explains much of the $20,000 disparity in average salary between Massachusetts biotech workers who average around $97,000 a year, and California biotech employees who make around $76,000 a year (although this number is for all of California, so workers in the San Francisco area probably do a bit better).

Boston and San Francisco: The Principle Biotech Business Hubs

It is not clear which is the top biotech cluster, but what is clear is that combined, Boston and San Francisco host the largest concentration of biotech activity in the world. Both areas have growing established broad-based biotech industry segments. Almost half of all US biotech investment is made in these areas, about 1/3 of the biotechnology employees work for companies in these areas, and about a quarter of US biotech companies are located in one of these clusters. These two regions are the major drivers for global biotechnology innovation.

With the economic climate of the last few years, both regions have faced some challenges, but the unique mix of features that have enabled the biotech industry sector to thrive in these areas is not easily replicated, and investment continues, so both regions appear positioned to retain their roles as biotechnology leaders. It seems that the global biotech industry will continue to revolve around these two hubs for some time.