The New Capital of Bio-Tech and Life Sciences

Boston and San Francisco have long battled for supremacy in biotech innovation and investment, but the Massachusetts city is surging ahead

Health care is a primary concern worldwide. As the global population ages and developing countries increase access to medical services, the need to innovate is greater than ever. Despite rising investments in pharmaceutical research and development, drug pipelines are shrinking. Coupled with major breakthroughs in recent years, biotechnology has emerged to address areas of medicine that the pharmaceutical industry is struggling to address. Defined as any technology making use of “biological systems, living organisms, or derivatives thereof,” this exciting field has produced some of the most creative developments in health care.

The United States is the undisputed leader in biotechnology. While many countries have tried to recreate the conditions responsible for the United States’ proclivity to develop basic science research into novel therapies, none have been able to capture the same level of success. The formula is complex and relies on a mix of synergistic factors, including the concentration of talent, infrastructure and available capital.

Not surprisingly, two cities have emerged at the global forefront of biotech innovation: San Francisco and Boston. At the opposite ends of the country both geographically and culturally, both regions are responsible for a staggering percentage of scientific innovation in academia and industry, producing pioneering research and changing the face of health care. Together, these cities account for 47 percent of total biotech venture capital in the United States.

Boston and San Francisco are home to a remarkably unique confluence of factors that continues to churn out some of the most game-changing biotech companies. The importance of historical research institutions in these areas cannot be underestimated. Steeped in tradition and fueled by an enormous amount of public funding, universities like Stanford in California and MIT and Harvard in Boston attract the top minds in science, presenting unparalleled learning opportunities for the most motivated students from around the world.

Such an ingenious community is further supported by their extensive infrastructure and local governments’ willingness to improve the regulatory environment to support cutting-edge research. Huge investments have also been made within these universities to cultivate an ethos of cooperation that brings people together from disparate disciplines within the schools and by improving access and collaboration with industry leaders.

But one question remains: who wins out among the two?

Much debate has circled whether San Francisco or Boston takes the No. 1 spot. The two cities have been battling it out for years, defending their positions in order to attract maximum investments. Different reports alternately place one over the other, but it’s clear that they outpace the third spot by a large margin in terms of venture capital investments. San Francisco and Boston both received roughly US$ 1 billion in biotech venture funding in 2013, while runner-up San Diego received less than US$ 400 million.

However, Boston may be poised to tip the scale in its favor.

MIT has shouldered much of the brunt of Boston’s biotech success, which is geographically concentrated in Kendall Square, the heart of the campus. In recent years, several pharmaceutical giants like Sanofi have relocated to the square – Genzyme Corp.’s historical stomping grounds – in hopes of getting closer to the epicenter of viable scientific progress. The appeal was apparently sufficient to inspire Pfizer to build a US$ 300 million complex in Kendall and transfer operations from its Alewife campus a short distance away.

There’s a good reason motivating these decisions: location matters. You can’t contrive the magic artificially. Graduates from both scientific and management fields aren’t interested in moving to the suburbs and communities to sterile office parks. The talent pool and companies vying for their attention are more than willing to pay the skyrocketing real estate prices in urban centers like Kendall Square.

In response to these trends, Harvard is building a new campus that could create a new biotech nucleus to launch Boston as the leader over San Francisco. With access to the same foundation that has created such success in the past, Harvard is doubling the available area for the same proven biotech model to expand and thrive, keeping everything within walking distance of the most sophisticated venture capital funds.

The plan calls for an ambitious expansion of Harvard’s Allston campus, which houses the storied Harvard Business School. The university has already broken ground on a new center across the street from the business school that will house the School of Engineering and Applied Science. Named the Enterprise Research Campus, this complex will flank the new Life Sciences Center. Harvard hopes to increase the natural networking and serendipity that occurs when the most brilliant minds mingle in classrooms, coffee shops, parking lots and sporting fields only steps away from each other.

It’s not unreasonable that such an effort on Harvard’s behalf presents huge potential to inspire a collaborative community for research, scientific development, venture capital, and business. Effectively, Boston has the potential to double its marketplace for ideas in the near future, expanding on a proven model that has rewarded scientists and investors with outstanding medical advances and returns. This poses a real threat to the Bay Area, and could finally rank the New England city as the decided leader.

Elena Forchielli is an associate at Osservatorio Asia, a research center in Bologna, Italy