Does RI Have What it Takes to Create a Life Sciences Industry?

Creating A Life Sciences Cluster in Rhode Island

Rhode Island House Speaker Joseph Shekarchi has an excellent idea: try to replicate in Rhode Island the life sciences ecosystem enjoyed by their neighbor up north in Cambridge, Boston and Worcester, Massachusetts.

This is an excellent idea because, as the trade association for the biotechnology industry in Massachusetts reports, the life sciences industry in Massachusetts employs more than 100,000 with an average wage of $201,549.  This is an industry that could bring billions in wages to Rhode Island.

However, as someone who studies the life sciences industry in Massachusetts, I would give the Speaker certain heartfelt advice.

First, the life sciences ecosystem in Massachusetts was not created by the politicians, as much as they would like to take the credit.  If I had to dispense the lion’s share of credit for Massachusetts’ success in the life sciences, it would go first to its great universities:  Harvard and MIT.  In Worcester’s case, it is clear that the Worcester Polytechnic Institute played a critical role in creating the life sciences cluster in that city.

After all, if you want first-rate biotechnology companies, the first thing you need is first-rate biologists.  A life sciences cluster is not built upon government spending; it is built upon intellectual capital. Smart scientists with great ideas will first do great research and then start great companies.

The good news for Rhode Island is that it has a great university, Brown University, which has a new Provost, Dr. Frank Doyle from Harvard, who knows a few things about academic-industry partnerships. Supporting Brown and other Rhode Island universities is the first step to creating a vibrant life sciences industry.

Therefore, I would not make the “Field of Dreams” mistake, thinking that if the government builds lab space or gives out lots of “life sciences” grants, this will draw the scientific talent to Rhode Island. If the state builds lab space, world class biologists will not emerge from the corn fields of Pawtucket to fill up the labs. If Rhode Island’s universities can cultivate world class scientific talent, then private funding, foundation grants and government support will find its way to that talent, and to Rhode Island.

What can government do?  The best thing the government can do to persuade talented scientists to start a company in Rhode Island is to do the things that employees and citizens expect government to do: have reliable and safe transportation, good roads and schools, and safe communities, especially around its universities.

The other piece of good news for Rhode Island is that, in order to compete for life sciences companies, the state is not required to have the lowest taxes and a perfect business climate. After all, the most important clusters of life sciences companies are found in Massachusetts, California, and New Jersey – three states not exactly known for their competitive business environments.

Biopharma companies care about the business climate, but it is not a make-or-break issue for them. When they succeed, biotechnology and pharmaceutical companies tend to have higher profit margins than your typical manufacturing company.  To some degree, these companies can tolerate slightly higher taxes and more regulation than other types of companies. What they need is scientific talent — and they will not locate to places where there is little of that.

Finally, my last word of advice is that the state should actually consider buying the products produced by these companies, which means that the state Medicaid program and state employee retirement health plans should actually become good customers to biopharma companies.

For this last piece of advice, I can only point to Europe which, only a few short decades ago, had the most robust life sciences industry in the world. However, the socialized healthcare systems in Europe stopped paying for some of the newest and latest drug therapies. These companies were not happy. Not surprisingly, Europe has lost its edge in the life sciences and will soon be overtaken by China in the numbers of new drug approvals. Biopharma companies are moving so swiftly away from Europe that the United Kingdom recently announced a 360 million pound government “investment” to keep the UK as a “science and technology superpower.”

Let me make a bold prediction: all this government spending in the UK will largely fail. These European governments had made policy decisions for decades that sent a clear message to their life sciences companies – we do not value your products. You will now find the laboratories of these European companies in Cambridge, Massachusetts, and their sales forces working hard to sell products in the U.S.

One can only commend Speaker Shekarchi for shirking the vitriol that is sometimes leveled by politicians at life sciences companies and for putting a priority on economic development in his state. From his cousin up north, we can only wish him luck.

William S. Smith, PhD, is Director of the Life Sciences Initiative and Senior Fellow at Pioneer Institute in Boston

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