Massachusetts’ Competitive Position in Life Sciences: Where Do We Stand? Professor Michael E. Porter Institute for Strategy and Competitiveness Harvard Business School Massachusetts Life Sciences Summit 12 September 2003 This presentation is composed of excerpts from reports and presentations created by the Boston Consulting Group, Professor Alan Clayton- Matthews, the Howell Group of Boston, the Massachusetts Biotechnology Council, MassMedic, the Massachusetts Medical Device Industry Council, the Massachusetts Technology Collaborative, the Milken Institute, the Monitor Company Group, Professor Michael E. Porter and the New England Healthcare Institute. See Sources.
Situation Facing Massachusetts � Massachusetts is one of the world’s leading centers in Life Sciences, but the State is facing a crowded and increasingly competitive field � The Life Sciences cluster encompasses a wide range of products and services , including medical devices, pharmaceutical products, research and testing, and health care delivery � Massachusetts has a rich set of institutions in the field, but each tends to be narrowly focused on one aspect of the cluster � There has been no overarching strategy for the cluster and no structure to develop one LSConsolidated-20030806 2 2003 Life Sciences Summit
A Crowded Field U.S. States U.S. States Countries Countries • Denmark/Sweden, Mediconvalley • Denmark/Sweden, Mediconvalley • 41 states have launched Life Sciences • 41 states have launched Life Sciences initiatives initiatives • Germany, BioRegio-Initiative • Germany, BioRegio-Initiative • 16 states have appropriated funds for • 16 states have appropriated funds for • Netherlands, BioDelta • Netherlands, BioDelta new biotech activities new biotech activities • Saudi Arabia, Jeddah BioCity • Saudi Arabia, Jeddah BioCity • 12 states have a dedicated Biotech • 12 states have a dedicated Biotech specialist in government • Singapore, Biopolis of Asia specialist in government • Singapore, Biopolis of Asia • 10 states have explicit biotechnology • United Kingdom , Genome Valley • 10 states have explicit biotechnology • United Kingdom , Genome Valley strategies strategies … and many other countries … and many other countries Source: BIO, State Government Initiatives in Biotechnology, September 2001; life sciences institutions’ web sites LSConsolidated-20030806 3 2003 Life Sciences Summit
Life Sciences Cluster Cluster Organizations Cluster Organizations Health and Beauty Health and Beauty Health and Beauty MassMedic, MassBio, others MassMedic, MassBio, others Products Products Products Health Services Provider Health Services Provider Surgical Instruments Surgical Instruments and Suppliers and Suppliers Specialized Business Medical Equipment Specialized Business Medical Equipment Services Services Biopharma- - Biopharma Biopharma- Banking, Accounting, Legal Biological Biological Banking, Accounting, Legal Biological ceutical ceutical ceutical Dental Instruments Dental Instruments Products Products Products Products Products and Suppliers Products and Suppliers Specialized Risk Capital Specialized Risk Capital VC Firms, Angel Networks Ophthalmic Goods VC Firms, Angel Networks Ophthalmic Goods Diagnostic Substances Diagnostic Substances Specialized Research Specialized Research Service Providers Service Providers Research Organizations Research Organizations Research Organizations Laboratory, Clinical Testing Laboratory, Clinical Testing Containers Containers Containers Educational Institutions Educational Institutions Analytical Instruments Analytical Instruments Analytical Instruments Harvard University, MIT, Tufts University, Harvard University, MIT, Tufts University, Boston University, UMass Boston University, UMass LSConsolidated-20030806 4 2003 Life Sciences Summit
Clusters and Competitiveness � Clusters Increase Productivity / Efficiency – Efficient access to specialized inputs, services, employees, information, institutions, and “public goods” (e.g. training programs) – Ease of coordination and transactions across firms – Rapid diffusion of best practices – Ongoing, visible performance comparisons and strong incentives to improve vs. local rivals � Clusters Stimulate and Enable Innovations – Enhanced ability to perceive innovation opportunities – Presence of multiple suppliers and institutions to assist in knowledge creation – Ease of experimentation given locally available resources � Clusters Facilitate Commercialization – Opportunities for new companies and new lines of established business are more apparent – Commercializing new products and starting new companies is easier because of available skills, suppliers, etc. Clusters reflect the fundamental influence of externalities / linkages across firms and associated institutions in competition LSConsolidated-20030806 5 2003 Life Sciences Summit
Institutions for Collaboration Selected Massachusetts Organizations Life Sciences Industry Associations University Initiatives Life Sciences Industry Associations University Initiatives � Harvard Biomedical Community � Massachusetts Biotechnology Council � Harvard Biomedical Community � Massachusetts Biotechnology Council � MIT Enterprise Forum � Massachusetts Medical Device Industry � MIT Enterprise Forum � Massachusetts Medical Device Industry Council � Biotech Club at Harvard Medical School Council � Biotech Club at Harvard Medical School � Massachusetts Hospital Association � Technology Transfer offices � Massachusetts Hospital Association � Technology Transfer offices General Industry Associations Informal networks General Industry Associations Informal networks � Associated Industries of Massachusetts � Company alumni � Associated Industries of Massachusetts � Company alumni � Greater Boston Chamber of Commerce � VC community � Greater Boston Chamber of Commerce � VC community � High Tech Council of Massachusetts � University alumni � High Tech Council of Massachusetts � University alumni Economic Development Initiatives Joint Research Initiatives Economic Development Initiatives Joint Research Initiatives � Massachusetts Technology Collaborative � New England Healthcare Institute � Massachusetts Technology Collaborative � New England Healthcare Institute � Mass Biomedical Initiatives � Whitehead Institute For Biomedical � Mass Biomedical Initiatives � Whitehead Institute For Biomedical Research � Mass Development Research � Mass Development � Center for Integration of Medicine and � Massachusetts Alliance for Economic � Center for Integration of Medicine and � Massachusetts Alliance for Economic Innovative Technology (CIMIT) Development Innovative Technology (CIMIT) Development LSConsolidated-20030806 6 2003 Life Sciences Summit
Shifting Responsibilities for Economic Development Old Model New Model Old Model New Model • Government drives economic • Government drives economic • Economic development is a • Economic development is a development through policy development through policy collaborative process involving collaborative process involving decisions and incentives decisions and incentives government at multiple levels, government at multiple levels, companies, teaching and companies, teaching and research institutions, and research institutions, and institutions for collaboration institutions for collaboration LSConsolidated-20030806 7 2003 Life Sciences Summit
The Massachusetts Life Sciences Cluster Performance Productivity � Average wages in the Massachusetts Life Sciences Cluster are amongst the highest in the country , and growing strongly � The Cluster has the largest share of national life sciences employment of any metropolitan region but growth is only slightly above the national average for life sciences Innovation � The Massachusetts Life Sciences Cluster has generated many recently approved biotech products, and has about 7.5% of the world’s pharmaceutical product pipeline � The Cluster is the leading metropolitan region in terms of life sciences patents , but growth in patents is only slightly above average Establishments � The Massachusetts Life Sciences Cluster has relatively few large local firms. Establishment growth is only slightly above average LSConsolidated-20030806 8 2003 Life Sciences Summit
Wages in Leading Life Science Clusters National cluster wage growth: 5.1% $100,000 Bay Area, CA San Francisco $90,000 San Jose Oakland Boston $80,000 Baltimore Philadelphia San Diego Newark $70,000 Washington DC Cluster Atlanta New Haven $60,000 Seattle Middlesex, NJ average Average Minneapolis Los Angeles wage: New York Wage, Orange Ct. $50,000 Chicago $56,741 Indianapolis 2001 Raleigh-Durham Tampa, FL Cleveland Nassau, NY $40,000 Houston New Jersey $30,000 Salt Lake City $20,000 $10,000 $0 2% 3% 4% 5% 6% 7% 8% Percent Change in Annual Wage Growth, 1990–2001 Note: S. F. Bay Area — Average wage of San Francisco, San Jose, Oakland Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School LSConsolidated-20030806 9 2003 Life Sciences Summit
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