Newsclips

State competing against the world
Report says research effort is facing long-term threats

Worcester Telegram
February 1, 2008
By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

The Massachusetts “innovation economy” stacks up well against many states and foreign countries when it comes to the factors that feed modern economic growth, but the state continues to lose residents to other states and sends too few young people into math and science studies, according to a new report.

The “2007 Index of the Massachusetts Innovation Economy” suggests that Massachusetts possesses strength in research and development, investment and the life sciences. Yet the report, the 11th annual study from the Massachusetts Technology Collaborative John Adams Innovation Institute in Westboro, indicates that Massachusetts also has long-term challenges if it wants to compete with rapidly developing nations such as China and U.S. states pursuing growth.

“We as a state really have to keep focused on the entire world if we’re going to remain an innovation leader and if we’re going to do what we’ve done historically, which is excel at the front end of the product cycle,” said Patricia M. Flynn, Trustee professor of economics and management at Bentley College and chairman of the index’s advisory committee.

The report marks the first time that MTC researchers have attempted to compare the long-term factors of economic growth in Massachusetts to foreign countries. The report has previously focused only on comparing Massachusetts to other states with significant technology sectors.

According to the report, spending on all types of research and development in Massachusetts exceeds $15 billion a year and has been growing at an annual average rate of 6.6 percent, the same growth rate as European Union countries. Massachusetts also ranks second in the world, just behind Sweden, in corporate research spending as it relates to total economic growth.

Asian countries, however, are spending big and growing fast, the report’s authors found. Chinese spending on research and development hit $76.9 billion in 2003, the most recent year cited. That compared to research and development spending of $292.4 billion in the United States. Yet over the five years ending in 2003, U.S. spending rose at an annual average rate of 4.5 percent, while Chinese spending rose 22.8 percent.

In education, Massachusetts faces other difficulties. In 2003, just 7.1 percent of Massachusetts college graduates majored in science, far behind countries such as Ireland, Great Britain, Germany, Canada, and even the U.S. average of 9.4 percent. Just 9.5 percent of Massachusetts graduates majored in engineering, construction and manufacturing, compared to 29.5 percent of graduates in Korea.

In addition, Massachusetts high school graduates show little enthusiasm for pursuing science, math and technology studies in college. In 2006, only 1 percent of high school seniors headed to college said they intended to major in math. Two percent said they intended to major in physical sciences, 4 percent in biological sciences and 4 percent in computer and information sciences.

Massachusetts has long been able to attract science and engineering students from elsewhere, but the lack of math and science interest among native youths bodes ominously for the state’s future work force, said Michael J. Tavilla, lead author of the report and program manager for research and innovation at the John Adams Innovation Institute.

“It’s that more native population that’s more likely to stay that isn’t as well-prepared as it should be,” Mr. Tavilla said. “That puts Massachusetts at a serious disadvantage.”

More work needs to go into showing young people that math and science can lead to careers in a wide variety of fields, such as forensic police work, construction, agriculture and advanced fuels, said state Rep. Jennifer M. Callahan, D-Sutton, who spoke about education yesterday at a legislative hearing on Gov. Deval L. Patrick’s proposed life sciences initiative.

“I think the key here is showing students early on about what the possibilities are,” she said in an interview.

The loss of residents also persists, another factor that can play havoc with fielding enough skilled workers for modern technology businesses, according to the report. In the year ending in May 2006, Massachusetts posted a net loss of 19,243 residents. That compared to a loss of 33,538 residents the previous year.

Many people likely left Massachusetts because of high housing prices in the state and better job opportunities elsewhere, said Dr. Flynn of Bentley, who has a doctorate in economics. Housing prices have moderated, however, and the state’s employment in innovative sectors grew at an annual rate of about 1 percent, which was below faster growing California and North Carolina but about the same rate as technology-rich states such as New Jersey, New York and Pennsylvania.

The arrival of immigrants also rebounded after dipping in 2004 to 2005, Dr. Flynn said.

“If we can help stem that outflow and have more good jobs that attract people here, then that’s really critical,” she said.

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Friday, February 1, 2008

Governor’s plan backed at hearing

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

Worcester Telegram

WORCESTER— A $90 million state investment in a proposed University of Massachusetts Medical School science center could yield $1 billion in economic impact, according to a new estimate.

Michael D. Goodman, director of economic and public policy research at the University of Massachusetts Donahue Institute, said yesterday that a state appropriation for the proposed UMass Advanced Therapeutics Cluster, plus an additional investment of $359 million from the medical school, could lead to more than 5,800 construction jobs and an estimated 730 net new jobs when the center is fully operating. The estimates reflect the impact that the state has already felt from the Aaron Lazare Medical Research Building, which opened in 2001 on the medical school’s campus in Worcester.

“Just this one facility at UMass Worcester has quickly become a major economic engine in its own right,” Dr. Goodman, who has a doctorate, said in testimony yesterday to the legislature’s Joint Committee on Economic Development and Emerging Technologies. “These investments, if done effectively, are the gift that keeps on giving.”

Dr. Goodman and others testified at Worcester Polytechnic Institute’s Life Sciences and Bioengineering Center on Gov. Deval L. Patrick’s proposed life sciences initiative, a $1 billion package of spending on facilities, research and education that would be funded by bonds. It was the committee’s final hearing on the proposal, and state Sen. John A. Hart Hart Jr., D-Boston, said he hoped a bill would make it to the floors of the House of Representatives and state Senate by mid-February.

The life sciences — a broad term that encompasses biotechnology, pharmaceuticals, medical devices and related research — is a small but highly coveted industry among states and nations. Massachusetts employment in biopharmaceuticals, medical devices and related hardware fell 1.6 percent between 2002 and 2006, while employment over the same period grew in California, Minnesota and North Carolina, according to a new study released today by the Massachusetts Technology Collaborative John Adams Innovation Institute in Westboro.

The 25-member Central Massachusetts delegation of state legislators submitted a letter supporting the UMass request for funding. State Sen. Edward M. Augustus Jr., D-Worcester, told committee members that the investment would help build and retain a scientific work force by providing a space for research into fields such as stem cells.

“With other nations and states such as California and New Jersey already investing significant sums in embryonic stem cell research, Massachusetts needs to act fast to retain its competitive advantage,” Mr. Augustus said.

Other support for the initiative came from business. James W. Peck, general counsel of Nypro Inc. of Clinton, said the initiative could make Massachusetts a focus of the U.S. life sciences industry and bring more business to Nypro. The company does injection molding, producing plastic parts for a variety of industries, including medical device makers.

“Our principal function is to manufacture and commercialize products other customers produce,” Mr. Peck said. “We’re obviously interested in deepening our relationships with those customers, as well as developing new customers.”

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Devising a healthy industry
Medical device sector boasts robust approvals, ample money
Sunday, February 10, 2008
Worcester Telegram & Gazette

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

WORCESTER— If Albert Prescott has his way, the treatment of the future for dysfunctional jaw pain might just be a polymer injected into the body to reduce inflammation.

Mr. Prescott, president and chief executive of Crescent Innovations Inc., is developing a treatment called NINJA that seeks to knock out TMJ pain in a market he estimates is worth $1 billion in annual sales.

“I’ve always said that if an entrepreneur is going to spend time creating something, you’d almost better have a billion-dollar market you can go after,” said Mr. Prescott.

He’s not the only one who thinks so. Across the state, medical device entrepreneurs are working on novel ways to improve surgeries, stop bleeding and detect disease. In an innovation economy that faces competitive pressures, the Massachusetts medical device industry has managed to secure escalating amounts of venture capital and win regulatory approvals at a rate that eclipses most other states with high-tech industries.

The state’s advantage comes from innovative small companies that spawn new concepts and a robust hospital system that helps refine them, said Marc E. Goldberg, managing director of BioVentures Investors, a venture capital firm that has invested in start-up medical device companies.

“Massachusetts has a wonderful infrastructure for both the creation of these ideas and the development of these ideas,” Mr. Goldberg said.

Those ideas led to 1,378 regulatory approvals between 2002 and 2006 for medical devices or instruments that were substantially similar to existing products, according to a new study by the Massachusetts Technology Collaborative’s John Adams Innovation Institute. The group’s annual “Innovation Index,” relying on Food and Drug Administration figures, showed that only California, with 3,495 approvals, bested Massachusetts among states with significant high-tech economies.

Over the same time period, Massachusetts companies received 15 premarket approvals for devices or instruments, behind California, with 51, and Minnesota, with 19. Devices that go through the premarket approval process are more novel, sophisticated products, and Massachusetts companies obtained more premarket approvals than competing states such as New York, New Jersey and North Carolina.

Venture capitalists helped fund the work with expanding amounts of cash. In 2007, venture capitalists closed 35 medical-device investment deals worth $395.3 million in the Boston area, a region that includes most of Massachusetts from Boston to Worcester, according to Dow Jones VentureSource. Much of that investing took place in the MetroWest area stretching from Cambridge to Worcester, with 26 deals worth $280.4 million.

Venture capital investments in Massachusetts medical device companies have also escalated in the last three years. In the MetroWest area, Dow Jones VentureSource calculated, 2007 investments were up 47 percent from $191.4 million in 2006.

The state’s ability to perform highly valuable manufacturing services, such as the plastics injection molding done by Nypro Inc. of Clinton, has allowed it to compete against larger, more established device clusters in California and Minnesota, said Michael J. Tavilla, program manager for research and innovation at the Massachusetts Technology Collaborative’s John Adams Innovation Institute in Westboro and lead author of the recent 2007 “Innovation Index of the Massachusetts Economy.”

“It’s things that medical devices can gain a foothold in that they can’t do elsewhere,” Mr. Tavilla said.

Doing that has made medical devices a stable industry, although it has endured layoffs recently, notably from large employer Boston Scientific Corp. of Natick. Medical device makers employed 20,555 people in Massachusetts in 2004, according to a study last year by the University of Massachusetts Donahue Institute. The industry had a $5.5 billion impact on the economy and accounted for about 10 percent of all Massachusetts exports in 2006.

North Carolina company Entegrion, which is developing devices to reduce bleeding from traumatic wounds such as battlefield injuries, has set up a Worcester laboratory, signed up Massachusetts collaborators and contracted with an Avon manufacturer to make the company’s lead product, a gauze-like dressing for wounds called Stasilon.

Keith Rosiello, a consultant to Entegrion, set up a laboratory in one of the Worcester business incubators owned by Massachusetts Biomedical Initiatives to push ahead with work on Entegrion’s Stasix, an agent to reduce bleeding. Massachusetts has a niche that Entegrion is using to its advantage, he said.

“It’s a biotech hub, and between all the industry that’s developed here and all the universities — I’m a graduate of WPI — all these things make a lot of variability very accessible,” he said.

Not all start-up companies have been able to tap into venture capital to fund their businesses. Mr. Prescott of Crescent Innovations has secured federal Small Business Innovation Research funding, grants and money from individual “angel” investors to finance research. He has hired researchers on a contract basis as needed and used young interns to help. The company is based within ECI Biotech of Worcester.

Crescent Innovations’ strategy is to develop its technology sufficiently to attract investment and support from biotech or pharmaceutical corporate partners, Mr. Prescott said. It is also aiming to secure another SBIR grant before the end of 2008.

“It seemed leading up to the year 2000, when the technology bubble burst, individual angels were willing to invest in companies,” Mr. Prescott said. “Following that they organized into angel groups. They acted a lot more like venture capital than angel investors, the only difference is they don’t have as much money as a venture capitalist. We’ve chosen more out of necessity to work on corporate partnerships.”

Bigger companies seeking to fill their pipelines with new projects are one of the factors that keep the state’s medical device industry moving, said Mr. Goldberg of BioVentures Investors, which has invested in companies such as HydroCision Inc. of Billerica, which is developing water-jet tools for surgeons, and Cardiosolutions Inc. of Stoughton, which has created a minimally invasive procedure to repair leaky heart valves.

“On the demand side, you really do see a fairly steady stream of larger companies looking for their next series of products,” Mr. Goldberg said. “While there are glitches from time to time while companies like Boston Scientific slow down, it is a fairly constant state of affairs of interest by the big companies and supply by the small companies.”

SIV Technologies Inc. of Worcester, a tiny start-up funded by friends and relatives, is trying to find the right potential investors for its technology, a way of using nuclear resonance technology to detect the nuclei of atoms and figure out the contents of a sample. President David Lieblich said he needs funding to develop a prototype, which was first aimed at military markets but that he now sees as a potential tool for the pharmaceutical industry.

“It’s a tough row to hoe, but I believe we have something of value,” said Mr. Lieblich, whose fund-raising pursuit took him to the Massachusetts Medical Device Industry Council investors event last year. “I know we can do things other people cannot do.”

The challenge for the state’s medical device industry is to sustain and fund the transfer of inventions from research organizations and academic researchers to commercial entities, said Mr. Tavilla of the Massachusetts Technology Collaborative.

“They call it the valley of death,” said Mr. Tavilla. “The up-front investment to move an idea from the research bend to the market can be expensive … They need cash to sustain themselves.”

Gov. Deval L. Patrick’s proposed $1 billion life sciences initiative might help with that, according to Thomas J. Sommer, president of the Massachusetts Medical Device Industry Council, a trade group. The bill’s language is vague about the kinds of companies that might qualify for loans or tax incentives, but money for the state’s Life Sciences Center might be available for medical device companies, Mr. Sommer said.

“Right now it comes without industry-specific support, and I think that’s a very good idea,” he said. “It doesn’t become a biotech bill or a medical device bill or a teaching hospital bill.”