- California and Massachusetts are largely considered the top two biotech hubs in the U.S., but recent data finds the Golden State holds key advantages over its cross-country rival.
- Venture capital flooded into the West Coast state during the first half of 2017, totaling $6.6 billion — or more than double the investment seen in Massachusetts — according to a report from California Life Sciences Association and PwC. California has also received more digital health venture capital funding and grant money from the National Institutes of Health than any other state this year.
- Effectually, the report counters claims that Massachusetts is home to the best congregation of biotechs in the world. In October, the Massachusetts Biotechnology Council published an industry snapshot that touted how the state saw $2.9 billion worth of venture funding go into its biopharmas in 2016, and how it ranked best among all states in biotech R&D employment.
While holding the number-one-biotech-hub title may seem arbitrary, it can offer real economic benefits. Most drug manufacturers need large and diverse workforces to operate, and have the financial backing to provide competitive salaries. Knowing the boon those companies can provide to job creation and local economies, states and cities have tried to make themselves attractive places for the life sciences.
California and Massachusetts — and to a more specific degree, San Francisco and Boston — have arguably been the best at doing this. In the last decade or so they have unseated New Jersey, which was long biopharma's main stomping ground, as the top biotech hubs in the U.S. due in good part to tax laws and government investments that favor life science companies.
In many ways, the two states are already seeing their return on investment. California saw its life science industry employ nearly 300,000 people in the state and fetch $169 billion worth of revenues in 2016, according to California Life Sciences Association. And as of last year, the state was home to more than 3,200 life science businesses, including 1,453 biotechnology and pharmaceutical companies.
California's size and population surely help when it comes to biotechs settling in and hiring employees. Even so, the state was the clear leader in life sciences venture capital investment during the first two quarters.
"In addition, the state attracted more than $6.6 billion in life sciences venture capital investment in 2017. The next closest state, Massachusetts, drew less than half that amount," touted the report.
It also topped the list for digital health venture capital investment, with $2.3 billion over the same period. Most of that money routed into digital diagnostics, consumer health and care management.
There were areas where California faltered, however. Though life sciences M&A activity remained robust, with 23 biopharma and 21 medical device transactions, dealmaking across all sectors in the state has taken a slight dip this year. What's more, initial public offerings also declined year over year as of Sept. 7.
"Today, we can proudly say the life sciences ecosystem is healthy," the report said. "Can it be improved? Absolutely. California Life Sciences Association (CLSA) works closely with industry, advocacy organizations, regulatory agencies, legislators and many others to make the system better. This spirit of collaboration is a major contributor to California’s success."