While Washington continues to work on public infrastructure legislation designed to spur economic growth and create jobs, the Boston business community must also do its part to maintain the U.S.’s leadership role in the life sciences sector by providing the industry’s own dedicated infrastructure. The COVID-19 pandemic shined an unprecedented light on the essential work of the life sciences industry and we must not lose sight of the economic engine the industry provides our local and national economy.
The pandemic has shown that while some industries can operate successfully with remote workers, essential lab work for drug or vaccine discovery cannot be done at home. The life sciences sector is dependent on a specialized, capital-intensive lab infrastructure situated in life sciences clusters with research institutions, startups, and venture capital. Real estate firms, like BioMed Realty, are an essential partner to the industry by providing unique life science facilities that contain the critical infrastructure utilized by these commercial firms and research institutions.
Life science buildings are highly differentiated from traditional offices given their more robust infrastructure, including redundant power, greater loading capacity, heavy-duty HVACs, and increased floor-to-ceiling heights to accommodate the substantial mechanical systems necessary for scientific research. Incidentally, many of these same design elements are now essential features for ensuring healthy work environments post-pandemic.
Providing mission-critical infrastructure enables life sciences companies to focus their capital on advancing research and creating life-changing products to address unmet medical needs. By meeting the infrastructure needs, real estate firms have allowed biotech and pharma companies to significantly compress the time needed to commence research activities, while also avoiding the need to deploy time and capital into costly design, development, and maintenance of real estate. While American cities need traditional infrastructure investments, like reliable transportation options, they also require an extensive portfolio of facilities to enable life science companies to grow their business and transition quickly and easily between properties as their needs change.
Several U.S. cities have unique ecosystems comprised of leading academic and research institutions, a vibrant startup culture, an extensive investor base, a large talent pool, and state-of-the-art lab/office buildings that help life sciences companies discover next-generation therapies. Boston represents the largest and most mature life sciences cluster, but additional cities, including San Francisco, San Diego, and Seattle, help to make the United States the center of life sciences innovation. The infrastructure needed for these centers of innovation should not be taken for granted, as each took decades to develop and is predominately funded by the private sector.
Powerful tailwinds in the industry have led to increased demand for lab research facilities for companies to continue their work. Expanded research and development (R&D) budgets, increased funding from the National Institutes of Health (NIH), and a streamlined Food and Drug Administration (FDA) approval process has led to significant growth in the life sciences industry. Global R&D expenditures now top $200 billion annually, up $44 billion from five years ago[1], and NIH funding increased year over year by $1.3 billion to $42.9 billion in 2021[2]. In fact, just under 10% of all NIH funding was awarded to Massachusetts organizations in 2020, totaling nearly $3.3B, according to MassBio’s 2021 Industry Snapshop Report, released August 25, 2021. Massachusetts-headquartered biopharma companies raised $5.8B in venture funding in 2020, and Q1 2021 has already surpassed the third highest funding year on record (2017), according to the report.
Infrastructure investments, inclusive of real estate, also enable significant job growth. MassBio reports that in 2020, biopharma employment in Massachusetts grew at 5.5%, and since the Massachusetts Life Sciences Initiative was passed in 2008, and biopharma employment has grown by an astonishing 55%.
We must make sure that public policy continues to encourage investment and protect the mission-critical medical advances and patents created by this innovation economy. Sound policy will lead to increased capital to fund groundbreaking new therapies, while also ensuring companies like BioMed Realty continue to invest in the real estate infrastructure to meet the industry’s research needs.
At BioMed Realty, we are confident that the life sciences sector will continue to be a major driver of economic growth for our country and especially the Boston area. The pandemic raised awareness of the industry’s critical role as our tenants invented vaccines and therapeutics to fight COVID-19. We believe capital investments will continue at an increased speed to seek medical innovations for a large number of unmet needs, in the backdrop of an aging U.S. demographic with early baby boomers reaching 75-85 cohort this decade. We are committed to providing mission-critical research space in the country’s top life sciences clusters to speed medical innovation and provide a growth engine to our nation’s economy. With prudent public policy, these private real estate infrastructure investments can spur growth, spark innovation, and enable an economy that provides jobs and life-saving medicines to flourish.
About the Author:
Tim Schoen is the Chief Executive Officer of BioMed Realty, the largest private owner of life science office buildings in the United States
[1] Evaluate Pharma January 2021
[2] FY 2021 appropriations package