As VC funding fuels MA life science cluster, CROs/CMOs to see continued business

According to the organization’s 2017 Industry Snapshot report, venture capital (VC) investment in Massachusetts biopharma companies was $2.9bn in 2016, up from $2.3bn in 2015, and nearly triple the $900m which was invested in 2012.

“VC investments continue to fuel Massachusetts’ position as the number one life sciences cluster in the world – highlighting the growth of cutting edge life sciences companies here​,” Robert K Coughlin, president and CEO of MassBio told Outsourcing-Pharma.com.

As Coughlin explained, startups have had to be more creative in fundraising, with many turning to crowd-sourced networks and investment groups, public funds, or relying on big pharma companies to license their technology.

Additional pressure to accelerate the drug development process and reduce R&D costs continues, he added, noting that drug manufacturers will increasingly look to CROs/CMOs to handle some or all of their research and manufacturing needs.

“Although this trend began to take off a few years ago, it’s seen continued growth in 2017 – and we’re not likely to see it slow down in 2018​,” said Coughlin.

“In fact, Grand View Research just released a report that says the global preclinical CRO market is predicted to reach $6.6 billion by 2025, up from $3.25 billion in 2016​,” he added.

Continued growth​

In addition to an influx of venture capital, 2016 also saw 30% of all US-based biotech initial public offerings (IPOs) from Massachusetts companies.

As part of this, the state also saw a growth in its employment.

According to the report, biopharma employment in the state grew 4.8% in 2016, which added more than 3,000 new jobs, many in research roles. Additionally, Massachusetts leads in the number of employees classified as “Biotechnology R&D” – a segment which grew by 9% in 2016.

For 2018, Coughlin also predicts that cell and gene therapies will take off.

“Companies are making massive investments in developing gene and cell therapies, which became a reality in 2017 and are sure to take off in 2018​,” he said. “Some are even going so far to call these breakthrough treatments ‘cures’ as they have been proven effective at eradicating certain cancers in patients.”​

However, Coughlin said the payer system is not set up to pay for these cures, some of which can cost half a million dollars.

As such, he said more payers and manufacturers will experiment with value-based partnerships and other alternative payment methodologies in 2018.