Local medical laboratories and pathology groups can often contract to provide certain services to nearby biotechnology firms

Clinical laboratories and pathology groups lucky enough to be located near one of the nation’s recognized “life science clusters” have an opportunity to create useful business relationships with the pharmaceutical firms, biotechnology companies, and medical device businesses that operate within these clusters.

Biotech firms located in these life science clusters often need some of the medical laboratory testing services commonly offered by local clinical laboratories. Relationships developed for these reasons can often open the door for medical laboratories—particularly in academic centers—to play other roles in helping develop new in vitro diagnostic (IVD) technologies for clinical applications.

On the other hand, these same biotechnology firms often employ medical technologists (MT). By paying more compensation than local hospital laboratories for medical technologists, these firms often outbid local medical laboratories and thus exacerbate an already-tight market for skilled clinical laboratory scientists.

Four states with life science clusters were profiled in a story published by Genetic Engineering News (GEN). The theme of the story was how, to attract more companies to their respective life sciences clusters, California, Massachusetts, North Carolina, and Maryland were responding to market changes, such as less access to capital. (graphic copyright GEN.)

Four states with life science clusters were profiled in a story published by Genetic Engineering News (GEN). The theme of the story was how, to attract more companies to their respective life sciences clusters, California, Massachusetts, North Carolina, and Maryland were responding to market changes, such as less access to capital. (graphic copyright GEN.)

What defines a life science “cluster” is the presence of a significant number of pharmaceutical, biotechnology, and medical device companies located in close proximity to each other. One example is California’s famed Silicon Valley. With its concentration of high-tech companies and biotech firms, it is both an information technology cluster and a life sciences cluster.

Real estate firm Jones Lang Lasalle, Inc. (NYSE: JLL) published a new 2011 report on global life sciences clusters. Along with recognizing nine existing life science clusters, this report identified seven new and emerging biotech cities in the United States.

According to Jones Lang LaSalle, such clusters emerge when pharmaceutical and biotechnology companies scramble for ways to cut costs by outsourcing research activities and manufacturing operations. These clusters also make it easier for companies to recruit the specialized scientific and informatics experts needed to advance their research and development activities.

“Complex macro and micro factors have forced the life sciences industry to re-examine traditional business models and location strategies,” wrote William Barrett, Executive Managing Director, Life Sciences, at JLL, in the report. These include economic, pricing and regulation pressures, as well as depleted new-product pipelines. “Life sciences companies… have to evaluate the financial equation surrounding innovation and production,” Barrett stated.

Nine Established and Emerging Clusters in the United States

Nine established life science clusters already exist in the U.S., and include:

• Boston

• New York/New Jersey

• San Francisco Bay Area

• Los Angeles

• Washington D.C./suburban Maryland

• Philadelphia

• Raleigh-Durham

• San Diego

• Seattle

Authors of the JLL report assert that the hubs in the Northeast and California will likely continue to be cornerstones of life science clusters in the United States, at least for the industry’s largest players.

At the same time, other regional markets are gaining critical mass. One reason is that most cities are eager to offer incentives to attract these types of businesses because they create high-paying jobs and are the most desirable growth industries of the 21st century. For these companies, being located in a life sciences cluster provides competitive advantage by helping these firms more rapidly discover, innovate and commercialize products or services.

The seven emerging bioclusters cited in the JLL report include:

• Atlanta

• Chicago

• Denver

• Florida

• Houston

• Indianapolis

• Minneapolis

Clusters Help Companies Innovate, Collaborate and Prosper

The JLL report listed the following as the commonly accepted criteria for defining a life sciences cluster:

• educated workforce

• venture and investment capital

• centers of excellence and innovation

• industry-friendly political structures

• institutions of higher learning

• target economic development incentives

• patent protection

• other associations and supporting infrastructure

Cluster synergy can add enormous value to participants, stated a recent New Jersey Department of Labor & Workforce Development report on the bio/pharmaceutical, life science cluster. Companies benefit by drawing on each other’s strengths to grow their own unique core businesses, the report stated.

They also face many of the same interrelated issues and challenges. It is the opportunity for collaboration and partnering that draws many bio-pharmaceuticals, medical devices and biotechnology companies—including medical laboratories—to locate their facilities within a cluster.

Regionally, the value of successful clusters is in the jobs and wealth they create. Regional political leaders can leverage the momentum created by the clusters to generate opportunities for the labor force and local economy. The combined strengths of companies in a successful cluster can add credibility in a region’s promotional and branding efforts as leaders in a given field, the New Jersey report observed.

Some experts believe that big pharma and big biotech will support the nation’s largest life sciences clusters, while establishing locations in the emerging clusters will be considered as riskier propositions for their businesses. “You’ve got to go where the science is now,” stated Dino Perazzo, Senior Vice President at real estate firm CBRE Group, Inc. (NYSE: CBG), in a story in Genetic Engineering News. Perazzo indicated that, at the moment, the biggest resources in science are in Cambridge, Massachusetts and the San Francisco Bay Area. “I don’t think [the new bioclusters] are going away,” he added. “But, I don’t think 2012 or shortly thereafter is going to be the time those markets are going to grow.”

For clinical laboratory managers and pathologists whose lab facilities are located near such life sciences clusters, there will be opportunities to develop useful business opportunities. But those opportunities may be offset by how these same biotech companies compete for the scarce supply of medical technologists and clinical laboratory scientists who live in the area.

—Pamela Scherer McLeod

Related Information:

New Jersey’s Bio/Pharmaceutical, Life Science Cluster

Biotech Funding Gets Harder to Find

Life Sciences Cluster Report, Global 2011

America’s Biotech and Life Science Clusters: San Diego’s Position and Economic Contributions

Emerging Biotechnology Clusters

The Life Sciences Cluster: A Report to the Montana Governor’s Office of Economic Opportunity