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Ten Cities Where the Drug Business Thrives

By Pharmaceutical Processing | July 24, 2014

They’ve got money, connections and hordes of eager college students. Ten U.S. cities head a new list of best places to develop and distribute drugs…of the legal kind, that is.

The 2014 JLL Global Life Sciences Cluster Report (http://www.slideshare.net/JLL/top-us-clusters) analyzes the top cities where science and pharmaceutical innovation converge. Boston stands at No. 1, cited for its ability to attract venture capital and funding from the federal National Institutes of Health, in addition to industry-leading research and development resources.

“With its unprecedented concentration of uniquely skilled talent, leading hospitals, world renowned academic institutions, pharmaceutical research centers, and deep financial resources, Boston has long been the ideal place to start a new biotech company,” said Glenn Batchelder, chairman of MassBio, a nonprofit organization of 620 biotechnology companies in Massachusetts, in a recent statement.

New kids on the block

San Diego and San Francisco come in at Nos. 2 and 3, respectively, largely because of their ability to attract small start-ups, mid-tier biotech firms and specialty companies that saw increases in year-over-year employment and establishments. San Francisco, for example, saw a staggering 15.2 percent increase in life sciences employment last year, by far the highest growth in any U.S. city.

That growth represents a significant trend in the pharmaceutical industry. Mergers and acquisitions altered the Big Pharma landscape in the wake of the global financial crisis, as many of the big companies consolidated their product portfolios. Today, small- to medium-sized companies and specialty players are growing steadily, propelling initial public offerings to a volume not seen since the “dot com” era.

“The right-sizing and reshuffling of the global biopharmaceutical companies has left its mark on key U.S. cities,” said Roger Humphrey, executive managing director of JLL’s Life Sciences group.

Here are JLL’s 2014 rankings of the top 10 U.S. cities for life sciences, based on innovation, growth, revenue and prominence in the industry:

1. Greater Boston (no change)
 2. San Francisco Bay Area (+1)
 3. San Diego (-1)
 4. Raleigh-Durham (no change)
 5. New Jersey/NYC/Westchester (+2)
 6. Los Angeles/Orange County (+2)
 7. Philadelphia (-2)
 8. Suburban Maryland/Metro Washington DC (-2)
 9. Minneapolis/St. Paul (no change)
 10. Seattle (no change)

Universities: The Core of Life Science Clusters

Want to be a center of pharmaceutical development and innovation? University campuses are a crucial part of the equation.

From the University of Massachusetts to Johns Hopkins University and the University of California Berkley, all of the top 10 cities boast nearby research institutions feeding the area’s R&D pipelines, said Erin Bovee, lead researcher for the JLL study. “These universities serve as the bridge between basic research funded by NIH and other grants, and the in-depth exploration of new pharmaceutical products needed to attract private funding and bring the product to market,” Bovee added.

Miles Wright, CEO of Xanofi, in Raleigh-Durham (No. 4 on JLL’s list) said that much of the innovation in the life sciences industry couldn’t be done without local universities. Xanofi develops nanofibers, which can be used to create artificial organ components and drug delivery applications.

“We see a lot of small companies coming out of universities,” Wright said. “Now more than ever you have to have university research to be a successful life sciences cluster, including significant R&D spend in your area. Without that, it’s pretty difficult to grow.”

As of now, U.S. cities lead the world in pharmaceutical innovation, but that could be changing. In recent years, countries such as the Netherlands, Korea, the United Kingdom, Australia and Japan have all outpaced the United States in advanced research degrees, according to the National Science Foundation.

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