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

By Melissa Fassbender

- Last updated on GMT

(Image: Getty/Yozayo)
(Image: Getty/Yozayo)

Related tags Drug development process Venture capital Initial public offering

Massachusetts biopharma companies received $2.9bn in venture capital investment in 2016 – and as pressure continues to accelerate the drug development process, manufacturers will continue to turn to CROs and CMOs, says MassBio.

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

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.

Massachusetts industry snapshot

  • Five of the top six NIH-funded independent hospitals are located in Massachusetts
  • The state’s drug development pipeline includes 20 candidates pending FDA approval
  • In 2016, 25% of all drugs approved for orphan designation in the US were from Massachusetts companies
  • Massachusetts companies also received 18% of all Fast Track designations in the US in 2016

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