Report hails Mass. biotech spending as job creator
State’s $1b initiative said to yield economic strength
By Robert Weisman | GLOBE STAFF MARCH 26, 2013
Halfway through a decade of investment promised by Governor Deval Patrick’s 10-year, $1 billion life-sciences initiative, launched in 2008, the state has spent only about a third of the money targeted to promote the biotechnology and medical device industries in Massachusetts.
But the authors of a report set to be released Tuesday by the Boston Foundation, a philanthropic group, say the effort has helped stimulate a key sector of the state’s economy, creating more than 8,000 jobs through capital grants, tax incentives, and business loans.
They urge state government leaders to continue funding the initiative in the face of stepped-up competition from other life-sciences hubs, such as California, Maryland, and New Jersey.
Northeastern University economists Barry Bluestone and Alan Clayton-Matthews, who wrote the report, noted the Massachusetts approach has focused on building an “ecosystem” of start-ups that can work with the state’s research universities and teaching hospitals.
They said the $300 million spent by the state so far has spurred more than $1 billion in spending by private companies. Those businesses include eight of the world’s 10 largest pharmaceutical companies that have set up shop in the state — and created thousands of additional jobs — to buy what Bluestone calls “a front row seat” in the arena of cutting-edge biomedical research.
“Here is a sector that grew right through the recession,” Bluestone, the director of Northeastern’s Dukakis Center for Urban and Regional Policy, said in an interview.
“If we’re competing with all the other life-sciences regions, the question is, ‘Has the life-sciences initiative succeeded in getting us to the top of our game?’ And the answer is yes.”
The report comes as the Patrick administration seeks the next annual round of funding from the Legislature to bankroll the initiative. It is likely to renew debate on the effectiveness of economic development incentives in encouraging businesses to expand or move into the state.
While the data are nine months old, the report shows the state distributed $301.5 million in grants, loans, and tax breaks through the Massachusetts Life Sciences Center between 2008 and June 30, 2012. At that pace, the state would have to pick up the pace of investments in coming years to hit the $1 billion target — requiring lawmakers to authorize additional annual funding. The center has spent about $359 million as of this week, according to officials.
The 8,000 jobs created, as cited in the report, are fewer than the 8,750 estimated by the center last year, a figure that included temporary construction jobs. In 2008, when the initiative was launched just before the economic slowdown, the governor suggested it could generate 250,000 jobs over 10 years — a projection that was not mentioned in the Boston Foundation report.
Susan R. Windham-Bannister, president of the Waltham-based center, said the initiative’s job-creating performance should be assessed in the context of the economy.
“Given how quickly everything changed in the recession, we all had to recalibrate our expectations,” she said. “We have grown, and grown very aggressively, despite the bad economy. That’s something we should feel very good about. And we’re not done yet.”
Critics of government incentives say it’s hard to gauge how effective they are because some jobs created in a state thanks to such incentives move elsewhere later, and others may have been located there without grants or tax breaks.
“From a national perspective, this makes no sense,” said Arthur J. Rolnick, senior fellow at the University of Minnesota’s Humphrey School of Public Affairs. “You’re just taking jobs from one state and moving them to another. It’s diverting public money from roads and bridges.”
Rolnick acknowledged that “from a local perspective, if your governor is good at stealing jobs, it may be that the economic benefit outweighs the costs. But you don’t know if these jobs are coming anyway. If I’m a business and I know I’m coming to Boston, I’ll call up your state officials and say, ‘I’m thinking about coming to Boston’ and see if I can get some incentives.”
Donald Klepper-Smith, chief economist for DataCore Partners, an economic research firm in New Haven, said state officials should recognize that life-sciences jobs are portable.
The drug giant Pfizer Inc., for instance, has moved research jobs to the Boston area from Groton, Conn., while the British pharmaceutical company GlaxoSmithKline PLC last week disclosed that it is moving research jobs from Cambridge to Philadelphia.
“The question is: Do these economic incentives have staying power?” Klepper-Smith said.
At the same time, he conceded, “In this economy, every job counts. When you look at biotech and pharmaceuticals, these are important jobs because of their direct and indirect economic impact.”
Bluestone has been a critic of government incentives to lure energy, video game, and film companies to Massachusetts.
But he said interviews with more than a dozen life-sciences executives and scientists convinced him that this initiative made sense for the state. While life-sciences employment has increased 12 percent nationally in the past 12 years, Massachusetts has seen a 27 percent growth in the biotechnology and medical technology sectors, he said.
“We’ve now eclipsed all other states — and that has happened in the past five years — in terms of employment growth,” Bluestone said. “This was making a bet not on an individual company but on an entire industry that has the potential for becoming a major supercluster. It was like betting on the auto industry in 1910.”
Robert Weisman can be reached at weisman@globe.com. Follow him on Twitter @GlobeRobW.
Expert says cities, towns need to thaw job freeze
By Dave Solomon | New Hampshire Union Leader | February 1, 2013
GOFFSTOWN – New Hampshire job growth has been essentially frozen for the past decade, and it’s up to the cities and towns in the state to do something about it.
That was the call to action from an expert on economic development, who warned a gathering of local business owners and municipal officials on Thursday that federal and state governments are overextended and will have little to offer in the way of economic stimulus in the years ahead.
Local leadership is critical to job growth, because “companies move to municipalities, not states,” said Barry Bluestone, founding director of the Dukakis Center for Urban and Regional Policy at Northeastern University in a presentation to a regional economic development group that embraces Manchester and 13 surrounding communities.
Bluestone was the keynote speaker at the annual meeting of Access Greater Manchester, created in 2012 as Metro Center-NH, under the leadership of the Greater Manchester Chamber of Commerce, Southern New Hampshire Planning Commission and the state Division of Economic Development.
Bluestone urged government and business leaders in the audience at St. Anselm College to take an objective look at how welcoming their communities are for development, and to awaken to the new realities of the New Hampshire economy. Job growth in the state has been anemic since the end of the 1990s, he said.
The state saw significant job growth in that decade, as the number of jobs in the state rose from 508,000 in 1990 to 627,000 in 2001, which is the same number of jobs now available 12 years later, in 2013. The number of jobs spiked close to 650,000 in 2008, before a loss of about 25,000 jobs in the Great Recession that have yet to be recovered.
“For all intents and purposes, employment has not increased in New Hampshire in a decade,” he said. “There is something that’s stalled out here. Over the next decade, you are going to be competing in a global and national market, so if you want to maintain the services and wonderful standard of living you enjoy here, you’ve got to do something.”
What does business want?
Bluestone and his associates surveyed 251 relocation specialists – the people who help companies decide where they should locate when they are starting a new business or trying to expand. He said the results of that survey show that many assumptions about what companies are looking for are simply off track, and that policymakers spend too much time on tangential issues while not paying enough attention to the things that do matter.
“When we asked about minimum wage laws, they laughed at us,” he said, suggesting they were irrelevant to the kind of companies communities need to attract. Access to rail was not an issue except for heavy manufacturing. When it comes to strong trade unions versus right-to-work, Bluestone said the issue is moot in a country where union membership is down to 11.6 percent of the work force. “No one cares,” he said.
Old perks of minimal value
Even tax incentives are of minimal value, he said, since most businesses don’t even ask for them until they’ve already decided on a particular location.
So which location factors are most important to businesses looking to move or expand? Practical things like on-site parking for employees, reasonable rental or lease rates, availability of an appropriately skilled labor force and the timeliness of approvals and appeals.
The last factor is the one that local officials can most effectively control, and which most needs their attention, he said. Being considered a development-friendly city or town will be essential to economic development in the future. That may mean rethinking zoning and land-use procedures and regulations, especially in communities still stuck in the 1980s, when controlling, not stimulating, growth was the goal.
Bluestone and his colleagues at Northeastern have developed a survey that community leaders can take to assess how development-friendly their community is, with the goal of making changes as needed. Nearly 100 communities have taken the survey, including Bow, Londonderry, Merrimack, Milford, Pelham, Rochester and Windham in New Hampshire.
He encouraged communities to create pre-approved sites for development, which the Access Manchester group plans to do through a “Ready, Set, Go” program unveiled before Bluestone’s presentation.
Communities participating in the Access Manchester initiative are Auburn, Bedford, Candia, Chester, Deerfield, Derry, Goffstown, Londonderry, Hooksett, Manchester, Raymond, New Boston, Weare and Windham.
Tech sector spurs Mass. growth as US economy contracts
By Robert Gavin | The Boston Globe | January 30, 2013
No one is calling it a return to boom times, but the state’s economy grew modestly in the final three months of 2012, even as the US economy unexpectedly contracted slightly, the University of Massachusetts reported Wednesday.
The contrast offered further evidence the state is rebounding from the recession at a more robust pace than the nation as a whole, largely on the strength of its technology industries.
“This appears to be a slow quarter, but the Massachusetts economy is growing still,” said Alan Clayton-Matthews, a Northeastern University economist and author of the report. “And growth is going to pick up.”
The state’s economy grew at a 1 percent annual rate in the fourth quarter, while the Commerce Department said the US economy shrunk at an annual rate of one-tenth of a percent, largely because of a pullback in government spending.
Over all of 2012, the Massachusetts economy grew 2.1 percent, compared with 1.5 percent nationally, according to UMass. The state also put people back to work at a faster rate — employment grew by 1.6 percent last year, compared with 1.4 percent nationally. Those figures could change, however, as revisions to the data are made in coming weeks by statistical agencies.
The state growth rates were reported in MassBenchmarks, an economic journal published by UMass and the Federal Reserve Bank of Boston. The decline in US economic growth was the first contraction since the first half of 2009, according to the Commerce Department.
The report put a damper on the recent rally in US stocks, which retreated from five-year highs. The Dow Jones industrial average fell 44 points, or 0.32 percent, to 13,910.42, while the broader Standard & Poor’s 500 index fell 5.88 points, or 0.39 percent, to 1,501.96. The technology heavy Nasdaq lost 11.35 points, or 0.36 percent, to close at 3,142.31.
Economists said the contraction was not the harbinger of another US recession. But Federal Reserve policy makers, meeting in Washington on Wednesday, acknowledged in a statement that the economy had slowed in recent months as a result of Hurricane Sandy and other temporary factors. The Fed said it would maintain its policies to stimulate the economy and keep long- and short-term interest rates low.
Still, the decline surprised many analysts, who had forecast that the national economy grew at the end of last year, albeit weakly. Uncertainty about whether Congress would avoid a scheduled combination of tax increases and deep spending cuts — and potential recession — may have contributed to the contraction, economists said.
Overall government spending in the fourth quarter fell at an annual rate of nearly 7 percent; defense spending plunged at a rate of more than 20 percent as the Pentagon braced for possible budget cuts, analysts said. Businesses may also have cut inventories because of the political and economic uncertainty, analysts said, another factor in the contraction.
Congress reached an eleventh-hour fiscal cliff compromise that settled tax questions but put off spending issues for a few months.
Michael Goodman, a professor of public policy at UMass Dartmouth, said the surprise contraction underscores the impact that political gamesmanship and gridlock in Washington can have on the economy.
“The economic data that’s been coming out as of late reinforces the idea that policy choices matter,” he said. “Our inability to come to an agreement at the national level about how much money we’re going to spend, and when, has consequences. We can’t pin the whole thing on that, but those choices matter.”
Economists noted that activity in the private sector expanded. Consumer spending accelerated to a 2.2 percent annual rate in the fourth quarter, from 1.6 percent in the third quarter. Spending on housing jumped at an annual rate of more than 15 percent.
Business investment rebounded, too. Spending by businesses on software and equipment, for instance, surged at annual rate of more than 12 percent in the fourth quarter after falling at a rate of nearly 3 percent in the third quarter.
“That’s a pretty good story in the private sector,” said Brian Bethune, an economics professor at Gordon College in Wenham
Business investment is particularly important to Massachusetts, which has a high concentration of companies that sell goods and services, particularly technology products, to other companies. Even as consumers rebounded slowly from the last recession, business spending has come back solidly, fueling the state’s recovery.
The UMass report projects that the state’s recovery will pick up speed over the next several months, expanding at a 3.6 percent annual rate.
But Clayton-Matthews warned that there are still reasons to be cautious about the outlook. For example, he said, wage and salary income declined somewhat in the last three months of the year, while consumer spending grew slowly.
The 2013 outlook: Slow hiring, then it picks up
By Megan Woolhouse | The Boston Globe | January 13, 2013
The Massachusetts economy grew slowly last year, but economists predict it will gain steam throughout 2013, adding jobs at a moderate pace.
The fastest job growth will occur in construction, as housing and commercial real estate markets rebound, as well as in two technology related sectors, professional and business services and information services, and leisure and hospitality, according to forecasts.
The economy will “slowly accelerate, and by the end of the year we should have stronger growth,” said Northeastern University economist Alan Clayton-Matthews. He added, “The worst may be now.”
A slow pace of hiring marked the final months of 2012 for Massachusetts as concerns about how Congress would manage the combination of tax increases and budget cuts known as the fiscal cliff led both consumers and businesses to hold back on spending. The continued economic struggles in Europe, the state’s largest export market, also had a significant impact, slowing demand for Massachusetts technology, pharmaceutical, and other products made here.
Total Massachusetts exports fell 15 percent in the past three months, even as US exports increased by 2 percent, largely because of the recession in Europe, said Patrick Armstrong, an economist at Moody’s Analytics, a forecasting firm in West Chester, Pa. Europe accounts for 40 percent of Massachusetts’ exports, about double the US average.
Armstrong said a downturn in Germany, which accounts for one-third of the state’s exports to Europe, has contributed to the slowdown here.
Economists expect a slow pace of hiring in the first few months of 2013 because of more uncertainty in Washington as Congress tries to tackle spending cuts to bring the budget under control and faces another crucial vote to raise the nation’s borrowing limit. In addition, federal payroll tax increases that were allowed to go into effect as part of the recent fiscal cliff deal could slow consumer spending.
Economists project, however, that growth here will accelerate later in the year — and describe growth in 2014 as robust — as political issues are resolved, housing markets recover, and national and global economies improve.
The Massachusetts unemployment rate had fallen to 6.6 percent in November, from a peak of 8.7 percent in December 2009. That remains much lower than the national average of 7.8 percent.
Armstrong predicted that Massachusetts’ unemployment rate will rise to 6.8 percent in the first three months of 2013, before declining to 6.4 percent at the end of this year and 6.2 percent by the end of 2014.
“Boston’s recovery next year will be driven in large part by the rebound in residential construction,” Armstrong said. “The Seaport District has been the source of much of this growth, with major projects such as Waterside Place and the Boston Wharf Tower having broken ground recently.”
Clayton-Matthews predicted that the state’s unemployment rate would remain between 6 and 6.5 percent in 2013 and 2014, and then decline slowly to 5.5 percent by the end of 2016.
Clayton-Matthews said the unemployment rate may rise temporarily in 2013 as discouraged workers, who are not counted in the unemployment rate, resume job searches in an improving labor market.
So far, the state has regained about 87 percent of the 143,000 jobs lost in the recession. By the end of 2013, the state should regain all the jobs it lost in the downturn that began here in 2008, according to Clayton-Matthews’ forecast.
Susan Fontana, a spokeswoman for the national staffing agency Manpower Inc., said employers in Greater Boston will be “looking to hire at a solid pace.” According to a recent Manpower survey of local employers, 18 percent of employers said they planned to increase staff in the first three months of the year and 72 percent said they would maintain staffing levels.
Manpower said manufacturers, retailers, the financial sector, and the education and health services sector would probably add jobs. “I would say optimism is increasing,” Fontana said.
At Hollister Inc., a Boston staffing firm, hiring increased significantly last year in the technology and health care sectors, said spokeswoman Trish Bromme.
She said she expected that trend to continue, noting that employers in those sectors are hiring for a variety of positions. Lately, for example, high-tech and health care companies appear to be hiring more sales and marketing employees.
“We’re coming out of the gate this year very strong,” she said.
Brighter outlook for Mass. businesses in 2013
US and global economies are predicted to rebound if the fiscal crisis can be resolved swiftly, and Massachusetts is well positioned to build on its strengths
By Globe Staff | The Boston Globe | December 30, 2012
The Massachusetts economy, despite slowing in recent months, should improve in 2013, adding jobs at a moderate pace and gaining speed towards the end of the year, according to economic forecasts.
But the forecasts hinge on an important factor: the fiscal cliff. If drastic federal tax increases and spending cuts go into effect next month as scheduled, they could tip the state and national economies into a double-dip recession, according to Northeastern University economics professor Alan Clayton-Matthews. Massachusetts stands to lose more than 50,000 jobs in the next few years unless a political compromise is reached soon.
Clayton-Matthews said he expects Congress and the White House will reach a compromise before the worst can happen. And once they do, he said, it should provide a lift for Massachusetts, freeing employers from uncertainty about taxes and the government’s next move.
“It looks like by the end of the year the economy will be accelerating robustly,” Clayton-Matthews said. “This weak period now, with all this uncertainty from the fiscal cliff and the slowdown in Europe, will improve throughout the year.”
Massachusetts recovered from the recession faster than the nation as a whole largely due to its high-tech industry and strong global demand for technology products. But the state economy slowed in recent months as national and global economies sputtered, weakening demand for Massachusetts products in key export markets such as Europe and China.
Both US and global economies, however, are poised to rebound, according to IHS Global Insight, a Lexington forecasting firm. Economists there say the dynamics for a gradually accelerating US recovery are already in place, assuming tax and spending issues get resolved. Global growth should also accelerate gradually next year.
“Over the past year, the risks facing the global economy were skewed to the downside,” said Nariman Behravesh, IHS Global Insight’s chief economist. “In the coming year, not only will some of the big-four threats — another US recession, a Eurozone meltdown, a Chinese hard landing, and a war in the Persian Gulf — become less menacing.”
In Massachusetts, employment is expected to grow by just under 1 percent, or about 30,000 jobs, in 2013, compared to 1.2 percent this year, Clayton-Matthews said. By 2014 and 2015, employment growth will increase by 2 percent, or more than 60,000 jobs, each year.
So far the state has regained 87 percent of the 143,000 jobs lost in the recession. By the end of 2013, the state should regain all the jobs it lost in the downturn that began here in 2008, according to Clayton-Matthews’s forecast.
The unemployment rate, 6.6 percent in November, is expected to decline slightly next year. In 2013, jobs in Massachusetts will grow fastest in the construction, professional and business services, information services, and the leisure and hospitality sectors, according to forecasts. - MEGAN WOOLHOUSE
Retail: a more level playing field
Massachusetts retailers are looking forward to a more even field in 2013 by getting online merchants to collect taxes on all purchases.
The effort to adopt a national Internet sales tax law appears to be gaining momentum as the world’s largest online store, Amazon.com Inc., has expressed support for it while major retailers, such as Walmart Stores Inc., push legislation to eliminate what they see as an unfair advantage for online-only competitors.
Online retailers have been protected by a 1992 Supreme Court ruling that requires them to collect taxes only in states where they have a store or other outpost. This loophole cost Massachusetts $387 million in taxes in 2011 and nearly 2,000 jobs, according to a recent study by the Massachusetts Main Street Fairness Coalition, a group of retailers, elected officials, and labor unions.
The coalition and the Patrick administration plan to lobby the federal government to adopt a national law that would require all online merchants to collect and remit sales taxes.
But even if these efforts fail, the Patrick administration recently succeeded in getting Amazon to collect the state’s 6.25 percent sales tax from Massachusetts customers beginning in November. - JENN ABELSON
Commercial real estate: livelier times
The commercial real estate market will get a lot livelier in 2013 with office rents and property values on the rise.
That combination should entice owners of large office properties to sell and developers to seek more opportunities to launch new projects. Speculative building, or erecting projects before tenants commit, appears unlikely as lenders stay conservative following the economic downturn. But neighborhoods like East Cambridge and Boston’s Seaport District will continue to see construction for growing technology and life sciences firms.
In the multifamily residential market, apartments will remain the favored product. New apartment towers are already rising across Boston, with the first wave to be completed in 2013.
Several large condominium projects are also likely to get underway, including the long-stalled Filene’s redevelopment in downtown Boston. The condominium market should heat up around the city, as more buyers hunt for a dwindling supply of units.
It is another matter whether any of these new homes will be affordable for middle-income families or younger renters. The median sale price for a condo in downtown Boston rose to a near record of $486,000 at the end of 2012, according to the real estate information service LINK. Rents are also among the highest in the nation.
Boston officials hope that the completion of the city’s first project of so-called micro-apartments — 350- to 400-square-foot units — will begin to address this issue. The apartments are smaller by design to make them more affordable, but it remains to be seen whether prices will be manageable or the units desirable. - CASEY ROSS
Travel and Tourism: attracting more international visitors
As the middle class expands in emerging nations such as China and India, the market for international visitors has increased dramatically. The Massachusetts tourism industry is ready to grab its share.
With an additional $4.5 million to focus on attracting international visitors, the Massachusetts Office of Travel and Tourism is collaborating with Brand USA, a federal agency that promotes the United States as a destination, and airing the state’s first TV ad in another country.
The Greater Boston Convention & Visitors Bureau is teaming with Brand USA to promote Boston at trade shows around the world in the hopes of doubling the number of international visitors to 2.8 million by 2015.
The Massachusetts Port Authority is focused on adding more nonstop flights into Logan International Airport from Asia, the Middle East, and Latin America. The first nonstop to Japan started in 2012; a Central American route will probably begin operating in the new year.
Hotels, shopping centers, and tour operators are also paying more attention to the international market. The Charles Hotel just became the first independent US hotel to launch a Chinese website hosted in Hong Kong. - KATIE JOHNSTON
Housing: moderate gains in Boston market
The Boston-area housing market will continue to improve in 2013 with sales increasing and home values stabilizing — especially in higher priced neighborhoods.
As a sign of increasing confidence, more sellers will put properties on the market while developers build new condominiums, apartments, and single-family homes.
But even with this additional supply, the overall inventory will remain low, holding back sales. Few expect a boom in prices, especially in areas that are farther away from Boston and its amenities.
Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at the Northeastern University School of Public Policy and Urban Affairs, said the condo market in and around Boston showed some strength this year as prices climbed.
He said he expected condo prices to rise modestly in 2013. Demand for single-family homes should also increase modestly next year, Bluestone said.
Home values in the Boston area have held up better than in other parts of the country, which were hit harder by the recent housing bust.
Values here are down about 15 percent since the 2005 market peak, about half the decline of the country as a whole, according to the S&P/Case-Shiller Home Price Indices, widely used gauge of the housing market.
Karl E. Case, a creator of the national housing indices and a retired Wellesley College economics professor, said the housing market faces several challenges, including changing demographics. The trend is upward, he said, but “it’s not likely to be a rocket ship.’’ - JENIFER B. MCKIM
Health care: change, consolidation, cost controls
For hospitals and health insurers, 2013 looks to be a year of change and consolidation. Industry pressures combined with new state and federal laws will push health care providers and payers toward more coordinated care with an eye towards reining in costs.
Hospitals and doctors, who are banding together in integrated networks known as accountable care organizations, are bracing for deeper cuts in Medicaid and Medicare, the government health insurance programs for lower-income and older Americans, even if US lawmakers manage to avoid the fiscal cliff and agree on spending reductions.
At the same time, insurers will intensify efforts to shift health care providers to so-called global payment contracts where hospitals and physicians are given a fixed budget to cover a patient’s care and are rewarded for providing quality care under budget.
That is replacing fee-for-service contracts that reimburse providers for visits, tests, and procedures.
Hospital consolidation will probably accelerate, as Partners HealthCare presses forward with a plan to acquire South Shore Hospital, Beth Israel Deaconess Medical Center negotiates affiliations with Cambridge Health Alliance and Signature Healthcare of Brockton, and Tufts Medical Center works with Vanguard Health Systems to buy independent hospitals.
Steward Health Care System, meanwhile, will renew its efforts to expand out of state. - ROBERT WEISMAN
Financial services: Plenty of uncertainty still ahead
It’s been a strong year for stocks, and with the election over and the economy slowly improving, there could be more good news for investors ahead.
But markets hate uncertainty, and there will still be plenty of it in 2013. Even if Congress and President Obama reach some agreement to avoid the fiscal cliff, there will more tax and spending issues to deal with in the new year. Early in 2013, Washington must contend with another big, divisive issue: whether to raise the nation’s debt ceiling and allow more borrowing. If that can’t be resolved quickly, it could put rating of the United States at risk and rattle global markets.
Banks and insurers are hoping the economy grows at a faster pace in 2013. The sluggish recovery has reduced demand for loans, insurance, and other financial products, while ultralow interest rates have reduced the money they earn on Treasury bonds and other safe investments. These factors have weighed on profits, prompting companies to cut jobs and streamlinetheir operations. More job cut announcements are likely.
The industry is also waiting for details of the Dodd-Frank financial overhaul to be determined and applied by regulators. Critics complain that the rules are being watered down, and worry that retiring US Representative Barney Frank, the Democrat from Newton, won’t be there to champion the reforms.
That may seem good for industry players, who complain that new regulations will be costly. On the other hand, a failure to achieve more transparency and better oversight could lead to new problems in the financial system. Everyone agrees that that is the last thing the sector, or the economy, needs. - BETH HEALY AND TODD WALLACK
Life sciences: Focus is on new drugs and devices
Fresh off their success in hosting well-attended national industry conventions in Boston, Massachusetts biotechnology and medical technology companies will turn their attention next year to bringing new drugs and devices to market.
After years of research and clinical trials, several biotechs are making the transition to full-scale commercial enterprises as they win Food and Drug Administration approval for new therapies. Vertex Pharmaceuticals Inc., Ironwood Pharmaceuticals Inc., and Ariad Pharmaceuticals Inc., will ramp up sales in 2013 after getting the green light from the FDA in 2012. Other drug makers, notably AVEO Pharmaceuticals Inc. of Cambridge, are hoping to join them next year.
At the same time, a growing number of global pharmaceutical companies are setting up operations in the Boston area to strike drug research partnerships with the region’s cluster of venture-backed biotechnology firms and university and hospital researchers.
Medical device companies, meanwhile, are looking forward to a faster review process from FDA regulators so they can get their products to market sooner. They will continue to fight a new federal tax to help pay for President Obama’s health care overhaul.
With new leadership, one of the state’s best known device makers, Boston Scientific, will focus on developing new products to help the company regain its competitive advantage and rebound from some disastrous decisions in recent years. - ROBERT WEISMAN
Clean energy: Financial, market challenges ahead
The last year was a tough one for the alternative energy sector, and 2013 could be just as challenging for many segments of this still-emerging industry.
High profile bankruptcies of government-backed companies such as battery maker A123 Systems of Waltham and energy storage firm Beacon Power of Tyngsborough have made investors reluctant to back young companies that might need years of capital infusions before becoming profitable. Cheap natural gas prices are making the new technologies less competitive. Government support is waning as Washington tries to bring ballooning budget deficits under control.
The wind energy sector, for example, is waiting for federal leaders to extend the production tax credit, which helps lower project costs and spurs development but expires at the end of the year. Each time it has been allowed to lapse in the past, wind projects have stalled.
The industry, however, encompasses a variety of energy technologies, and some are poised to advance in the next year. The solar and energy efficiency sectors expect another year of double-digit jobs and revenue growth, driven by mandates calling for the increased use of both technologies. In Massachusetts, clean technology companies are expected to benefit from aggressive state policies to bolster the industry.
But whether that will be enough to combat competition from overseas, especially China, is in question. China has wooed several clean technology manufacturing operations from Massachusetts in recent years, while Chinese firms have stepped up clean-tech investments in the United States. If the state and the nation hope to remain leaders in clean technology, companies here must figure out how to push their technologies forward with modest funding. - ERIN AILWORTH
Technology: another big year for state’s innovators
In technology, all signs point to another big year for Massachusetts. Some of the state’s hottest start-ups, such as the Cambridge software firm HubSpot Inc. and Boston’s network security company Rapid7 Inc., are poised to launch initial public stock offerings, which will pump more cash into the state’s innovation ecosystem.
But what could be even more promising is a growing interest among venture capitalists in funding tech start-ups that work in mobile technology, robotics, big data analytics, and enterprise software — all areas in which Massachusetts companies excel.
One of the most talked about tech trends is another Massachusetts specialty known as big data. This segment of the tech industry uses sophisticated software to analyze massive datasets collected from the Internet and other sources.
Big companies such as EMC Corp. of Hopkinton and tiny start-ups such as Sqrrl Data Inc. of Cambridge are banking on big data getting bigger. But as consumer data becomes more of a commodity, Congress will consider legislation in 2013 to increase privacy safeguards around the public’s online information.
Another piece of federal legislation that could affect the region’s innovation economy is the JOBS Act: The Jump-start Our Business Startups law, enacted earlier this year, allows start-ups to raise money from the public over the Internet.
The Securities and Exchange Commission must adopt rules to govern so-called crowd funding, but if it does, 2013 could be the year that dramatically changed how companies get started. - MICHAEL B. FARRELL
Graduate Programs
