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Friday, January 23, 2009
Life sciences CEOs line up questions for Obama
By Mass High Tech staff
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Days before the inauguration of President Barack Obama, Mass High Tech asked a handful of CEOs from life sciences companies for their thoughts on what impact on their industry sectors they expect from the new administration, the economic crisis and the Massachusetts Life Sciences Bill. Their comments to three questions on the new president are below.
What can Barack Obama do as president to help your industry sector thrive?
Richard J. Meelia
Chairman, president and CEO
Covidien Ltd., Mansfield
Competition in the medical device industry is characterized by continual innovation, and companies need to develop and launch a steady stream of new product offerings to remain competitive in the global marketplace. We would welcome support from the new administration that would provide additional incentives for research and development to drive technological innovation in our industry. These innovations can provide improved patient outcomes and slow increases in the cost of health care over time. In addition, support for programs that spur investment will allow companies to expand operations, hire new employees and accelerate growth.
Michael W. Bonney
President and CEO
Cubist Pharmaceuticals Inc., Lexington
Health care reform was a key part of President Obama’s campaign, an issue he repeatedly referred to as a “top priority” over the past two years. However, the need to pass a thoughtful economic stimulus package to ensure that the economy stabilizes and returns to growth as quickly as possible must be the top priority, and it is very clear that it is. In both the stimulus bill and health care reform, the president has the opportunity — and indeed must include provisions — to ensure that innovation in life sciences, technology and services remain key drivers of the economy. The resilience of the U.S. economy over the last 40-plus years is due in large part to the innovation that this country has driven. I am encouraged that President Obama’s public statements reflect his understanding of the key role that innovation has played and must play going forward in order to address these key issues. For our sector specifically, incentives to invest in R&D, and clarity on the regulatory path for new technologies is critical.
Deborah Dunsire
President and CEO
Millennium: The Takeda Oncology Company, Cambridge
Going into his first term in office, Barack Obama seems to have a strong health care agenda planned. As president, the decisions he makes will have a direct influence on whether or not the U.S. stays at the forefront of innovation. Proposing and defending patent laws will be a central issue as well as ensuring access to essential medicines for those that need them.
Marijn Dekkers
President and CEO
Thermo Fisher Scientific Inc., Waltham
At a high level, I am concerned about U.S. competitiveness in the global economy. The big issues that I see are corporate taxes, labor relations and availability of technical talent. These will become more urgent as we move into the next decade. We need to improve the math and science education in this country to develop the future work force that we’ll need to succeed. Labor relations are not as urgent an issue, yet I am concerned going forward that we’d find ourselves with a labor model more like some of the countries in Europe. Those models are very restrictive and expensive to make any adjustments to the work force either up or down; Flexibility is critical to addressing the changing economic climate. Lastly, here in the U.S. we have one of the highest corporate tax rates in the industrialized world; any changes to improve this situation and actually encourage investment domestically would be welcome. Tax incentives for companies to put new factories and investments in the U.S., combined with a better-educated work force is one way of preventing outsourcing to other countries in the long term. If President Obama can make progress on any of these issues, he’ll be helping our industry to thrive.
Geoff MacKay
CEO
Organogenesis Inc., Canton
We believe that, as a champion of regenerative medicine and a strong supporter of stem cell research, President Obama’s support of the regenerative medicine industry will automatically have some positive benefits. Additionally, he can help to boost confidence and shift the discussion toward scientific debate on the true merits and challenges of translating this exciting new technology into viable patient treatments.
Lewis Bender
CEO
Interleukin Genetics Inc., Waltham
The more important question, we feel, would be to ask how the president can more effectively use the molecular diagnostics industry to improve health care for Americans. This is a country of disease treatment that is less focused on prevention than it should be. Our science allows for patients and physicians to better understand a person’s risks early in life, so that actions can be taken early to prevent or reduce the incidence and severity of several different diseases. If molecular diagnostic tools are used more broadly, America’s health care system should improve and overall costs will be reduced significantly.
What will be the long-term and short-term implications on your industry sector from the economic crisis in terms of innovation, growth and company stability?
Meelia- Covidien
For the medical device industry, the expected impact of the current economic crisis is two-fold: a slowdown in capital purchases by hospitals and a potential reduction in elective surgical procedures. These two factors will likely slow industry growth over the short-term. While no company is completely immune to economic cycles, Covidien’s product and geographic diversity puts it in a good position to weather the slowdown.
Dekkers- Thermo Fisher
No company is immune to the current economic situation, and some of our customers, including large pharmaceutical companies, academic and government entities, and certain industrial customers, are tightening their capital spending. However, our range of customers – which also include those in biotech, healthcare, food safety and environmental markets that are less affected – our breadth of technology, diverse product line and global footprint put us in a good position to weather the economic headwinds. In the short term, we are carefully watching our costs as we always do, and we’ve initiated actions to limit discretionary spending. In the long term, we continue to invest to support our growth plans in terms of products and technologies that our customers need to do their work more efficiently and to yield better results. We also continue to invest heavily in growing geographic markets, such as China and India.
Bonney-- Cubist
In the short term, the industry is suffering from the credit crunch, which has an obvious crushing effect on those companies running low on cash because they have a long runway before they get to cash flow positivity.The lack of credit means that there will be opportunities for those who are well capitalized to grow through acquisitions. This dynamic also affects innovation as it forces talented people to move to well-capitalized companies like Cubist, which provides them with new opportunities to innovate. But inevitably, in a highly capital constrained environment, innovation will suffer without new and meaningful incentives for the continued investment in R&D.
MacKay- Organogenesis
In the short term, the economic crisis is not favorable for early-stage companies looking to raise funds. Even when deals are possible for such companies, it is clearly a buyer’s market, meaning company valuations are lower than a year ago. What we are seeing is that the investment community has adjusted risk profiles away from higher risk and towards late-stage companies with more proven technologies and revenue streams. In the longer term, healthcare costs cannot outpace the national GDP forever. The economic crisis has accelerated the need for rational healthcare reform. We need to evolve our system to improve patient outcomes while at the same time managing costs.
Dunsire-- Millennium
In the short term, companies are being more cautious in their investment profiles, which in some ways is healthy. Smaller companies are having a harder time raising capital and may be forced to sell themselves to big pharmaceutical companies at a discount. From a long-term perspective, this creates a gap in the market as all the innovation is held by larger institutions.
Bender-- Interleukin
The financial crisis is having its greatest effect on those industries requiring significant amounts of capital to conduct research. A lack of a capital will starve those small innovative companies and lead to a significant reduction in new technologies that can improve healthcare outcomes.
Now that six months have passed since the enactment of the Massachusetts Life Sciences Bill, what are your expectations in terms of the benefits to your segment, and how have those expectations changed over time?
Meelia- Covidien
We applaud the state’s significant commitment to life sciences. The $1 billion funding and investments should create new jobs, spur innovative research, and strengthen investments in higher education and workforce training. We continue to believe that the bill will result in accelerated innovation, provide needed infrastructure improvements and offer life sciences businesses incentives to expand in Massachusetts. That said, Covidien does not expect to be a significant beneficiary of any of this funding.
Dekkers- Thermo Fisher
Massachusetts has always has been an attractive location for those involved in the life sciences space because of its unique combination of biopharma companies, medical equipment, life sciences tools, companies as well as major medical centers, academic research institutions and scientific tools providers like Thermo Fisher. As the world leader in serving science, we have implemented a number of initiatives that could have major implications on human health and treatment of disease, including developing integrated workflows for stem cell and biomarker research. We expect that this strong emphasis by the governor’s office – and the associated funding – will help to fuel our efforts in these important areas of life sciences discovery.
Bonney- Cubist
It is now clear that Massachusetts leads the nation with respect to the economic incentives available to life sciences companies in all stages of development, but after only six months, the LSI is in its infancy. Even at this early stage the Life Sciences Center is developing protocols for reviewing economic incentives and regulations that allow the center’s leadership to interpret and apply the LSI’s incentives to fit the unique and particular needs of certified life sciences companies. Our expectations have not changed - we remain optimistic regarding the LSI’s outcomes for our sector and for Cubist.
MacKay- Organogenesis
We are pleased to see that the state remains committed to this sector through tough economic times, and glad that the bill passed with the proposed tax reforms included, as this negates the need for biotech and medical device companies to expand elsewhere outside of the state. Additionally, we are excited to see a strong leadership team up and running at the Life Sciences Center, and rigorous, transparent corporate governance established.
Dunsire-- Millennium
I think we are just beginning to see the effects of the Life Sciences Bill. The first six months have been utilized by Susan Windham-Bannister to pull together key players and lay the foundation for future processes. I am very excited to see how the new bill will drive life science advancements over the next six months and beyond.
Bender- Interleukin
Anytime that our government agencies are willing to invest $1 billion in an industry that has the potential to create novel healthcare benefits, our expectations can only be of optimism and hope. But given that $500 million is to be used for infrastructure and only six months have passed, it is likely that not much has happened yet. I will be happy to answer the question again in a few years regarding any changes to my expectations for this legislation.
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