Biotechnology Clustering: The Regional Dynamics of the Modern Biotechnology Industry

The success of the early biotechnology clusters suggests that cluster development is often a result of a bottom-up process by which companies emerge early and gain competitive advantage rather than a top-down approach of state investment. But there are other patterns of cluster development. Hybritech is based in San Diego because its cofounder Ivor Royston (see profile, p. 37) was a faculty member at the University of California, San Diego. Nevertheless, San Diego’s emergence in the 1990s as a center of biotechnology activity is due in large part to an aggressive attempt by local government to encourage the commercialization of university research in the region. Policy makers in Raleigh-Durham and Seattle have also helped create regional climates favorable to the commercialization of research. Success in other regions has been based on the existence of one or several large, dominant firms that anchor economic development in biotechnology: Monsanto in St. Louis, multiple pharmaceutical corporations in the Philadelphia–New Jersey area, and Amgen near Los Angeles.

While studies of the regional dynamics of industrial growth have existed since the 19th century, Porter’s work has drawn the attention of analysts and policy makers. It was developed in the context of his interest in encouraging regional industrial growth to ensure national leadership in a global economy. His ideas attained broad recognition in academic, government, and economic circles and ensured continued policy interest in the cluster as a fundamental unit of economic growth. Economists, sociologists, geographers, urban planners, and other scholars have produced a large amount of literature on the phenomenon of industrial clustering, both generally and for the biotechnology industry in particular. Much of this literature purports to provide guidelines for regional economic development.

There is considerable debate about the degree to which cluster analyses aid policy creation. Some commentators have argued that development strategies treat the concept of clustering somewhat superficially, neglecting regional nuances and idiosyncrasies in favor of a standardized approach. Critics have urged policy makers to move beyond a reliance on cluster studies, suggesting that they might be better served by adopting economic development strategies that exploit the innate and dynamic characteristics of their regions.
To a great extent debates about the value of cluster studies to economic development reflect the great diversity of approaches undertaken in these studies. Some analysts follow a quantitative approach, statistically analyzing a variety of indicators of economic success across large numbers of cluster locations and industries. Others use a qualitative approach, producing detailed case studies of individual clusters in order to understand the specific attributes of a cluster’s success. The definition of cluster also varies. Some analyses highlight interindustry ties; others see distribution links between suppliers, manufacturers, and customers as the central component of a cluster; others focus more generally on the proximity of similar or complementary firms without defining the interactions between these firms.

In light of this variation in method and definition some critics question the value of clustering as a concept, but the idea’s strength lies in this diversity; it is rich and fertile, rapidly evolving, and broadly applicable to the dynamics of different regions and fields. There is no single method, definition, or process for understanding or creating clusters; regional economic development is by definition connected to a specific place, and every place has unique circumstances.

Studies of biotechnology clusters shed light on the future of the field, but they also reveal that there is no one-size-fits-all method for creating new clusters. A multifaceted understanding of clustering, combined with the dynamic and ongoing process of understanding the unique circumstances of a particular economic region, can provide the most reliable means to ensure the growth and evolution of successful biotechnology clusters.

For Further Reading

Braunerhjelm, Pontus, and Maryann Feldman, eds. Cluster Genesis: Technology-Based Industrial Development. New York: Oxford University Press, 2006.

Cortright, Joseph. Making Sense of Clusters: Regional Competitiveness and Economic Development. Washington, DC: Brookings Institution, 2006.

Cortright, Joseph, and Heike Mayer. Signs of Life: The Growth of Biotechnology Centers in the U.S. Washington, DC: Brookings Institution, 2002.