Decoding the DNA of innovation: lessons from Kendall Square

Nothing — not even global economic jitters — can slow the appetite for investment in life sciences and biopharma research and development.

By Yuru Ding, Researcher at Hassell

In the first quarter of 2023, Pfizer announced a bullish 10% increase in spending on research and development (R&D) with Global CEO Dr Albert Bourla describing R&D as ​“the lifeblood that fuels us as a company”. According to a recent study by McKinsey, the top 12 biopharma companies have more than $290bn available to invest in R&D, mergers, acquisitions and other activities to help drive their businesses. And in Shanghai, authorities have introduced hefty subsidies for R&D, as well as policy changes to attract foreign operators, to help drive innovation across life science and other high-tech industries.

However, spending vast amounts on R&D is no guarantee of success — especially in the field of life sciences. The same goes for locating R&D labs in gated business parks and expecting innovation to occur organically. 

While locked gates and high walls might be perfect for manufacturing and other downstream activities, these are not the places where the initial sparks of brilliant innovation are first dreamed up. Closer examination reveals that creating innovation in this field is deeply connected to place and context.

WHAT’S THE SECRET RECIPE BEHIND THE WORLD’S MOST INNOVATIVE DISTRICTS?

Kendall Square in Boston, Massachusetts holds excellent clues.

At the centre of much of the USA’s life sciences boom for over half a century, Kendall Square is home to life science and biopharma industry heavyweights like Novartis, Biogen, Pfizer, Sanofi and more.

Starting as a collection of university labs surrounded by industrial wasteland, over the past five decades Kendall Square has developed into a thriving life sciences community. It is now home to more than 2,000 businesses, including over 600 start-ups.

Of the 50,000 people employed in and around Kendall Square, approximately 60% work in the creation of ​‘ideas’.

Today, the best talent, most savvy investors and giants of industry are all drawn to the fertile soil of Kendall Square, where groundbreaking ideas and pioneering solutions emerge.

This ​‘perfect setting’ of interconnected people and resources in a physical environment allows and encourages ideas to be tested, to grow, scale and flourish. 

But Kendall Square’s success hasn’t happened by chance.

‘A Good Neighbour is a Priceless Treasure.’ 

— Chinese proverb

A virtual stone’s throw away from Kendall Square you’ll find MIT and Harvard, two of the world’s most well-known and highly regarded universities. Also close by are numerous leading medical facilities including Massachusetts General Hospital and Brigham and Women’s Hospital. If you were wanting to start an innovative life science enterprise and engage some of the brightest minds in their fields to help you reach your goals, this is the place to be.

This proximity to university and medical resources is an essential lesson and tactic for early-stage life sciences startups looking for exceptional minds, to commercialise novel findings or seek timely, critical examination from an elite set of knowledge leaders. ​“The timescale of decisions for a start-up can be really short,” says former Provost and professor at MIT Martin Schmidt, who now heads up the Rensselaer Polytechnic Institute (RPI) in New York as president. ​“You’ve got a small organisation that needs to react quickly.”

This interconnected ecosystem is remarkable not just for its output but because people and companies continue to ​‘stay put’ — choosing to work from Kendall Square over other tech-centres like Silicon Valley or New York. 

“Geography does matter, and the reason it matters is because of serendipitous encounters,” said Paul Maeder, founder of the multinational VC firm Highland Capital Partners, after moving the business’s East Coast operations from the suburbs to Kendall Square.

Through a variety of well-thought-out and designed spaces, Kendall Square provides workplaces, living options and collaborative opportunities. It’s a community where companies can let scientific discoveries, risk capital and innovation policies interconnect easily without an elaborate strategy to do so, or an array of standalone structures. And all this is supported by an easy and convenient public transport system — and access to plenty of open green spaces and public parks.

IT’S NOT ALL WORK AND NO PLAY

Kendall Square appeals to the best and brightest because it caters for the whole person.

Young professionals in the life sciences and high-tech sectors are drawn to the spontaneity of lively urban environments offering an abundance of retail outlets, leisure, cultural and recreational options, and green spaces — a challenging set of requirements to successfully deliver in a gated business park. 

Whether it’s an eatery on Third Street or a coffee shop at the corner of Broadway, in Kendall Square these social spaces serve as informal conversation spots for researchers, clinicians, innovators, start-up CEOs and students alike to explore pressing, real-world issues and plan entrepreneurial moves side-by-side. As Sarah Eusden Gallop, co-director of the MIT Office of Government and Community Relations and chair of the Kendall Square Association said: ​“You could see Nobel Prize winners having lunch at the diner sitting next to anyone — an MIT student or staff member, a Kendall Square employee, a Cambridge resident.”

The dynamics of the interchange of information and knowledge in a relatively neutral place help to spark innovative thinking. These interactions propel scientific advancement and help catalyse investment in the pursuit of cutting-edge, knowledge-driven innovations. The vibrancy, convenience and variety of services in an urban system are compelling reasons to move to Kendall Square — and stay.

Creating a physical environment that encourages the exchange of ideas and allows symbiotic relationships to occur is vital for innovation in the life sciences sector.

Making location, amenities and vibrant lifestyle offerings right are fundamental to driving success. The innovation ecosystem and urban ​‘kit-of-parts’ found in and around Kendall Square provide clear guidance and inspiration for organisations and cities looking to develop and grow their own innovative life science and biopharma sectors.