Lilly heads to Cambridge, MA, as Big Pharma gentrifies a biotech hotbed

Lilly CEO John Lechleiter

Eli Lilly ($LLY) is the latest multinational drugmaker looking to Cambridge, MA, to jump-start its innovation engine, blueprinting a new R&D outpost on the Charles River as biotech's hippest neighborhood gets more and more crowded.

The new facility, dubbed the Lilly Cambridge Innovation Center, will open by year's end in Kendall Square, already home to a slew of world-renowned biotechs, incubators and research institutions. Over the next two years, Lilly plans to hire about 30 scientists to staff the center, paying particular attention to drug delivery and devices, the company said. Lilly believes the future of healthcare will involve greater interplay between traditional therapeutics and newfangled hardware, and the Cambridge move is in part an effort to take a lead role in the future of pharma.

The new shop should be a boon to Lilly's business development, too, CEO John Lechleiter said, giving the company a dealmaking beachhead to complement its existing hubs in San Diego, New York City and Indianapolis.

"Locating in Cambridge is an important strategic move for achieving this goal, as it provides us access to a concentration of high-caliber academic institutions, cutting-edge life science and technology companies, and some of the world's leading talent," Lechleiter said in a statement.

And, he neglected to mention, a fast-growing list of Big Pharma companies. The secret has long been out on Cambridge and the wonders its ecosystem has done for anchor tenants like Biogen ($BIIB). Over the past few years, Novartis ($NVS), Pfizer ($PFE), Sanofi ($SNY) and many more have bought into the idea of abandoning far-flung R&D campuses in favor of rubbing elbows with the Kendall Square locals, cutting the ribbon on similar innovation centers in search of valuable ideas.

But the ongoing gold rush is now running the risk of consuming itself. As Unum Therapeutics CEO Chuck Wilson outlined in a blog post today, the deluge of demand for Cambridge lab space is driving rent prices through the roof. That may be no big deal for the likes of Lilly and Pfizer, but for penny-wise startups, $80 per square foot can be cost-prohibitive. And, in a case of gentrification writ biotech, if Big Pharma prices out all the innovators it so desperately wants to hang out with, it'll end up right back where it started, spinning its wheels in a neighborhood only it can afford.

- read the announcement
- here's Wilson's post