BOSTON - There are signs that Gov. Deval Patrick and the Legislature's $1 billion bet on the biotech industry might be paying off.

Despite a recession that is sapping jobs, the state's biotech industry is showing signs of growth.

"We are as busy as we've ever been. We see a lot of opportunities, and opportunities are going to be plentiful," said John Dunn, executive vice president of the pharmaceutical biotech company Biogen Idec.

A report by the UMass Donahue Institute last fall found life sciences employers are optimistic about the future of their companies in the state, and more than 85 percent of them expected to expand their companies within the next two years.

One of the growing companies is Siemens Healthcare, one of the largest employers in Walpole with 525 employees.

Walpole's economic development and grants officer Stephanie Mercandetti said the company announced it was creating 70 new jobs when it unveiled its $109 million expansion plan in east Walpole in September.

"The good news is many of these (biotech) companies plan to expand here in Massachusetts." Massachusetts Biotechnology Council president and CEO Robert K. Coughlin said.

Bill accelerates growth

Industry and government officials attribute the growth - often by a dozen jobs here and another 20 jobs there - to the governor's long-debated biotech bill that was passed by the Legislature in the past session.

The $1 billion plan provides money for funding programs, primarily in the forms of grants and contracts, to companies developing products over the next 10 years. "The Life Sciences Initiative positions Massachusetts as a preeminent player in biotechnology globally," said Sarah MacDonald, spokeswoman for the Massachusetts Biotechnology Council.

Angus G. McQuilken, vice president of the state's Massachusetts Life Science Center, said the $1 billion in state funding is intended to create jobs and support basic and applied research.

"The $1 billion initiative will be provided in several different ways," said McQuilken. "It includes $250 million for tax incentives, $250 million for grants, loans, life sciences research, and investments. Another $500 million is for capital projects."

Recent state budget cuts will not have a major impact on the plan. McQuilken said although $160,000 in budget cuts will eliminate some grants and loans, the $1 billion initiative has not been affected.

McQuilken said that $5.2 million in grants have already gone to Genzyme for its expansion plan to upgrade the sewer capacity at the site in Framingham.

"The expansion will create 300 new jobs in Framingham." McQuilken said.

Genzyme's managing director Alan Waltz said that the company is not only looking for good scientists and products for future development and expansion, but "also look(ing) at things that are outside of our current focus areas, such as corporate venture capital." Waltz said.

Other expansions

Other biotechnology companies have also recently expanded.

Cubist Pharmaceuticals opened its new 35,000-square-foot research facility at the company's headquarters in Lexington in September. The facility adds enough lab space to fit an additional 100 new employees.

Also in Lexington, RainDance Technologies dedicated its new headquarters and commercial and manufacturing operations in September. The company plans to double its staff of 30.

In Cambridge, Novartis Institutes for BioMedical Research plans to build a new Center of Excellence in Virology research facility as big as 500,000 square feet and hire an additional 150 people by the end of 2009, increasing the workforce to more than 1,800.

Such news gives weight to a 2006 report by the state's Office of Labor and Workforce Development that projected Massachusetts' net job growth rate in the life, physical and social science sector would increase 17.6 percent between 2006 and 2016, with an estimated 9,300 new jobs.

"I see that it [biotechnology industry] isn't slowing down, in terms of opportunities or corporative investors." Biogen's Dunn told the 10th annual Massachusetts Biotechnology Investors Forum last month.

But the industry still needs funding - a theme repeated frequently at the forum.

According to the Money Tree Report from PricewaterhouseCoopers and the National Venture Capital Association, New England's biotechnology industry captured a 21.2 percent share of national investment dollars in the third quarter, the second-highest dollar amount after Silicon Valley.

Top sector

The state's biotechnology sector edged out all the other sectors for top billing as the top industry sector in terms of dollars in the third quarter, with $281 million in venture capital investments going into 20 deals.

The report says investments in life sciences companies represented 46.7 percent of all investment dollars and 29.3 percent of all deals in Massachusetts in the third quarter. The state's life sciences sector, which combines biotechnology and medical devices, saw a 19.3 percent increase in venture capital investments with $347 million going into 29 deals in the third quarter. "There's more venture money in biotech in the last couple of quarters than there was six or seven years ago," said Christoph Westphal, CEO of the Sirtris Pharmaceuticals, a GSK company.

Tight times still

However, Westphal and others worry that many companies face harder times in the next 12 months. "It is going to be a tough year for small to midsized biotechnology companies," MacDonald said.

Even larger firms, such as Siemens, Biogen and Genzyme, have cut back as capital becomes increasingly hard to find.

CombinatoRx, a Cambridge biotechnology firm, recently announced that it will cut 80 of 164 jobs. Biopure, also based in Cambridge, laid off 72 workers, or 30 percent of its work force, in October and reduced salaries to keep the company alive while it tried to raise money. Pro-Pharmaceuticals, in Newton, has cut managers' salaries 75 percent.

McQuilken said that as a result the state's $1 billion package has become critical in helping the life sciences industry pull companies, especially those in the development stage, through the tough times.

MacDonald hoped funding from foundations, federal programs and partnerships with pharmaceutical companies would help small and midsize companies survive. "Biotechnology companies are creative, and the good ideas are still being funded," MacDonald said.

Nannan Zhong reports for the Gazette from the Boston University Statehouse Program.