California’s biomedical industry experienced modest job growth during the worst economic downturn since the Great Depression, but the state stands to lose some of its grip on the biomedical industry unless it can continue to attract high-paying jobs and fund innovation, according to a new report issued by the La Jolla-based California Healthcare Institute. For San Diego, home to the third largest cluster of biotechnology companies in the U.S., the implications of this trend could have a profound effect, according to local industry leaders.
“In the next five to 10 years, unless we can continue to provide the talent that the companies require, the industry will not be able to grow at a historic rate,” David Gollaher, president and CEO of California Healthcare Institute, said at the time of the release of the institute’s report Feb. 2.
Produced in conjunction with PricewaterhouseCoopers, the report sheds light on a regional industry that has historically captured a significant share of biotech venture capital dollars nationwide, but one that could lose its edge to state budget cuts and fierce competition from other states for the high-paying jobs the industry generates. PricewaterhouseCoopers reports that California companies received 42 percent of all investments in biotech and medical devices nationally.
Seeking Ways To Grow The Industry
“We’re not asking for a handout; we’re not asking for TARP money,” said CHI Chairman George Scangos, who also serves as CEO of South San Francisco biotech Exelixis Inc. and serves as board chair of local biotech Anadys Pharmaceuticals Inc. “We’re asking for an environment in California that allows us to grow our industries. We need to keep and even increase our competitiveness as other regions develop their own biotech and other industries.”
Michael Drake, a physician and chancellor of UC Irvine, said state budget cuts threaten to harm the kind of basic scientific research that leads to new discoveries, and, eventually, new drugs and diagnostic procedures.
“We think the future of our state and nation really lies with its peoples and its ideas,” he said. “People, in a sense, refers to our young people. It’s important we have opportunities for them to be able to have the skill set to help to make the future bright for us all.”
Uncertainty surrounding the state’s $20 billion budget deficit was a common theme in the report, with industry representatives saying the state stands to lose biomedical jobs unless it can continue to provide competitive tax incentives.
While the city of San Diego has an enterprise zone that offers tax cuts to businesses that locate in the southern part of the city, Russ Gibbon, development manager for the city, said it hasn’t attracted any biomedical companies.
“We are looking at expanding it,” he said.
‘Sea Turtles’ And Off-Shoring
Besides competition from cities like Orlando, Fla., the location for the La Jolla-based Sanford-Burnham Medical Research Institute’s East Coast operations, California is also facing challenges to keep its scientists from returning to their home countries.