California has edge in scramble for biotech, Public Policy Institute of California study says

Posted on Wed, Apr. 27, 2005

State has edge in scramble for biotech, study says

By Steve JohnsonMercury News

Given California's plans to pour $3 billion into a stem-cell research initiative, plus its top universities and skilled labor force, it should have little trouble retaining its national lead in biotechnology, a new study has concluded.

But because of its high cost of living, the state may need government help fending off competition from other states vying for biotech manufacturing facilities, according to the report made public Tuesday by the Public Policy Institute of California.

``No other state has so much biotech R&D capacity and so many biotech products in the pipeline,'' the report said. But California nevertheless faces competition from other states eager to lure business their way.

The study found that there has been a trickle of biotech businesses migrating out of the state over the years.

Fifty-two biotech businesses moved out of the state from 1990 through 2001, while only 45 moved into California during that period, the study noted. But the state saw a net increase in biotech jobs as a result of that in-and-out migration.

That migration was only a small proportion of the 5,589 biotech establishments that existed in California at some time during that period, the study authors said. The study defined an establishment as a business unit that could be a firm or a branch of a firm.
And while Junfu Zhang, one of the study's co-authors, said he hasn't fully analyzed more recent data, he said the trend appears to be continuing.

``To have very good biotech firms, you have to have top-notch scientists, and California is very strong on that front,'' Zhang said. ``But in terms of manufacturing, I see that as a legitimate concern.''

The report recommended among other things that California government officials maintain high levels of financing for state universities and provide incentives to encourage regional biotech manufacturing clusters, such as the one that has sprung up in Vacaville.

Although the report noted that almost every state has efforts under way to develop biotech economies, California has a considerable head start. Part of that is due to its talented workers, many universities and long tradition of venture capital investment.
California also boasts nearly 40 percent of the nation's biotech employees and public biotech companies, and more than half of biotech-industry revenues.

Another big plus is Proposition 71, the measure approved by voters in November, which authorized the state to spend $3 billion in public money over the next 10 years on stem-cell research.

``Proposition 71 will almost surely tilt the playing field in favor of California,'' the report said. ``It has the potential to make the state a magnet for bioscientists and a training center for coming generations of bioscientists.''

Contact Steve Johnson at sjohnson@mercurynews.com or (408) 920-5043.