Biotech Firms Say the State Needs to Heed Industry Complaints : Business: At meeting in La Jolla, California lawmakers will be shown what other states are offering companies.

When state legislators walk into a statewide biotechnology industry meeting today in La Jolla, they’ll be greeted by piles of brochures that other states are using to lure biotech firms out of California.

Meeting sponsors are using the out-of-state sales pitches that promise everything from cheap land to low tax rates to deliver a simple message to Sacramento: Create a nurturing environment for California’s fast-growing biotechnology industry or stand back and watch as companies scatter to states offering friendlier business climates.

No local companies are known to have moved out of town because of California’s allegedly hostile business climate. But biotechnology executives maintain that an exodus is assured if the state’s business climate doesn’t improve.

About 29% of San Diego County’s 147 biotechnology firms are considering relocating all or part of their operations out of state, according to a survey released Thursday by Ernst & Young, an accounting firm, and Connect, a UC San Diego program that supports biotech and high-technology companies.

State taxes are the chief culprit, according to the survey, followed closely by the lack of a “business-friendly environment.”

Today’s gathering, believed to be the first statewide meeting held by the industry to lobby Sacramento legislators, is sponsored by the Biomedical Industry Council of San Diego, a trade group that represents about 45 local biotech companies, and Biocom, the San Diego Biocommerce Assn., which represents companies that do business with biotech firms. The meeting also is supported by the state Chamber of Commerce and the Bay Area BioScience Center, a trade group.

Biotechnology industry executives have shied away from lobbying, “but given the state’s economic and regulatory environment, they’re getting more tuned into politics,” Biocom President James McGraw said.

With defense and manufacturing waning, biotech leaders maintain that state legislators should be favoring biotechnology, which has the potential to create thousands of news jobs. In San Diego County, 147 biotechnology companies have 14,500 employees and expect to hire 1,450 additional San Diegans during 1993, according to the Ernst & Young/Connect survey.

But biotech executives maintain that Sacramento legislators remain largely ignorant about the role that the industry plays in California’s economy.

“We need to point out (to legislators) the value of retaining these (biotechnology) firms,” said Dan Pegg, president of the San Diego Economic Development Corp., which is charged with attracting and retaining industry in the county. “There’s no recognition (in Sacramento) of what the firms’ needs are.”

Pegg, polio vaccine inventor Jonas Salk and other speakers will make their case to legislators today at the Sheraton Grande Torrey Pines.

But event planners acknowledged Thursday that many lawmakers, weary from marathon budget sessions in Sacramento, will skip the meeting and return to their districts.

The biotech industry’s wish list includes modifications to the state Clean Air Act, assorted tax breaks, a guaranteed supply of water and worker’s compensation reform. The group also supports construction of a proposed low-level nuclear waste dump in the Mojave Desert that would house materials used in the development and manufacturing of biotech products.

Industry leaders will display “dozens and dozens” of sales brochures that competing states and countries are using to lure companies from California. The sales pitches were gathered from out-of-state delegations that regularly visit biotech firms to extol the virtues of their home states.

Many of the out-of-state visitors “are spending more time walking through biotech companies than California officials do,” McGraw said.

Foreign governments also are showing increased interest in San Diego County firms.

During a Thursday breakfast meeting, executives from about 20 local biotechnology firms listened as representatives of NOM, a quasi-public agency in the Netherlands, detailed a variety of loan-and-grant packages that are available to firms willing to relocate.

NOM is in negotiations with Invitrogen, a privately held, San Diego-based biomedical company that sells test kits to universities, research laboratories and biotech companies. NOM could end up acting as “a financial partner” when Invitrogen opens a sales office and a warehouse facility in Europe during 1993, Invitrogen spokesman Charles McAteesaid Thursday.

California’s laissez-faire attitude toward biotech firms was obvious during a national biotech meeting in San Diego in May, observers said.

More than 300 biotech executives from around the country gathered for the Assn. of Biotechnology Companies’ annual meeting, but “San Diego and California had no presence inside the meeting hall,” said Mark D. Dibner, an official with the state-funded North Carolina Biotechnology Center.

While economic development officials from more than two dozen states and countries sponsored booths and hospitality centers, “the San Diego mayor was too busy to attend and the deputy mayor got there too late and missed his talk,” Dibner said.

In contrast, when North Carolina hosts the 1993 ABC meeting, the state’s governor will meet twice with delegates and “all the big companies are sponsoring events,” Dibner said. “We’ll show (executives) that North Carolina knows how to support and nurture companies.”

“California continues to shoot itself in the foot” when it comes to nurturing its home-grown biotech industry, said A. Stephen Dahms, director of the California State University Program for Education and Research in Biotechnology.

Ernst & Young predicts that San Diego could have as many as 50,000 biotech jobs by the year 2000, “but you have to take care of the industry if that’s going to happen,” Dahms said.

Other states, aware of California’s economic and budgetary woes, have stepped up their recruiting efforts. North Carolina is spending $7.5 million annually to fund a biotech center near Raleigh that helps struggling biotech companies to develop business plans, find investors and speed products into the market.

Even states not known for their scientific prowess are making a bid for part of the biotech pie: Montana state officials now are handing out four-color brochures that describe developments in the self-described “Bitterroot Biotech Corridor,” which is tucked away in the state’s southwestern corner.

Biotech industry executives acknowledge that it’s a tough time to be lobbying Sacramento, which is caught up in the state’s ongoing economic and budgetary woes.

“We can’t just talk among ourselves,” said Martin Nash, chief executive officer of NeuroTherapeutics, a San Diego-based biomedical firm. “We’ve got to raise the consciousness of the political leadership in Sacramento, the press, the people who read newspapers . . . everybody.”

The summit meeting in La Jolla is patterned after a successful workshop that biotech leaders presented last spring to the San Diego City Council. Then, some City Council members registered surprise at the size and number of biotech firms that have grown up near UC San Diego and the Scripps Clinic & Research Foundation.

Biotech industry leaders maintain that they’re not seeking special treatment from state legislators.

“We can bear the fact that real estate is a little more expensive here . . . because the lifestyle benefits are here,” Nash said. “But there needs to be cooperation from the powers that be . . . we need to remove the disincentives.”

Biotech Industry in Flux Are you considering moving any portion of our company to another state? No-72% (84 companies) Yes-29% (34 companies) If yes, which part are you considering moving? Headquarters-15% (5 companies) All-38% (13 companies) Others-3% (1 company) Research & Development-9% (3 companies) Manufacturing-35% (12 companies) Source: Erst & Young, UC San Diego Connect