Health-Care Tech a Leader in State's Jobs

By PAUL JACOBS

July 16, 1998 12 AM PT

TIMES STAFF WRITER

Health-care technology has emerged as one of the largest employers in California, surpassing such longtime job providers as aerospace and the movie industry, according to a report scheduled for release next week.

The survey by the California Healthcare Institute, a trade and lobbying group, found that the health technology industry employs 210,000 workers in California, which can now boast having the highest concentration of biomedical firms anywhere in the world. Only the state’s electronic equipment manufacturers account for more jobs.

“Since we released our first report in 1993, the industry has really come of age,” said David L. Gollaher, the institute’s president. “The industry now in terms of sheer number of employees, wages, and exports has taken its place as a linchpin of the 21st-century economy.”

The report said one-third of the nation’s biotechnology companies and 28% of high-tech medical device and diagnostics companies are in California.

The statistics show the power of California--with its strong biological research base in universities and private laboratories--to attract an industry that depends on the highest level of experimental science, said Edward Penhoet, the institute’s chairman and vice chairman of Chiron Corp. in Emeryville, one of the biotechnology giants.

“This is a major shift in the industry, which used to be largely on the East Coast,” said Penhoet, who recently became dean of the UC Berkeley School of Public Health. “Clearly the momentum is for California now, and the magnet is the high-quality research here at the universities.”

The institute used government wage and employment statistics and a survey of California companies conducted by KPMG Peat Marwick to take a snapshot of the industry and illustrate its growing impact on the state’s economy. Included in the employment figures were about 44,000 people working in university and private research labs. The institute defined health-care technology as biotechnology, pharmaceuticals, medical devices, diagnostic testing, laboratory services and biomedical sales.

Just how fast the industry is growing is impossible to determine from the statistics. Two years ago, when the institute last surveyed the industry, it estimated total employment in the state at 165,000--but that did not include workers involved in sales of biomedical supplies. This group accounted for 41,100 in the current survey.

Joe Nation, an economic consultant who worked on the report, estimated that the health-care technology industry has been growing at an annual rate of about 2% a year.

The study found that jobs in the industry are among the highest paying in the state--averaging $50,500 a year, far above the statewide average of $32,800.

The institute study found that there were several large clusters of industry activity--primarily around San Francisco, San Diego, Los Angeles and Orange County.

San Diego is the fastest-growing of these clusters, according to the report, with a large number of biotechnology companies concentrated in a small area, near UC San Diego, the Salk Institute and the Scripps Research Institute.

The San Francisco Bay Area remains home to many of the largest and best-established of the biotechnology companies.

But Los Angeles and Orange counties between them have more than 800 companies with 58,000 employees. And Orange County, the report states, is “home to the largest cluster of medical-devices companies in the world.”

Many of the biotechnology companies are at a crucial point in their development, and the future of the industry in the state depends on how well they are able to turn ideas developed in their laboratories into profitable products.

Of 101 publicly traded biotechnology and drug companies that are headquartered in California, only 14 were profitable last year, according to statistics compiled by The Times.

One of the companies that appears to be on its way to turning that corner is IDEC Pharmaceuticals of San Diego, which last year won Food and Drug Administration approval for Rituxan, a drug it developed for treatment of non-Hodgkins lymphoma.

IDEC Chairman William Rastetter said that a number of companies in California founded a decade ago also are poised to bring products to market. “This is a tremendous time for those of us who are now transitioning,” he said.

But still at issue, according to the report, is how much manufacturing will take place in California.

Said Rastetter, “We have so many people employed here who have the skills necessary to do research and development that [the state] is the logical place to start new companies and expand old ones. But the exception is when you get to manufacturing. California has never been a low-cost site for manufacturing.”

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Biotech Beachheads

Health-care technology has become a major source of job growth in California. And the fastest growth in the industry has been in San Diego. A look at heath-care tech employment*.

Northern California

Area: Bay Area

Employers: 670

Employees: 78,032

Southern California

Area: Santa Barbara/Ventura/Lompoc

Employers: 155

Employees: 4,085

Area: Los Angeles

Employers: 491

Employees: 25,277

Area: Orange County