BIO-BURG

This old rural town, known mostly for its state prison, is quietly making a name for itself in the cutting-edge world of biotechnology.

In recent years, Bay Area giants Chiron Corp. and Alza Corp. put up plants across the street from each other on the east side of town.

To the southeast, Genentech Corp. is erecting what could be the industry’s biggest factory. “This is our site for future manufacturing--not just for the next few years but the next 50,” says Frank Jackson, the plant manager.

These businesses didn’t choose Vacaville by accident. They all found the living easier--and costs lower--than in the Bay Area 50 miles to the southwest.

But the city of Vacaville also made it hard to say no.

“We consciously set out to make these people not just satisfied but so happy that they actually will be salesmen for us,” said Michael Palombo, the town’s manager of economic development.

Next year, assuming Genentech’s plant opens on time, Vacaville will boast 1,100 biotech workers. “Is that a lot? No,” said Palombo, “but it’s a good start.”

Indeed, experts predict that Vacaville’s biotech cluster is likely to pull in other plants, as well as attract suppliers.

And the timing couldn’t be better, industry experts say. This clean, high-paying industry figures to grow, as rising numbers of experimental drugs get cleared for sale.

Vacaville’s experience reveals some of the rewards, as well as risks, awaiting communities that link their futures to advances in life sciences.

Unlike other towns, Vacaville went after factory jobs rather than the industry’s flashier research and development workers, who command higher salaries. R & D facilities, however, don’t generate as many tax dollars, says Palombo.

To be sure, factories also require highly paid scientists, engineers and quality-control specialists. But they also employ more high school or community college graduates for such jobs as technicians and systems operators.

As more local workers become trained for industry jobs, more biotech business will probably consider setting up shop in Vacaville, said Gary Fulscher, senior vice president at Alza. It’s a finicky, highly regulated, hyper-clean industry that produces drugs and related items. And employers are passionate about finding trained workers who can master government-approved processing standards.

To accommodate the anticipated demand, Solano College in Fairfield has set up a satellite program across the street from Genentech to train students for biotech work. The first 50 enrollees range in age from younger than 21 to 55. Two are PhDs, and one is a retired physician.

Still, it’s hard to predict how many new jobs will materialize in an industry that must adjust to technological change, regulatory approvals and global consolidation.

Overall, the industry can claim only a handful of sizable, profitable companies, so potential job growth for communities might be limited. “The danger of focusing on biotechnology work is that there are not very many companies in it,” Palombo said. “You have to be careful that you don’t think that, by itself, it’s a panacea, because it’s not.”

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Vacaville’s first industry catch was small fry--Biosource Technologies.

In 1987, young scientists who founded the Sunnyvale company wanted lab space to develop ways of using plant viruses to make drugs. They were tired of the Bay Area’s high living costs and wanted an affordable place to raise their families.

Scientists thrive on research, ingenuity and imagination, notes David R. McGee, the company’s senior vice president. “[But] we have to be satisfied at the end of the day,” he added, recalling that at that time, a new four-bedroom home in Vacaville could be purchased for $150,000, about half the cost of a three-bedroom fixer-upper in Sunnyvale.

The company, which relocated its corporate headquarters, now employs 40 scientists and support people in Vacaville.

When Biosource landed, Vacaville wasn’t looking for biotech jobs especially. It was happy for any business that promised to reduce its historical dependence on government employment.

A military center for decades, Vacaville had seen employment decline at nearby Travis Air Force Base during the massive downsizing of the military and defense industries. Eventually, the naval shipyard on Mare Island, which also drew workers from Vacaville, also closed.

City officials were determined to lure employers who could provide enough jobs for any resident who wanted to work.

Biosource led to bigger fish--Alza in 1987, Chiron in 1993, and now Genentech. Unlike Biosource, the others built major factories.

In each case, the town’s welcoming attitude gave it an edge over competing locales.

Permits moved through local channels in a manner of months--lightning speed compared with some municipalities. The City Council had earmarked some areas for industrial development even before the biotechs came calling, which meant that companies only had to work with city staff to clear land, building, zoning and environmental permits.

The process was a big relief to Chiron, which had become mired in a three-year battle in Emeryville to get approval to expand its headquarters.

“It’s easier to get things done in Vacaville,” said Nelson Hiner, manager of Chiron’s plant.

In 1992, the company needed to build a factory quickly. Clinical tests on an experimental growth hormone were nearly done. Assuming regulators gave approval, the company had to start making the drug immediately on a contract with Johnson & Johnson.

Vacaville officials approved the company’s plans, then went out of their way to calm residents when fears arose over the possible risks of having a biotech plant nearby.

At one of several discussion sessions with residents, questions came up about the plant’s use of phosphoric acid. Mayor David Fleming stood up, popped open a Pepsi can, drank it, read the label, and said, “You know, there’s phosphoric acid in this, and it didn’t hurt me a bit.”

The town’s biggest catch so far is Genentech. The South San Francisco company has invested $250 million to put up a 365,000-square-foot plant on 100 acres of former pastureland.

For Genentech, the town helped amass a package of financial incentives--$12 million in state and local funds for training employees; up to $5 million in rebates on various taxes and licensing fees; a promise to ration the company’s water only during an emergency, and the usual fast-track service.

While the package helped land Genentech, Vacaville’s proximity to South San Francisco was critical.

The town is a 60- to 90-minute commute from the company’s headquarters, which is also the center of its manufacturing know-how. The short distance will make it easier to replicate the production processes developed at its South San Francisco factory.

Inside, the South San Francisco factory resembles a cross between an immense clean room and a brewery. A small frozen vial of cells, cloned from hamster ovaries, is thawed, mixed with a nutrient-rich broth, and it multiplies for several weeks. Each cell is itself a tiny factory that has been genetically altered to make new drugs to treat diseases such as non-Hodgkin’s lymphoma.

More than 10 miles of pipes deliver vast amounts of water, oxygen and heat for growing cells, or remove waste. Gowned workers tend to a multitude of control panels across the floor and the catwalks, checking the soup’s contents, pressure, water quality and temperature.

If all goes well, that original vial of cells will yield drugs with a retail value of more than $1 million. But 10% of the time, impurities or other troubles are discovered, and a batch gets tossed.

Currently, 20 engineers from headquarters are working in Vacaville to make sure the process is properly cloned.

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So far, both town and company officials maintain the other side is living up to expectations. But nothing’s perfect.

As expected, Alza found manufacturing workers in greater supply in Vacaville than the Bay Area, but labor costs were a bit higher than projected. “The direct labor costs are somewhat lower than the Bay Area, but the difference is 10%, not 15% as expected,” said Alza’s Fulscher.

Similarly, Alza hoped to recruit scientists from Sacramento and nearby UC Davis at salaries below Bay Area rates. “But that didn’t happen much,” he said.

What’s more, highly paid executives, transplanted from elsewhere, have found Vacaville short on upscale lifestyle.

Michael Paulik, Alza’s top executive in Vacaville, is living 57 miles away in Blackhawk. He couldn’t find a home in Vacaville to replace the one he sold four years ago in suburban Philadelphia for more than $750,000.

“There are very few upscale communities or locations for executive management in this area,” Paulik said.

For Vacaville, jobs at Chiron haven’t been as bountiful as expected. When the company originally bought its 51 acres of pastureland, it planned to put up two plants.

But one, a product filling operation, was canceled. As is common in the biotechnology industry these days, Chiron became partners with drug giant Ciba-Geigy, which had a plant on the East Coast to accommodate the filling activities.

The industry’s influence on local education has raised some eyebrows too.

James DeKloe, a Solano College biology professor, trained for several months at Genentech’s South San Francisco headquarters to develop the college’s vocational training program for the biotech industry. Fellow academics claimed the college would be subsidizing the industry’s training requirement. And they worried that investment in costly equipment necessary to train students might be money misspent on “today’s technology, tomorrow’s buggy whip,” he said.

DeKloe vows he will alter the program to keep pace with technological change. He reminds students of the industry’s risks and tells them to follow biotech stocks.

A proud moment came for him when one student recently asked an industry executive, “What’s your burn rate?”

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The New Pioneers

Four biotech and pharmaceutical firms have set up facilities in Vacaville, along the Interstate 80 corridor between San Francisco and Sacramento. A look at the companies and the jobs they bring:

New Facilities in Vacaville

Biosource Technologies

Headquarters: Vacaville

Facility: Research & development and administrative headquarters

Leased: 1986

Cost: $15 million

Square footage: 20,000

Employees: 52

Uses a genetically altered form of the tobacco mosaic virus to develop pharmaceuticals.

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Alza Corp.

Headquarters: Palo Alto

Facility: Manufacturing

Opened: 1987

Cost: $200 million

Square footage: 200,000

Employees: 560

Makes drug delivery systems such as time-release capsules and skin patches for smoking cessation, pain control and testosterone deficiency.

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Chiron Corp.

Headquarters: Emeryville (near Oakland)

Facility: Fermentation production

Opened: 1993

Cost: $45 million

Square footage: 30,000

Employees: 35

Uses yeast fermentation process to produce pharmaceuticals such as Regranx, a drug marketed by Johnson & Johnson to treat diabetic foot ulcers.

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Genentech

Headquarters: South San Francisco

Facility: Manufacturing

Opened: 1998, will begin production in 1999

Cost: $250 million

Square footage: 365,000

Employees: 160 currently, 325 in 1999

Uses cultured mammalian cells to produce pharmaceuticals to treat non-Hodgkins lymphoma and other diseases.

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New Jobs

Employment in the biotechnical industry in Vacaville is projected to almost double in the next five years as existing plants increase production and new facilities are constructed:

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Why Vacaville?

Location

* Many biotechnology firms are headquartered or have research and development facilities in the Bay Area. Having a manufacturing firm within a reasonable driving distance helps scientists who developed the drugs maintain oversight of large-scale production.

* Vacaville is close to major universities such as Stanford, UC Berkeley, UC San Francisco and UC Davis where important biotechnology research is being conducted.

Work Force

* Access to a skilled production work force is needed.

Affordability

* Open, affordable space for facility construction and future expansion.

* Affordable housing attracts and helps retain employees.

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Sources: City of Vacaville, Association of Bay Area Governments, individual companies

Researched by JANICE JONES DODDS/Los Angeles Times