Battling to Stop Area’s ‘Brain Drain’

Few regions in the country can claim as much high-powered medical science as greater Los Angeles, with its rich collection of research universities and hospitals.

Last year, medical investigators in Los Angeles County alone took in more than $400 million in grants from the National Institutes of Health--that’s more than all but a handful of states.

But the local economy hasn’t reaped the full benefit of all that scientific prowess. All too often, when discoveries are turned into biotechnology businesses, they leave the area, taking root in the state’s more established biotech centers in San Diego or San Francisco, or leaving California entirely. And the potential for high-paying jobs goes with them.

Some call it a “brain drain.”

“Ideas that are spun off from local universities are licensed to firms outside of the area,” said Ahmed A. Enany, executive director of the Southern California Biomedical Council, a nonprofit formed to promote the development of the industry in the region. In other cases, he said, “an investigator has an idea and builds a local firm around it, but moves away when the idea is developed.”

A number of local leaders, from universities, government and the industry itself, are trying to change that flight of innovation by finding ways to attract and hold onto biotechnology in a region better known for its entertainment industry than for the development of new drugs, laboratory tests and medical devices.

These leaders talk about achieving “critical mass” with clusters of biotech business that are large enough to attract even more companies, like a self-sustaining nuclear reaction.

But a number of obstacles must be overcome first. Among them:

* Local government is late in encouraging this kind of development. As a result, scientists with marketable discoveries and venture capitalists with the needed cash gravitate to other areas that are already recognized for biotechnology.

* Land near the research institutions is generally both scarce and expensive. This is in contrast with the state’s major biotech centers in San Diego and around San Francisco, where research parks were established more than a decade ago on open land and at affordable prices.

* University and nonprofit research institutes that should attract commercial development are scattered across the landscape--with the City of Hope National Medical Center in Duarte and Caltech in the east, UCLA and Harbor-UCLA Research and Education Institute to the west, and the USC campuses in between. By contrast, San Diego’s three major biomedical research centers--the University of California, the Scripps Research Institute and the Salk Institute, together accounting for almost $300 million in NIH grants last year--are within a few miles of one another. And many of that city’s biotech businesses are located in well-manicured research parks close by.

Similarly, in Orange County, a number of biotech and medical device companies have grown up around UC Irvine, an area that Los Angeles-based leaders see as a competitor to their efforts.

Psychological Stumbling Block

Perhaps the biggest impediment of all is a psychological one: Los Angeles has not been seen as a center for biotech development by entrepreneurs or investors.

That could change quickly, said Mayor Richard J. Riordan, whose business team has zeroed in on biotech as one of four industries it is trying to attract or keep in the city. (The others are fashion, manufacturing and entertainment.)

“Things seem to happen like magic,” Riordan said. In San Diego or Irvine, one company was soon followed by another and another, until “all of a sudden they were up and running,” he said. “We are setting the seeds for it here, making people aware of the advantages. I can see it starting to take off.”

To encourage biotech companies--and the high-wage jobs that come with them--Riordan’s staff promises to find the land they need and offers packages of tax incentives and training grants.

Los Angeles has been slow to incubate the emerging industry. Enany, at the biomedical council, has documented the lost opportunities, the companies that have moved away.

One of those is Medco Research, a small pharmaceutical company that produces heart drugs--including Adenocard, used routinely in emergency rooms throughout the country to slow a very rapid heartbeat.

The company was founded in Los Angeles 20 years ago but moved to North Carolina in 1993 as its drug business was beginning to take off. Company executives “wanted to go to the East Coast and get closer to the pharmaceutical business, closer to our partners and co-collaborators,” said company spokesman Michael Freeman.

Enany points to examples of local discoveries that led to companies started up outside the region. Applied Biosciences is the leading producer of machines for decoding DNA--instruments that have been vital to unlocking the secrets of genetics. The technology was developed in the 1980s by Caltech scientists. The company, now part of instrument maker Perkin-Elmer, is based in Foster City, on the San Francisco Peninsula.

Winning Over Wary Venture Capitalists

One problem is attracting venture capitalists to invest in biotechnology in the Los Angeles area, especially at a time when there are prospects for quicker payouts from software and Internet companies, according to Enany and others. The Southern California Biomedical Medical Council is trying to encourage home-grown venture capital partnerships with an interest in local biotech. But progress has been slow, Enany said.

However, Riordan, a venture capitalist himself before he got into politics, is optimistic. “Venture capital money follows where the deals are,” he said. If there is the right mix of research and management and good products, he said, “you’d have venture capitalists from all over the country investing.”

“There is an industry in Los Angeles,” Enany said. But companies are moving out of the area as fast as new firms are born. “It’s as if we are running in the same place,” he said.

In fact, there already is a surprisingly large number of health-related businesses in Los Angeles and the surrounding counties--more than 1,000, according to the California Health Care Institute, an industry lobbying and educational organization.

Included in the statistics are clinical laboratories, prescription drug distributors and medical equipment suppliers. Most are manufacturers of medical devices--pumps and monitors, heart valves and artificial knees, sterile tubing and syringes. However, only a small number--fewer than 50--fall under the common definition of biotechnology: companies using genetic engineering and other biological tools to create drug products and lab tests.

These companies are spread across the region. Most are very small.

One of the exceptions is Amgen in Thousand Oaks, the world’s largest independent biotechnology company, with a stock market value of more than $30 billion. The company’s best-selling products are two genetically engineered versions of human hormones for kidney dialysis and cancer patients--each with annual sales in excess of $1 billion.

Another is MiniMed in Sylmar, a fast-growing company with a market value of $1.7 billion that makes insulin pumps and blood sugar monitors for diabetes patients.

Few have done more to foster biomedical business development in the area than MiniMed’s founder and chairman, Alfred E. Mann. He has pledged $100 million to USC to establish a biomedical engineering institute that will translate scientific discovery into practical products, and he’s offered another $100 million to UCLA.

“The concept is to take raw technology and convert it to products and then license that to companies,” he said.

In addition, Mann worked with city officials to establish a biomedical research park on Cal State Northridge property, where MiniMed is leasing 28 acres for a new manufacturing facility.

“The major problem with Los Angeles is that it is a megalopolis,” Mann said. “There isn’t much land left. . . . The city is so enormous it’s been an obstacle to development of any of the high-tech businesses.”

But he sees San Diego and the Silicon Valley as choking on their own success--with high housing costs and labor shortages--and that presents an opportunity for the Los Angeles region.

The Northridge campus is just one of several sites that could become the center of a cluster of biomedical companies.

Pasadena, working closely with Caltech and the Jet Propulsion Laboratory, has modified zoning for 100 acres as a high-tech corridor, which is expected to provide lab space for biotechnology and other companies. “There’s 60,000 square feet of laboratories throughout the city, and it’s all [in use],” said Eric Duyshart, the city’s business development manager.

The corridor has been slow getting started, he said, but the city is actively negotiating with private developers interested in the site.

Caltech President David Baltimore is a strong advocate for development of commercial research facilities near the university.

“I think it will work here,” Baltimore said. “I think what we need to do is have our facilities be at a reasonable price so that people who want to go to the Silicon Valley or Cambridge [Mass.] will see an opportunity to start up here and to spin things out of Caltech and out of the surrounding universities.”

“Los Angeles is a very difficult place to work in because things are so scattered,” he said. “I’d love to have UCLA next door to us and I’d love to have USC next door to us, so we could all come together and cooperate. But in fact, we’re far enough apart that we’re going to have to develop [separately] in our penumbras.”

Room for Growth at Duarte Center

In Duarte, 10 miles to the east, the City of Hope National Medical Center has broken ground on its $10-million Center for Biomedicine & Genetics to enable the research center and hospital to convert its discoveries into products. And it has acreage available for a biotech research park where those products could advance to market.

The idea for the development began when scientists at the facility found a way to make genes that deactivate the AIDS virus. But to test those genes’ therapeutic possibilities, the research center had to pay a private company $600,000 to manufacture enough of the material for use in patients, said Dr. John S. Kovach, executive vice president for medical and scientific affairs at the City of Hope. It took two years to negotiate the contract, which included provisions for sharing patents if the therapy proves effective.

The new facility will enable City of Hope to produce future gene therapy products quickly on its own. “We could produce and follow four, five or six leads at a time, and we know we couldn’t do that if we had to go out and negotiate production costs outside,” Kovach said.

As part of this effort, City of Hope is discussing development of 30 acres of its property for private companies that would work with scientists from the nonprofit research center and university campuses and commercialize discoveries, Kovach said.

Research Park Would Include Housing

Far across the county, in Torrance, the Harbor-UCLA Research and Education Institute is planning a new laboratory and office facility at surplus Navy housing property in nearby San Pedro. The nonprofit institute wants to build housing for its investigators and staff on a 29-acre parcel as well as a 20-acre research park, providing badly needed lab space for institute scientists and for start-up biotech companies.

The new site could provide room for companies from both the institute and UCLA’s Westwood campus, said Dr. Daniel Hollander, the institute’s president and chief executive.

“We do see faculty members’ productive ideas leaving and going elsewhere,” he said. With new facilities, early-stage development of medical products could be done locally.

Los Angeles County Supervisor Gloria Molina is exploring the possibility of developing a biomedical industry park near USC’s health sciences campus east of downtown. Among the possible sites is the county’s earthquake-damaged juvenile hall facility, which would have to be relocated.

Molina spokesman Miguel Santana said a decision about the fate of the site will have to wait until the supervisors resolve a long-running dispute about rebuilding the Los Angeles County-USC Medical Center.

Developing a job-generating biotech research park near the hospital and the USC medical campus is “an interesting concept, and we’re very excited about pursuing it once the hospital issue is resolved,” Santana said.

USC would welcome such a development. If university scientists “could walk across the street where their commercial ideas could be tested, that would be very nice,” said USC Associate Vice President John Hisserich.

Others would like to see a research park developed on Veterans Affairs’ acreage in Westwood--property just off the San Diego Freeway and within a mile of the UCLA campus.

A few years ago, local VA officials began discussing a master plan for as many as 120 acres, part of which could be commercial laboratory space, said Dr. Stephen Pandol, former director of research and development at the facility.

But specific plans would require public hearings, approval by the VA in Washington and perhaps even congressional action, Pandol said. Some veterans’ groups and nearby property owners have already expressed opposition to the proposal.

“It is all on hold,” Pandol said. And it will likely remain so. Federal officials have stopped all research at the Veterans’ facility because of concern about the safety of patients receiving experimental treatments. The ban, which affects animal research as well as human trials, would apply to private biotech companies leasing space from the VA.

The overall outlook remains hopeful, however, according to the biomedical council’s Enany.

“People love to be here, not just for the weather,” he said, “but for access to resources. There’s nothing that a business needs that doesn’t exist in Los Angeles. The problem here is mobilizing it.”

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Wanted: A Home for Local Biotech Industry

The Los Angeles area lacks the laboratory space that start-up biotechnology companies need. To deal with the problem, Southland officials are trying to create research parks that will nurture an emerging biotech industry. Unlike clusters in other parts of the country known for biotech, such as San Diego and Cambridge, Mass., these locations are scattered across the local landscape. And some are only proposals, unlikely to be developed any time soon.

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Times staff writer Paul Jacobs can be reached at paul.jacobs@latimes.com.