The biomedical industry in Greater Los Angeles, despite its wealth of talent, must overcome substantial obstacles to achieve world-class status, according to a report by the Los Angeles Regional Technology Alliance.
The shortcomings are so substantial that the region--which boasts three top-tier universities and the world's largest biotechnology company, Amgen Inc.--may never achieve the stature of the Bay Area and San Diego, said Victor Hwang, LARTA chief operating officer and an author of the report.
The Bay Area is the world's leading biotech center, and San Diego ranks third nationally, behind Boston. Its proximity to two top-flight biomedical clusters in the same state puts the Los Angeles region at a disadvantage in competing for investment capital and management talent, Hwang noted. Los Angeles is variously ranked fifth or sixth nationally in a race for prominence with emerging centers in North Carolina, Maryland and Northern Virginia.
"No one really knows if the state can support a third center," Hwang said in an interview.
LARTA, a state-sponsored organization charged with spurring high-tech employment, doesn't answer that question in its report. The purpose of the study, to be released Thursday, is to prompt discussion that could lead to a game plan for biotech development in the region, which LARTA defines as the territory from Santa Barbara to the border of San Diego.
"What we are saying is there is a need to stand back and take an objective look at where we can take the region," Hwang said. "There is a lot we can build here without feeling like we have to attain what the Bay Area or San Diego has attained."
To be sure, the size of the biomedical industry in the Los Angeles area is substantial. Greater Los Angeles has 2,090 bioscience companies with a total of 64,700 employees, more than either of its in-state rivals. The Bay Area has 1,344 bioscience firms with 64,200 employees and San Diego has 615 companies with 23,000 employees, the report says.
But the character of the biomedical industry in Los Angeles differs significantly from the clusters in the Bay Area and San Diego. As the corporate head count suggests, firms in Greater Los Angeles tend to be smaller than in San Diego and the Bay Area. And the industry in the Los Angeles region is unusually diverse, encompassing medical-device firms and generic pharmaceutical companies in addition to those involved in biotechnology--the focus in the San Francisco and San Diego areas.
The result, Hwang said, is a "lack of identity" that hurts Greater Los Angeles when it comes to recruitment and funding. Led by UCLA, Los Angeles-area universities boast more bioscience graduate students than institutions in the Bay Area or San Diego. But many talented students gravitate to jobs outside Los Angeles, the report says, a "brain drain" that leaves local companies scrambling to find capable help.
The report doesn't attempt to quantify the exodus of talent; much of the evidence is anecdotal, Hwang said. It is clear that many of those with doctorates aren't so much abandoning Los Angeles as responding to demand. Bioscience employment in Greater Los Angeles is growing 4.9% annually, the report says, compared with 5.2% in the Bay Area and 6.5% in San Diego.
Region Has Potential but Is Lacking Funding
Where Los Angeles clearly lags behind its competitors is in investment capital, according to the report. Using initial public stock offerings as a measure, the report says bioscience companies between Santa Barbara and San Diego raised $118 million from 1998 to 2000. Bay Area companies took in a staggering $5.2 billion, while San Diego firms raised $809 million.
The Los Angeles region also came up a distant third in venture capital financing and in the amount raised through secondary stock offerings.
Still, Greater Los Angeles has the ingredients essential to building a strong industry, the report says. It has a wealth of academic talent at UCLA, UC Irvine, USC and Caltech. And it has prominent companies to anchor further development. Besides Thousand Oaks-based Amgen, there are generic drug maker Watson Pharmaceuticals Inc. of Corona; eye-care specialist Allergan Inc. of Irvine and Beckman Coulter Inc., a Fullerton-based medical-device firm.
"Southern California has many of the basic strengths in place," the report says.
Numerous efforts to leverage the region's scientific expertise are underway, though progress is slow. After much delay, construction has begun on a research park in San Pedro affiliated with Harbor-UCLA Research and Education Institute, the report notes. It will provide much-needed lab space for scientists and start-up companies.
Feasibility studies are nearing completion for a research park on the site of the county's earthquake-damaged juvenile detention facility near USC's Health Sciences campus east of downtown.
Mayor James Hahn wants to encourage biotech development in Los Angeles, as did his predecessor, Richard Riordan, who identified it as one of four key industries for development. (Others were fashion, manufacturing and entertainment.) From an economic-development standpoint, biotech is desirable because it is a recession-resistant industry that provides good-paying jobs.
"We have great research facilities and medical facilities across the city," said Hahn spokeswoman Julie Wong. Hahn "sees no reason why we should not attract new biotech businesses to Los Angeles."
There are glimmers of progress elsewhere in the region. In Pasadena's biotechnology corridor near Caltech, a developer has completed work on a building with lab space to accommodate six to 10 start-ups, said Rich Wolf, associate director of technology transfer at Caltech.
Promise Seen in Caltech, City of Hope Projects
City of Hope, a nationally prominent research and medical center in Duarte, has 20 to 23 acres available for development as a bioscience center, where scientists throughout the region could commercialize discoveries.
"Right now, we are trying to get a handle on what the site would look like, what it would cost, who would pay," said Larry Couture, vice president of technology development at City of Hope, which believes the center would help the private institution attract and retain world-class scientists.
Ahmed Enany, executive director of the Southern California Biomedical Council, said despite the obstacles, the industry is stronger in Los Angeles than it was five years ago. And he predicted that by 2005, "at least two big projects will happen," laying favorable odds on the USC and City of Hope proposals.
"To talk about problems is passe," he said, commenting on the LARTA report. "We've been talking about them for years."
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Biotechnology employment in the region from Santa Barbara
to Orange County nearly equals that of the Bay Area, the nation's No. 1 biotech center. But enormous disparity exists in the flow of capital into the regions, as measured by the size of stock offerings.
Source: Salomon Smith Barney
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
More Parks Planned
Several bioscience clusters are in the planning stages to jump-start the industry in Southern California.
Bioscience park location: Pasadena
Status: Corridor beginning to develop; Feasibility study recently completed for park
Bioscience park location: Los Angeles--USC Health Science campus expansion
Status: Feasibility study in progress
Bioscience park location: Irvine--Irvine Spectrum University Research Park
Status: Limited bioscience involvement; other technology companies maintain dominance.
Bioscience park location: San Pedro--Harbor REI expansion
Status: Construction in progress following political delays
Bioscience park location: West Los Angeles
Status: Early proposals for alternate use of Veterans Affairs land in development