Electronic noses that can sniff out toxics. Artificial eyes that can give sight to the blind. Skin that can be grown in the lab and applied to burn victims’ bodies. They’re all being developed in the Southland, along with countless other innovations that sound more like science fiction than fact. But despite all the hard work, the regional biotech community is in danger of never reaping any of the benefits of these incredible discoveries. All too often here, the research doesn’t translate into commercial products. The Southland’s geographic sprawl is defeating efforts to foster a strong, clustered base of companies that can thrive, and not enough venture capital is flowing through to local biotech enterprises. Biotech has gelled in other parts of the state, most notably in the San Diego-La Jolla area and in Silicon Valley. There are also thriving clusters of biotech companies on the East Coast, near Boston and Baltimore and in the Research Triangle of North Carolina.
Urgency in LA
If Los Angeles doesn’t start aggressively building a strong biotech industry soon, by encouraging investment and building biotech campuses, local scientists will see their cutting-edge discoveries translated into billion-dollar industries elsewhere, industry observers warn. The recent successful mapping of the human genome is lending additional urgency to the situation.
“We have a tremendous research capacity in Los Angeles, but there has not been a commercial focus on biomedicine or biotech firms,” said Ross DeVol, director of regional and demographic studies at the Milken Institute, an economic think tank in Santa Monica. Industry leaders note that Southern California was slow in picking up on the commercial bonanza stashed away in biotechnical and biomedical research. “We really lagged behind in the transfer of technology,” noted Ahmed Enany, executive director of the Southern California Biomedical Council, a nonprofit trade association established in the mid-1990s to spur growth of the industry in the Southland.
“We’re 20 to 30 years behind in fostering the interface between researchers and business people,” he said.
According to John Baldeschwieler, a professor at Caltech, Los Angeles and Orange County have thus far largely lost out on the biotech bonanza because there was a lack of leadership in grabbing those kinds of companies 10 to 15 years ago.
Indeed, the biotech age in California started in 1973 when Stanley Cohen of Stanford University and Herbert Boyer of University of California, San Francisco collaborated to combine DNA from different life forms. That gave birth to the first recombinant DNA organism. Just three years later, Boyer and venture capitalist Robert Swanson founded Genentech in the San Francisco area. It is now one of the world’s top biotech firms, with revenue last year totaling $1.42 billion. It was a pioneer in developing and marketing products and enticed other biotech companies to set up shop in the Bay area. The local area is not devoid of biotech giants. Amgen Inc., based in Thousand Oaks, is the nation’s largest biotech company, with revenue of $3.2 billion last year. Much of the Amgen-fueled boom has taken place in Ventura County, though. Amgen founder Gordon Binder said he set up shop there because housing prices were more affordable than in other areas.
Consequently, in terms of employment, the Bay area still outpaces Los Angeles in the bioscience industry. The Bay area employs approximately 80,000 people at 645 biotech companies. The Los Angeles area employs about 35,000 people at 467 companies. The greater San Diego area, which includes La Jolla, employs 27,000 people at 401 companies.
San Diego Leads SoCal
While Los Angeles may outdistance San Diego in the number of biotech employees and companies, San Diego’s industry is considered to be of a higher caliber. “San Diego seems to have a better infrastructure in place and there has been much better commercial transfer of scientific discoveries from the university to the private sector,” DeVol said, noting that San Diego’s per capita employment in biotech is higher than in Los Angeles. Economists point out that Los Angeles is lacking several key elements that could make it one of the top centers of the biomed-biotech world. One of the main hurdles is the area’s sheer geographic size. Los Angeles is spread out over hundreds of square miles, and so are the major biomedical companies and research institutes here. Amgen, which makes the anti-anemia drug Epogen and the immune system stimulator Neupogen, is at least 50 miles from Caltech, for example. Scientists wanting to meet with Amgen executives would have to spend at least two hours in traffic to get to the biotech company’s headquarters. MiniMed Inc., which manufactures medical devices for diabetics, was in Sylmar until its recent headquarters relocation to a 36-acre biotech campus adjacent to Cal State Northridge. “Biotech executives like to set up offices next to the scientific research centers where they get many of their consultants,” Enany said. That may be why San Diego has been so successful at incubating biotech and biomedical firms. Three major biomedical research centers,the University of California, the Scripps Research Institute and the Salk Institute,are near each other in La Jolla.
Proximity to Reserach Is Key
And therein lies Orange County’s best hope. Several biotech companies and medical device firms are headquartered in Costa Mesa, Newport Beach and Irvine, all near the University of California, Irvine. And the developing tech-oriented University Research Park office and R & D; complex next to UCI is trying to attract biomed and biotech startups. If the geographic sprawl wasn’t a big enough problem, there’s a scarcity of available land in close proximity to many of LA’s major research centers, where a large biotech park could be developed. City of Hope in Duarte, Caltech in Pasadena, UCLA in Westwood, USC in Exposition Park and Cedars-Sinai Medical Center near Beverly Hills are all in mature neighborhoods that are already densely developed. “The biggest problem we face is the lack of available land,” explained Alfred E. Mann, chairman and chief executive of MiniMed. Mann, who has an economic interest in eight biomedical companies, said he is looking at sites near Santa Clarita as places to expand.
Nonetheless, the Southern California Biomedical Council and industry leaders are working to set up several biotech campuses near the area’s major universities and research centers to attract more start-ups, Enany said.
While land near research centers is indeed at a premium, it is not non-existent. The City of Hope has 24 acres of land it would like to see established as a biomedical campus and is working on developing it.
Also, there are plans for an East Pasadena Science and Technology Center on 9 acres relatively close to Caltech. The U.S. Navy may make 60 acres available for development of a biotech park near Harbor-UCLA Medical Center in the South Bay area. And Cedars-Sinai Medical Center is finishing up a 20,000-square facility for start-up biomedical companies. This week, Los Angeles County Supervisor Gloria Molina is expected to ask the Board of Supervisors to study a proposal to set aside as many as 100 acres next to the new County-USC Medical Center for a biomedical park.
Venture Capitalists Reluctant
But even if more land is made available, local venture capitalists have been unwilling to invest in biomedical research that may not yield commercial returns for 10 years. “The money is here, but it doesn’t find its way into biomedicine,” Enany explained. He points out that when Binder started Amgen in the early 1980s, he went to Silicon Valley and Boston for his funds, not to LA financiers. Things haven’t changed much in 20 years. For example, Calhoun Vision Inc., a start-up medical device company developing an adjustable intraocular lens to correct vision, was started by Dan Schwartz, a professor of ophthalmology at UC San Francisco, and Robert Grubbs and Julia Cornfield, professors at Caltech. When they approached venture capitalists for funding, they received not a single commitment. Still determined, the professors approached a group of doctors, headed by Brentwood ophthalmologist Jack Kavanaugh, and secured $20.3 million in private funding, said John Maynard, Calhoun’s chief financial officer. The company could have located in the Bay Area. But because company officials were able to find office space near Caltech at a lease rate that was about half the going rate in the Bay Area, they decided to base their company in Pasadena. Many biotechnology leaders feel that the Calhoun Vision story could be replicated many times over in Los Angeles, due to the area’s inherent strengths. Mann of MiniMed points out that the area has a highly educated and talented labor pool. There is a deep pool of scientists working on projects and there are three major research universities and several hospitals and medical centers.
Imitation Could Pay Off
Caltech’s Baldeschwieler noted that in 1985, San Diego, reeling from the decline in the defense and aerospace industry, was looking for alternative businesses. Bill Otterson, a local businessman, formed a group called CONNECT that got space at UC San Diego to help entrepreneurs network with scientists, venture capitalists and real estate people to form new companies. Caltech is now doing the same thing. A group called Pasadena Entretec, whose executive director is Stephanie Yanchinski, is being formed. Caltech is providing office space for the small organization, which hopes to connect investors with scientists and form a network that will bring more biotech companies to Los Angeles. “I think we have an outstanding opportunity here for biotech companies,” Mann said. “Hopefully the biotech and biomedical industry will become a major segment in LA’s economy, along with entertainment and the Internet.” n
