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Biomedical Jobs Appear to Be 'Recession Resilient'

Biomedical Jobs Appear to Be 'Recession Resilient' [The San Diego Union-Tribune]

From San Diego Union-Tribune (CA) (February 3, 2010)

Feb. 3--Employment in California’s biomedical industry has remained fairly stable through the recession, according to a new industry study that also points to numerous challenges on the horizon for the sector.

The report yesterday from the La Jolla-based California Healthcare Institute says the biomedical work force shrank slightly in the 12 months through March 2009 but was still up by more than 1,000 jobs from 2007.

Altogether there were 272,181 jobs in areas that ranged from biopharmaceuticals and medical devices to academic research and laboratory services, according to the report. The industry employed 24,123 people in San Diego County.

Institute Chief Executive David Gollaher pointed to the youth of the industry as a reason it appears to be "recession resilient." He said most companies have maintained or added jobs because they are still developing or preparing to launch their first products.

"The biotech industry has weathered the recession with incredible resiliency," Gollaher said. "Whether it can continue to do so in California is somewhat of an open question."

The study, conducted with consulting firm PricewaterhouseCoopers, included a survey of 200 of the state’s leading biomedical companies in which three-quarters of the executives said they expect more mergers and acquisitions in the industry.

With many companies struggling to raise money in recent years, 52 percent of the executives said they also expect to see an increase in bankruptcies.

"Access to capital is really the lifeblood of the industry," said Tracy Lefteroff, national life-sciences partner for PricewaterhouseCoopers. "That is going to continue to be a challenge."

A previous study PricewaterhouseCoopers did with the National Venture Capital Association found that venture-capital funding of life-sciences companies dropped to $2.6 billion in 2009 from $3.5 billion a year earlier.

While that means fewer new companies were likely to get started, Gollaher said one reason employment hasn’t plummeted is that companies aren’t as reliant on venture capital as they once were.

He said biomedical companies in the state are generating $75 billion a year in sales, meaning that a significant number of companies have grown beyond the point where they are reliant on investment funding.

"More and more of the growth of the industry is coming from product sales," Gollaher said. "More of it is coming from partnership deals with Big Pharma."

The California Healthcare Institute, a public policy research organization for the biomedical industry, has produced the annual report since 1993 to spotlight trends and important issues for the sector.

Currently, much of the industry is focused on the ongoing health care reform debate, which Gollaher described as "completely uncertain."

Components of that debate that could affect the biomedical industry include a "biosimilars" provision that specifies how long certain drugs get protection from generic competition and a proposed medical-device tax.

But the report also points to the uncertain state of California’s budget as potentially problematic for the industry. Around two-thirds of executives in the survey cited tax incentives for innovation and work-force preparedness as key issues for maintaining the industry’s growth in the state.

Michael Drake, chancellor of the University of California Irvine, spoke on a conference call unveiling the report about the need to make sure funding doesn’t slip in areas vital to the biomedical industry.

"Everyone knows that this is a knowledge-based industry," Drake said. "We think it’s critical for the state to continue investing in it, by investing in people and investing in ideas."

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Posted: February 2010