Data Science Helps Drive Big Growth Expected for Bay Area and California’s Life Sciences
11/18/2016 6:33:17 AM
November 18, 2016
By Renee Morad, BioSpace.com Breaking News Staff
America’s birthplace of biotechnology—California—continues to thrive as a major player in life sciences and is in an ideal spot for big future growth given the strength of the state’s data science companies, according to the California Life Sciences Industry 2017 Report, conducted by the California Life Sciences Association and PricewaterhouseCoopers.
The recent report reveals that Golden State life science sector generated $147.7 billion in revenue in 2015, while adding 192 life sciences companies to reach a total of 3,040 businesses statewide. Those companies employed more than 287,000 people.
California also boosts a robust pipeline for new drugs and medical devices. As of September 2016, 1,269 drugs from companies within the state were in the FDA pipeline. In addition, 264 new devices developed by California companies were approved in 2015. This, coupled with California’s life sciences venture capital investments totaling $4.4 billion in 2016, marked the highest level of life sciences funding in the country. This robust activity suggests more momentum ahead.
“We see the increase in seed/early stage funding for young life sciences companies and the continued growth in the number of life science companies as being very promising for the future, both in terms of innovation for patients and for economic impact for the state,” says Peter Claude, partner in the pharmaceutical and life sciences advisory of PwC US.
He says this result emphasizes “the importance of sterling academic production, NIH funding and the attractiveness of the industry to VC funding” to create great success, in both new products to improve patient outcomes and in economic benefits to the state.
“California companies have, however, an advantage given their co-location with many of the world’s leading data scientists and data-driven companies,” Claude says. “For an industry that is broadly under significant pressure across the U.S., the ability to better demonstrate human value created would be a great advantage.”
By combining the report’s findings with the election results, Claude forecasts “the attractiveness of the industry increasing to both initial funders and strategic buyers.” He says a decrease in time to market would reduce investment risk and expand the number of companies and concepts for which investment could yield an acceptable return. “Especially if larger companies would be able to repatriate overseas cash, the California life sciences innovator market would be a natural hunting ground,” Claude says.
In addition, President-elect Donald Trump’s positions around speeding up the regulatory review process and his desire for free-market solutions represent opportunities for traditional biomedical and new digital health companies to bring innovative products to market quicker and with less uncertainty, according to Claude.
California’s life sciences industry—home to some of the biggest biotech companies in the world, such as Amgen (AMGN) (headquartered in Thousand Oaks) and Gilead Sciences (GILD) (located in Foster City)—is spread among several clusters. For years, the Bay Area and San Diego have been epicenters of California’s entrepreneurial life sciences culture.
But more recently, Los Angeles, which currently employs 20% of California’s life sciences workforce, has started to catch up. “We’re where San Francisco and San Diego were 20 years ago,” Shlomo Melmed, MD, executive vice president of academic affairs and dean of the medical faculty at Cedars-Sinai, said in the report. With the Los Angeles County Board of Supervisors’ recent decision to earmark $3 million to fund another bioscience incubator, LA BioMed, Melmed sees more opportunity around the corner.
“I think there’s going to be tremendous life science investment in population health management: software accounting, patient management,” Melmed said in the report. “Cancer will drive it because of our large, aging population and high cancer incidence growth rate.”
Across other industries in California, the life sciences industry holds the No. 2 spot for employment, behind computer and peripheral equipment manufacturing, according to the report. With employment in the state’s life sciences jumping 2 percent since 2014, jobs span from academic research to bioengineering. The average wage for life sciences employees in the state topped $116,000, with total wages exceeding $33 billion.
But it’s not all about the numbers. When it comes to aspects that the California life sciences ecosystem can stand to improve on going forward, Claude says “quantification of the industry’s impact on the human condition is not an easy math.” He explains that one can measure the number of new treatments, tax dollars or employees, but it is more challenging to pinpoint how these companies have contributed to patient outcomes in a holistic sense.
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