March 25, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
A new poll of BioSpace readers found that while the Bay Area continues to boom on the back of a biotech rally, there remains considerable concern that large biotech and biopharma companies will leave the region or relocate jobs to another life sciences cluster. Perhaps most surprising? The workers who think Bay Area biotech may bolt are almost all located in that region.
After Amgen Inc. said last week that it will close its South San Francisco facility acquired during its $10 billion buyout of Onyx Pharmaceuticals and will lay off 300 of Oynx’s 750 workers, BioSpace is wondering—will the number of mergers and acquisitions completed in 2014 mean a “streamlining” of biotech jobs in the Bay Area?
The answer was a resounding yes. Of the 742 respondents, 73 percent on those polled said biotech and biopharma companies will cut jobs in the Bay Area in 2105, while 27 percent were convinced they would stay here in the region, at the same level. That may come as a surprise to some community watchers in the Bay Area, who say the neighborhood has more to offer now than ever.
“Our region continues to lead the world in life science patents, new start-ups, venture capital, and NIH grant recipients,” said BayBio, a trade association for life sciences professionals in Northern California. “The Bay Area is the home of firsts for the life science industry – the first biotechnology company, the first biotech public offering, the first biotech drug approved by the FDA, the first companion diagnostic company and the first agricultural biotech company – just to name a few.”
The majority of the respondents in this week’s poll were from the United States, with 89 percent of the 752 participants based in America. The rest hailed from a host of countries including India, Germany, France, Canada, Switzerland, the United Kingdom, Japan, Ireland, Russia, Singapore, Argentina, Belgium, Spain, Hong Kong, China, the Netherlands, Portugal, Sweden, Spain and France. Five percent of respondents declined to identify their country of domicile.
For states, California led the pack, with 39 percent of the poll’s respondents based in that state. New Jersey followed with 14 percent, then Massachusetts at 8 percent. The rest were distributed throughout the U.S.
But BayBio said the Bay Area is commonly considered “the birthplace of biotech,” a region that now includes nearly 1,000 companies, directly and indirectly employs 125,000 people, and generates $29 billion in revenue.
Biotech Bay also represents “the full spectrum of life sciences,” including digital health innovators blending technology and medicine to transform healthcare; biotechnology, medical device and diagnostic companies that are advancing medicine; agricultural companies that use biotech to improve their yields; and bioindustrial organizations that lobby and reform all worldwide.
But if jobs are lost? BioSpace’s poll found that 57 percent did not believe those jobs would be relocated, while 43 percent thought they’d eventually find a home someplace--just not in the Bay. That prediction could be in line with recent data that found the Bay Area is slipping slightly when gaining biotech/life sciences-specific investment.
The PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report based on data from Thomson Reuters found that Bay Area businesses grabbed $1.15 billion in funding in 2013, a number which dipped slightly to $839 million in 2014, as Boston captured the most VC investment.
Still, while a report by About Money found two years ago that while venture capital investment and overall job creation and retention remains about even between Boston and the Bay Area, there is definitely a pay gap that favors Genetown workers on the high side—which can sometimes be to the benefit of Bay Area cities, which are seen as slight cheaper places to do business.
“It was the medical device sector where San Francisco companies drew over three times more capital than Massachusetts,” wrote Paul Diehl, a biomedical expert, in that column. “This difference likely explains much of the $20,000 disparity in average salary between Massachusetts biotech workers who average around $97,000 a year,” he said, “and California biotech employees who make around $76,000 a year (although this number is for all of California so workers in the San Francisco area probably do a bit better).”
If those jobs were relocated, 35 percent said they would move abroad, 34 percent said they’d go to booming Boston, 21 percent said they’d wind up on Biotech Beach down in Southern California, and the smallest percentage, 10 percent, said they’d find a home in the longstanding biotech communities of New Jersey.
The jobs that are staying are certainly unique and committed to building a lasting local ecosystem. Last month Johnson & Johnson’s new 30,000 square foot life science incubator, JLABS @South San Francisco, will eventually accommodate up to 50 life science startups in the Bay Area and hopes to spark an “innovation revolution” across the region, Melinda Richter, head of Johnson & Johnson Innovation, JLABS, told BioSpace at CALBIO 2015 exclusively.
“We look forward to building relationships with innovators in the region and filling JLABS @SSF with cutting-edge startups across the healthcare spectrum, as well as kicking off our education events at the site,” Richter told BioSpace in an interview. “In addition, we are also always continuously evaluating additional life science hubs that may be a good fit for the JLABS model, in order to enable more entrepreneurs to gain access to the resources of JLABS.”
The latest addition to the Johnson & Johnson Innovation family was hatched several years ago and is a sign that the industry is moving quickly to bring hot new life sciences startups directly into the experimental and funding models that had long been monopolized by larger, better connected early-stage companies.
The new South San Francisco location will house five companies to begin with: Applied Molecular Transport (AMT), which focuses on therapies for immune-mediated inflammation and metabolic diseases; Audentes Therapeutics, which is developing new treatments rare diseases through gene therapy technology; Cortexyme, an Alzheimer’s and other disorders of aging company; and MiNDERA, which is creating non-invasive skin tests to help aid in the diagnosis of skin cancer and other skin diseases.
