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Pharmaceutical Giants Expected to Have a Bigger Local Presence

The San Diego biotech sector is beginning to see a lot of activity among big pharma that has previously sidestepped the region — a trend that will continue to grow in 2014, said Joe Panetta, CEO of San Diego life sciences industry trade group Biocom. There will also be growth in the stem cell and digital medicine sectors, as more emphasis nationally is placed on these fields.

Pharmaceutical companies that have historically been under the radar in San Diego, like British pharmaceutical giant GlaxoSmithKline PLC, are beginning to do more to enlarge their research base in the region.

GlaxoSmithKline (NYSE: GSK), the world’s fourth-largest drugmaker, is opening its first office in San Diego and recently launched a partnership with San Diego firm Avalon Ventures that could funnel up to $495 million into 10 new biotech companies over three years. It recently announced its first new company from the joint venture, a biotech specializing in developing treatments for celiac disease called Sitari Pharmaceuticals Inc.

This trend extends to companies like Lexington, Mass.-based Cubist Pharmaceuticals Inc. (Nasdaq: CBST), with its $1.62 billion double acquisition of San Diego’s Trius Therapeutics Inc. and Optimer Pharmaceuticals Inc., as the company will expand its presence in San Diego, Panetta said.

For example, Panetta said that British drugmaker AstraZeneca PLC (NYSE: AZN) built out its San Diego presence after the $1 billion purchase of Ardea Biosciences Inc. in April 2012 — and companies like GSK, Cubist and others are likely to follow suit.

Companies such as Merck & Co. Inc. (NYSE: MRK) and Johnson & Johnson (NYSE: JNJ) have long had strongholds in San Diego, but they’re beginning to expand, Panetta said. He hopes that beyond the American and European pharma giants, bigger players in the Japanese markets will also carve footholds in San Diego.

“I think, true to form, San Diego’s got a very young, innovative and cutting-edge life sciences research community that’s attracting a lot of attention from more than the usual big players in San Diego,” Panetta said. “Now the unlikely ones we’ve been curious about for a long time as to why they haven’t had a presence — now I think we’ll see their presence in 2014.”

Moving Stem Cells from Lab to Clinic

Beyond big pharma, Panetta said he expects growth in the stem cell sector — thanks in large part to the $100 million donation in November by businessman and philanthropist T. Denny Sanford to University of California, San Diego.

“It’s an omen of what’s beginning to happen in moving stem cell research from the lab to the clinic,” Panetta said.

And a major shift Panetta predicts is going to be in digital medicine.

“It’s too early to tell how it’ll all play out, but the combination of genetic sequencing, mobile health and personalized medicine — the whole preventative side of health care will help bring costs down,” Panetta said. “This will likely have a large impact on San Diego’s biotech and medical device sectors.”

Genetic Sequencing and Diagnosis

Companies like San Diego’s Illumina Inc. (Nasdaq: ILMN) and Pathway Genomics Inc. are building out the technology that will enable consumers and physicians to map out genetic predispositions to disease. While Panetta said “some people view this technology as more of an entertainment aspect of genetics,” that’s beginning to change rapidly as there’s greater understanding about how sequencing can impact the diagnosis and treatment of patient conditions.

“That’s going to feed into companies that are more in the mobile health arena in terms of communicating that information to patients,” Panetta said. “The general public is, after all, taking more of an interest in personalized medicine.”

Everything is linked, Panetta said — because more proactive patients lead to better candidates for the clinical trials that are so critical to biotech companies’ research.

“I think it goes back to the fact that we’ve got companies in San Diego in a variety of different areas of biotechnology, pharmaceuticals, personalized medicine and digital health care — as well as advanced hospital systems we have in the region,” Panetta said. “They’re all pairing up and working together, and that’ll definitely have an impact on the direction we’ll see the biotech space head in 2014.”

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