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Service Providers Put Life in Life Sciences

When Pam Gardner heard that salespeople were facing rejection when knocking on drug companies’ doors after the terrorist attacks in 2001, she turned an idea to ease security concerns into a full-time business.

Biotech Vendor Services Inc., founded in 2003, organizes supplier showcases on-site at biotechnology firms where scientists and executives check out the latest high-tech microscopes or order chemicals and reagents for use in their pursuit of the next blockbuster drug.

Gardner, a former consultant for the electronic banking industry, declined to disclose BVS’ revenues, but said the business was profitable from its earliest days and supports four full-time employees and four contractors.

Gardner’s business is one of the hundreds of companies in San Diego County that make their money by servicing the life sciences industry. Industry groups say there are three service provider jobs created for every one life sciences company job.

It may seem as though the scientists are feeding the lawyers, public relations executives and trade show organizers, but it’s not that simple, say industry leaders.

The service firms, they say, help grow the very fruit off which they live. They are the lifeblood of one of the most sophisticated biotech hubs in the country, said Joe Panetta, chief executive officer of Biocom, the region’s life sciences trade group representing 540 firms. Around 40 percent of Biocom’s member companies are service providers.

“These companies are really the depth and breadth of the life sciences industry,” Panetta said, adding that this plethora of providers is one reason the San Diego life sciences industry is the envy of other biotech hubs.

Biocom has its own purchasing group, where life sciences companies get a discount on supplies. Panetta said the group’s vendors sell more than $30 million worth of products, combined, to life sciences companies annually through the purchasing group.


Providing A Service

Provider companies run the gamut from contract research organizations such as Perry Scientific Inc., which offers preclinical research and a place to store animals for clinical trials, to the numerous large and boutique intellectual property and trademark law firms here.

In the late 1990s, just two national law firms were located in San Diego, but today there are several more, with at least three having moved offices here in the last few years to focus on life sciences intellectual property work.

Larry Watanabe, co-founder of Watanabe Nason, a San Diego-based firm that helps law firms acquire partners or new offices, has called life sciences “San Diego’s No. 1 drawing card.”

Companies that have centered their business around life sciences companies vary from firms such as Quintiles, which has offices in San Diego and offers a range of product launch services, contract research and consulting, to real estate firms that specialize in designing, constructing or converting laboratory space such as San Diego’s BioMed Realty Trust and Veralliance Properties Inc.

There are at least three local public relations, investment relations or marketing firms that focus strictly on life sciences clients , Euro RSCG Life PR/Noonan Russo, Porter Novelli Life Sciences and Mentus.

Guy Iannuzzi, founder of Mentus and a founding member of Biocom, did advertising and created annual reports for the first life sciences firm in San Diego, Hybritech, which was later sold to Eli Lilly & Co. Iannuzzi founded Mentus in 1980.

“The life science industry is different from a bricks and mortar industry,” Iannuzzi said. “You’re going through the ringer with regulation agencies that have real teeth. Money must be raised; you face tremendously tricky legal issues, and you must have a highly trained work force. And still, you have no product.”

Iannuzzi said life sciences is a field that needs a lot of service , in several ways.

“These people like nice restaurants. They want museums, two to three cars in the family and their children in good schools. We’ve known them 30 years,” he said. “The support these companies want is demanding on the city, and has led to the building of a sophisticated infrastructure.”


Costly Investments

Greg Bisconti, vice president and principal at Burnham Real Estate’s life sciences group, said the high cost of converting a building into laboratory space means developers typically only make the investment if less than 10 percent of the existing lab space is vacant.

In biotech’s early days, developers were hesitant to make that investment at all, industry members said. Now, there are enough biotech startups around that if one crashes and burns, another will take its place.

Building lab space from a shell of a building in the University Towne Center area costs $150 to $200 per square foot, Bisconti said. Include a vivarium, where animals for testing are kept, the price can jump to more than $300 per square foot. Building class A office space from a shell in the same area is significantly lower, at $50 to $80 per square foot, Bisconti said.

The vacancy rate for lab space in San Diego is 7 percent, he said. But real estate and construction aren’t the only types of businesses affected by the growth of the life sciences industry.

Contract research organizations are becoming busier as the number of specialty pharmaceutical firms, which don’t discover drugs, but rather develop and test them, increase, Panetta said.

“Specialty pharma companies have to rely on service firms more because they don’t have the in-house resources,” Panetta said.

Lisa Van Es, associate director of global sales for Quintiles’ Global Clinical Research organization, said her firm has seen between 20 percent and 40 percent growth in annual revenues in recent years. The private company does not disclose actual revenues.

Gardner, the former electronic banking industry consultant who founded Biotech Vendor Services, said she knew no one in the life sciences industry when she decided to start her company.

She now conducts about 20 supplier showcases or industry workshops, each month. One of BVS’ most recent gigs was the exhibit hall at CalBio, an annual conference put on by Biocom.

Gardner, who plans to expand her business focus to medical device firms, says there is a mutually beneficial relationship between service companies like hers and the biotech industry.

“When companies are putting together a major show like CalBio, they don’t always have the resources to put all these exhibitors together so fast,” Gardner said, adding that her company takes an undisclosed percentage of vendor fees. “It allows the organization to still make money from an event.”

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