Few people know more about the local biotechnology industry than Joe Panetta. But the leader of the San Diego-based life sciences trade association was quite surprised by the results of his group’s first economic impact report.
“The first thing that surprised me was the sheer number of life science companies in the region,” said Panetta, who’s been leading Biocom since 1999.
He had estimated that there were 2,000 to 2,500 companies in San Diego and its three neighboring counties — Imperial, Orange and Riverside.
But it turns out that his estimates were low; the report showed there are in fact 3,535 life sciences “establishments” in Southern California, with 1,705 in San Diego County, far more than its neighbors.
“We tried to be very conservative when collecting these numbers,” Panetta said. “Our definition of ‘life science company’ was very stringent.”
The report tracked five subsectors of the life sciences cluster: biopharmaceuticals, research and lab services, medical devices and diagnostics, industrial biotechnology and biofuels, and life science supply distributors.
Biocom, with members throughout Southern California, found that San Diego County leads the region in life sciences employment, with 41,937 industry jobs last year paying an average wage of more than $100,000.
The report projects that San Diego life sciences companies will add 1,463 positions in 2012 and 2,770 by the end of 2013 — boosting the countywide life sciences employment to 44,707.
“The job development here in this region really took place independent of job development across the nation,” Panetta said.
Research and lab services made up the largest share of companies, at 821, followed by industrial biotechnology and biofuel companies at 308. Biopharmaceutical companies accounted for just 108 establishments locally, but their wages were the highest in the industry, at $123,417. That’s a stark contrast to the average $59,233 for jobs in industrial biotech and biofuels.
“You have to keep in mind that a lot of those companies are very early stage,” Panetta said, “and that companies in industrial biotech and biofuels usually have an agricultural component, and those jobs bring down that average salary.”
Education Is Catalyst
Biocom’s report, compiled in the past several months by independent economist Paul Hendershot of San Diego-based Hendershot Economics, takes a close look at the link between higher education and the life sciences economy.
“The very roots of our life sciences industry cluster began with UC San Diego,” the report said. “A region that can attract the best and brightest and retain their homegrown talent is strongly positioned to capitalize on its unique educational assets.”
In Southern California, San Diego County had the largest share — 12.5 percent — of its over-25 population who’ve attained a graduate degree or higher. That compares with 12.3 percent in Orange County, 7.4 percent in Riverside County and 4.9 percent in Imperial County.
UCSD also spurs the economy through its research, along with the vast array of private research institutes in the Torrey Pines Mesa area, including The Scripps Research Institute, The Salk Institute for Biological Studies and the Sanford-Burnham Institute.
“This is something that San Diego has known but has never been able to quantify,” Hendershot said. “We always talk about our research institutes and our collegiality. Now we can see how the strength of these research institutes drives the economy.”
Hendershot said that San Diego County has more than three times the concentration of employment in research and lab services than the United States as a whole.
From 2009 through 2011, San Diego added 3,940 jobs in this sector, bringing the county’s total in that area to 20,450. The average salary for these jobs was $103,958.
Support Industries Play Key Role
Biocom focused a good portion of its economic analysis on industries such as real estate, financial services and marketing, which support biotech companies.
“These key industries provide the necessary economic infrastructure to move products to market, supply and attract talent, create a sophisticated financial services network, and offer legal services that can protect intellectual property rights and assist with patent applications,” the report noted.
The life sciences cluster in Southern California generates $6.1 billion in activity in related industries, with San Diego contributing $2.4 billion of that total. Real estate was the No. 1 support industry in San Diego, followed by financial services.
Hendershot said the report shows a present-day snapshot of a diverse and constantly evolving sector. Biocom plans to update the report annually, with the possibility of providing regular updates throughout the year on specific areas of the life sciences sector.