An alliance for science

Since 1976, when Genentech labelled South San Francisco the “birthplace of biotechnology”, hundreds of life sciences companies have set up in the Bay Area of California to take advantage of its proximity to San Francisco and the respected academic centres nearby: the Universities of California Berkeley and San Francisco, and Stanford University.

According to the self-described custodian of the Bay Area life sciences cluster, BayBio, there are now nearly 1,000 life sciences companies in the Bay Area and Northern California, which directly and indirectly employ 125,000 people. According to BayBio, the cluster generated $13 billion in revenue in 2013 and its total market value was about $129 billion.

Abbott, Medtronic and Baxter all have bases in the Bay Area, and HIV/AIDS drug maker Gilead has its headquarters there.

However, the US’s second-largest life sciences cluster after Boston, according to Jones Lang LaSalle, is under threat. The rapid expansion of big technology companies and start-ups that open in the area, cash in and move on is driving up real estate prices, leaving local pharmaceutical companies and biotechs less room to develop.

The rise of big tech

“Life sciences just happens to be a business that’s relatively space-intensive,” says Robert Eyler, vice chairman of the North Bay Life Science Alliance (NBLSA), an initiative aimed at creating a ‘launch pad’ for the life sciences industry in the North Bay area by strengthening the bonds between researchers, educators and councils in the region.

He explains that the ephemeral workforces of the software, internet and mobile businesses that come to the Bay Area are able to deliver fast returns on investment to their investors, whereas the returns in the life sciences, while no lower than those in big tech, tend to take longer to come.

The alliance, which launched officially at the BIO International Convention in June, is backed by an initial investment from the City of Novato, the Buck Institute for Research on Aging and the Marin Economic Forum, and reaches the four counties that make up the North Bay Area: Marin, Sonoma, Napa and Solano.

According to Business Wire, the North Bay currently employs nearly 9,000 people in the life sciences industry, and is home to more than 400 life sciences companies and institutions.

“We want to do two things with the alliance,” says Christopher Stewart, NBLSA’s chairman.

“One is to help the existing companies that are here, and the other is to help companies that are being squeezed out by the high growth of the San Francisco and South San Francisco peninsula by the high-tech industry.”

Genentech, for example, had several offices in South San Francisco and the peninsula but, as it continued to grow, decided to expand into the North Bay, establishing a new office in Vacaville, in Solano County.

"although there is a smattering of law firms to support the technology industry in the area, there isn’t yet an equivalent hub of life sciences IP lawyers."

Moreover, San Francisco and the surrounding cities have become so dense, with so many businesses, that costs have escalated. As new companies form and smaller companies grow and need more space, they face the challenges of finding available space in San Francisco at affordable prices. The North Bay is seen as an alternative because it is a short distance from the San Francisco area, yet has ample competitively-priced open space to meet the needs of life science businesses.

“Folks don’t want to leave the Bay Area,” says Eyler. “They have deep roots across all aspects of the supply chain of that industry. They have the option of simply moving and finding lower-cost space and a better quality of life in the North Bay, rather than relocating to North Carolina, for example.”

In an effort to strengthen those deep roots, earlier this year the Governor of California Jerry Brown signed the California Competes Tax Credit into law—legislation that gives corporate income tax credits to California-based life sciences companies committed to developing in the state.

“In return for those tax credits, we have agreed to hire new people in the area over the next couple of years, which will generate and infuse our North Bay economy with about $89 million,” says Stewart.

“We’re working to provide a very attractive place for the companies to locate in economic terms,” he adds.

IP provisions

California attracts three times more life science venture capital than any other state, it has a rich life sciences history on its side and almost 60 percent of California’s patent activity occurs in the Bay Area.

However, Stewart and Eyler say, although there is a smattering of law firms to support the technology industry in the area, there isn’t yet an equivalent hub of life sciences IP lawyers.

Nonetheless, the concentration of technology companies in the area works in the local life sciences industry’s favour, Stewart says.

“Life sciences companies can benefit from the experience of the lawyers in the area, who can apply their high-tech experience to the life sciences industry.”

Life sciences companies in the Bay Area cover the entire spectrum of the industry, from genetics to medical devices, although given their proximity to the Buck Institute, many companies in the North Bay focus on degenerative diseases and orphan drugs. Also, as statistics show that California ‘feeds the nation’—with higher cash farm receipts than any other state—there is a strong focus on agriculture too, with plant and animal science companies based in Napa, Solano and Sonoma.

To keep tabs on its progress, the NBLSA will monitor the rate at which new jobs are created, keep an eye on companies expanding in the area and look at the amount of private equity being invested in the region, while working closely with BayBio to promote network opportunities in the area.

The next 24 months are crucial for the industry, Eyler says. “There’s activity in the greater Bay Area that might change the dynamics of life sciences businesses deciding to stay in the region or move to some other place such as further north, or to Austin, Texas, the research triangle in North Carolina, Boston, or San Diego.”

Keeping the existing companies in the area is more important than attracting new ones, he says.

“Our primary message is that we recognise that this industry is a growth engine for any community and the fact that we have a nucleus of companies that work, in that they attract retain and expand talent pools, businesses and potential financing, is something that from an economic development standpoint is too good to pass up.”