Most California Biomedical Companies to Maintain or Add Jobs in Next Two Years, According to New Report
La Jolla, Calif. (Vocus) February 2, 2010 -- The biomedical industry is one of the most recession-resilient sectors in California’s hard-hit economy and a critical driver of innovation, job growth and revenue that will help lead the state to economic recovery, according to a report released today by the California Healthcare Institute (CHI) and PricewaterhouseCoopers LLP (PwC). But, the report points to signs that the California biomedical industry is facing unprecedented challenges and that its biomedical leadership is being tested as other regions compete for biomedical research and manufacturing jobs.
As part of the report, in November 2009 California Healthcare Institute and PricewaterhouseCoopers commissioned a survey of 200 of the state’s leading biomedical employers about their outlook for the industry and the key challenges and opportunities it faces. Based on employment trends, the survey found that the sector is holding steady and positioned for future growth, but it remains to be seen how much of that growth will take place in California.
Key findings of the survey are:
Currently, California is home to the largest concentration of biomedical companies in the world. California’s biomedical industry directly employs 274,000 people, representing one in six of the 1.6 million biomedical jobs in the United States, according to PwC’s analysis of Bureau of Labor statistics and company-specific filings with the Securities and Exchange Commission. The industry supports more than 750,000 direct and indirect jobs statewide and is the second largest sector of California’s high-tech workforce.
In addition, California’s biomedical industry attracts the greatest portion of venture capital (VC) funding of any industry in California and of any other state, receiving 42 percent of all venture capital investments in biotech and medical device companies nationally. As a result, there are currently 869 biopharmaceutical products in development in the state, from pre-clinical and clinical development through registration. Nearly one-third of the pipeline (272 products) focuses on treating cancer, according to 2009 research from IMS Health.
"We are living in a period of extraordinary scientific and technological advancement that will not only change the future of medicine but also have economic, political and financial implications for the way healthcare is delivered over the next decade,” said Tracy T. Lefteroff, national life sciences partner for PricewaterhouseCoopers. "We can see the importance of contributions from the biomedical sector in patterns of new public and private investments such as VC funding, financing for capital expansion and M&A, and a revived market for public offerings as well as tax credits and incentives to fuel R&D. California has long been at the forefront of the life sciences revolution because of its unique ecosystem of biomedical assets and has a vested interest in continuing to do so. At stake is the state’s legacy of scientific innovation that benefits patients around the world.”
Jobs Holding Steady
After years of rapid expansion, California’s biomedical workforce experienced modest growth in 2008, adding nearly 3,000 jobs and increasing 1 percent from nearly 271,000 jobs in 2007. The state’s biomedical sectors include medical devices, instruments and diagnostics (111,942 employees), biopharmaceuticals (81,268 employees), academic research (43,038 employees), wholesale trade (31,920 employees) and laboratory services (5,390 employees), according to the report.
As the recession intensified, all of the state’s high-tech sectors downsized. The California biomedical industry shed 2,572 jobs or less than 1 percent of its workforce between March 2008 and March 2009, ending the period with 272,181 jobs. During this time of economic upheaval, the biomedical industry tied with aerospace manufacturing for the smallest percentage loss among high tech industries in California. Biomedical job losses were primarily driven by the decline of 2,955 positions in the medical devices and wholesale trade industries, which were offset by a gain of 428 positions in academic research, biopharmaceuticals and laboratory services.
Access to Capital
According to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report with data provided by Thomson Reuters, California life sciences companies attracted $2.6 billion in venture capital funding in 2009, down from $3.5 billion in 2008 but still more than any other high-tech sector in the state. Despite the slowdown in funding, California’s life sciences companies continued to expand.
Respondents to the CHI-PwC Survey anticipate that the next two years will find them in a holding pattern at best, navigating risks and events that have not been part of the biomedical industry experience.
CHI worked with PricewaterhouseCoopers LLP to collect and administer data for the 2010 CHI/PwC California Biomedical Industry Survey. The survey was conducted in November 2009 and targeted approximately the largest 200 companies that conduct business in California in the areas of pharmaceuticals, biotechnology, medical devices, diagnostics or medical equipment.
About the California Healthcare Institute
The California Healthcare Institute is a non-profit public policy research organization for California’s biomedical R&D industry. CHI represents more than 250 leading medical device, biotechnology, diagnostics and pharmaceutical companies and public and private academic biomedical research organizations. CHI’s mission is to advance responsible public policies that foster medical innovation and promote scientific discovery.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
© 2010 PricewaterhouseCoopers LLP. All rights reserved
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