Biomedical Industry Growing Despite Economic Downturn; Industry Study Shows 68 Percent of Companies Plan to Expand R&D 800 New Products in Development

Business Wire, Jan 23, 2002

Business Editors & Health/Medical Writers

BIOWIRE2K

LA JOLLA, Calif.--(BW HealthWire)--Jan. 23, 2002

California's biomedical R&D industry -- employing more than 225,000 people -- is expected to expand significantly over the next two years as new pharmaceuticals and medical technologies move from laboratories to patients' bedsides.

According to a report issued today by the California Healthcare Institute (CHI) and PricewaterhouseCoopers (PwC), 68 percent of biomedical companies surveyed expect to expand R&D in California in the next two years. Survey respondents reported nearly 800 new products in development, with more than half of those already being tested in clinical trials.

"Our data indicate that the future of biomedical R&D in California is wonderfully promising, but it is far from secure," CHI president David Gollaher, Ph.D., said. "In 2002, the biomedical R&D community's central challenge is to sustain the pace of innovation by improving the business environment in which we work. Of special concern, with the pressures of national recession and of bioterrorism, is the influence of government at every level."

The CHI and PricewaterhouseCoopers 2002 report, "Biomedicine: The Next Wave for California's Economy," showcases the importance of medical and biomedical research, development, and manufacturing to California's regional economies and ultimately, to the nation's health.

"We're witnessing the evolution of an industry from an early stage in which companies focused largely on research to a more mature phase including development, with those efforts resulting in new breakthrough commercial products," said CHI's chairman, Vaughn Kailian, president and CEO of COR Therapeutics. "California's scientific and medical innovators have spent years and billions of dollars developing treatments for unmet medical needs. Now we must focus on ensuring that patients have access to the results of our labor -- the most innovative therapeutics, new medical devices and diagnostics."

"As we study this promising industry, with its unique blend of science and entrepreneurship, it's important to recognize the essential role of private investment," said Tracy Lefteroff, global managing partner, life sciences, PricewaterhouseCoopers. "Biotech is capital intensive. And one of the reasons small groups of scientists with breakthrough discoveries can turn their innovations into successful companies is because the world's most sophisticated venture capitalists are in California."

Highlights from the report, based on a recent survey of California biomedical companies and academic and private non-profit research institutions, government data and CHI's comprehensive biomedical industry database, include:

-- 2,500 companies and 87 university and private research institutions are
actively engaged in biomedical research and development and manufacturing in
California.

-- In 2000, the biomedical industry paid $12.8 billion in wages and salaries.
Californians employed within the industry earned an average salary of $64,353.

-- Biomedical R&D now accounts for more than 225,000 California jobs.
Employment in the industry is diverse: 34 percent of employees worked in
businesses making medical devices, instruments and diagnostic tools; 32 percent
worked in biopharmaceutical companies; 18 percent in academic research; 13
percent in wholesale trade; and 3 percent in laboratory services.

-- The value of California biomedical exports surged to $6.4 billion in 2000 --
18 percent over the previous year and outpacing export growth nationwide.
Surgical and medical equipment accounted for 50 percent of total biomedical
exports.

-- California's leading biomedical companies invested $2.1 billion in the
development of new products for unmet medical needs in 2000 alone. The average
California biomedical company invests 45 percent of operating expenditures into
R&D -- four times more than other high-tech industries.

-- 45 percent of total biomedical venture capital dollars invested in the U.S.
went to California companies.

-- Large pharmaceutical companies played a key role in the growth and
development of California's biotechnology industry through joint ventures,
strategic alliances, licensing and royalty agreements, investing $2.5 billion
in the state's biotechnology firms. In 2000, 275 collaborations between large
pharmaceutical companies and California biotechnology firms were publicly
reported.

-- California is a magnet for NIH funding -- the state received nearly $2.3
billion in NIH grants in 2000 alone -- far more than any other state, and a 39
percent increase since 1996.

CHI represents more than 200 leading biotechnology, medical device, diagnostics, 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. CHI's Web site is http://www.chi.org.