San Diego Competitive With New England and Silicon Valley in National Ranking
By Ned Randolph
San Diego Business Journal Staff
San Diego continues to stake a claim as a leading biotech center, finishing as No. 3 in venture capital investments in the nation in the fourth quarter of 2007 and No. 2 for the year, according to a recent report.
On the quarter, the 15 venture capital investments in San Diego biotechnology companies rolled up $249 million, an increase from $216 million in the fourth quarter of 2006, according to a 2007 MoneyTree Report prepared by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Financial of Connecticut.
San Diego ranked closely behind New England, which boasted $251 million in biotechnology deals in the quarter, and follows Silicon Valley, which led all regions with $1.28 billion in deals, the report said.
On the year, San Diego was the No. 2 region, receiving $972 million from VCs, beating out New England’s $938 million. Silicon Valley received $1.15 billion in biotech-related deals, according to the report.
“San Diego has a huge biotech industry with 700 companies,” said Larry Stambaugh, a consultant and former chief executive officer, co-founder of Maxim Pharmaceuticals Inc. in San Diego.
As the youngest of the big three clusters, including software and medical devices/equipment, biotech relies heavily on early stage innovation and discovery — research talent San Diego has in spades.
But going further up the food chain, San Diego lacks the professional talent to commercialize drugs once approved by the FDA, said Joe Panetta, president and CEO of Biocom, a trade association for local life sciences companies.
“We create new companies more rapidly than any other cluster. What we haven’t done is to create a large commercial sector in the biotech industry,” said Panetta. “There’s no shortage of molecular biologists and biochemists and folks that do licensing, but all you have to do is talk to a CEO of a company that receives commercial approval of a product to ramp up, and they’re faced with a challenge.”
Donna Janson, CEO of a San Diego boutique dental company, Novalar Pharmaceuticals Inc., has experienced this phenomenon firsthand.
Novalar is preparing to commercialize a local anesthetic reversal product in the third quarter of 2008 and Janson said she is recruiting outside of San Diego for product managers.
“We’re a little unique in this area, where we’re closer to commercialization than most companies,” said Janson, whose company employs 16-18 people, up from seven last year. “It’s harder to find commercial types — managers, product managers — than development people that you can find readily.”
The dearth of professional talent will likely continue here, because fewer biotechnology startups need to commercialize their drugs. Pharmaceutical companies are buying up promising biotechs to replenish their own pipelines.