The San Francisco Bay Area, San Diego, and Los Angeles
Each year, global commercial real estate company JLL publishes a ranking of the top life sciences clusters in North America considering factors including talent, innovation, and lab real estate. While Boston remained at the top of this list in 2021, the next two top hubs were thousands of miles away – San Francisco and San Diego.
The life sciences industry in California, having experienced an explosion of growth over the past several years, was well-positioned to play an instrumental role in the fight against Covid-19. Before the pandemic, for example, diagnostics was far from being a particularly lucrative field of biotechnology. Yet for years several companies throughout California worked behind the scenes to advance the diagnostics arena, particularly through advancing mRNA-related research. When Covid-19 first made headlines, these companies were able to shift their diagnostics technologies quickly towards the development and production of Covid-related tools.
The level of industry readiness that had been built up over decades in California and could be harnessed nearly immediately to combat the virus speaks volumes about the amount of research and innovation emanating from the state as well as the perennial importance of supporting this line of work.
“The proximity offers a win-win-win scenario: the campus benefits as students and professors have the gratification of seeing their technologies take the next steps towards benefitting society; students and post-docs can learn how to conduct research in an industry setting, potentially leading to employment opportunities; and the companies enjoy access to scientific knowledge, new technology, and people.”
David Schaffer, Director, QB3-Berkeley
The San Francisco Bay Area
The birthplace of the biotech industry, San Francisco and its neighboring communities continue to outpace nearly all other regional clusters by a longshot. With the convergence of tech, biotech, and medtech, the region breeds innovation that is poised to shape the future of healthcare.
The Bay Area has a generous amount of infrastructure to accommodate the sector, yet it never seems to be enough. As of 2021, San Francisco had over 1.9 million square feet of leased lab space, with lab vacancies below 5%. The significant growth in startup activity that has generated this demand for space does not appear to be slowing down. According to David Schaffer, director of the Berkeley branch of QB3, a state-funded, multicampus entity that promotes innovation and entrepreneurship in the biosciences and spans facilities at UC San Francisco, UC Berkeley and UC Santa Cruz, there are various factors working in tandem to create an environment so conducive to growth. “To be a successful hub for bio innovation a region must have strong biological and physical sciences, engineering, medical schools and academic hospitals, and biotech and pharma companies,” explained Schaffer. “There are two epicenters with that kind of confluence, Boston and San Francisco, and these regions lead the biotech industry on a national and perhaps global level.”
Schaffer, also a professor at UC Berkeley, has noticed some encouraging changes in the interplay between universities and industry throughout his tenure. He sees this shift as making a positive impact on the number of novel therapeutics being produced in the region. “When I first started in academia, people who patented their discoveries were sometimes perceived as corporate sell-outs,” said Schaffer.
He came to see the danger in hoarding discoveries within an ivory tower. With no collaboration with the private sector, his lifetime of work in a research lab could never have a direct impact on the wellbeing of a patient. As a result, he started to spin out companies based on technologies created by students and post-docs, eight of which are currently being used in human clinical trials.
Schaffer points to Bakar Labs, a recent collaboration between QB3, UC Berkeley and the Bakar Bioenginuity Hub resulting in 40,000 square feet of lab space at the edge of the campus as a hallmark example of the mutual benefits gained from breaking down preexisting barriers. “This proximity offers a win-win-win scenario,” he explained. “The campus benefits as students and professors have the gratification of seeing their technologies take the next steps towards benefitting society; students and post-docs can learn how to conduct research in an industry setting, potentially leading to employment opportunities; and the companies enjoy access to scientific knowledge, new technology and people.”
Further south along the Californian coastline sits another hub that plays a major role in the overall health of the life sciences in the US: San Diego. The industry began here back in the late 1970s and has witnessed an explosion of new early-stage companies in recent years. The city has added more than 2.7 million square feet of infrastructure since 2016 to make room for this expansion. As of late 2021, San Diego had over 22 million square feet of lab exclusive space, with vacancy at 4.4%. Commercial real estate agency CBRE estimates that current demands are over three times higher than the amount of space that will be available over the next year. Funding the companies driving this demand, venture capital investments reached US$697 million within the fourth quarter of 2021, over US$520 million of which went to biotech and pharma.
Just as QB3’s Berkeley branch facilitates growth in the Bay Area, UC San Diego’s research capabilities have proven to be a main driver of innovation in the city. According to Joe Panetta, president and CEO of Biocom California: “UC San Diego is one of the most preeminent research universities, and its notoriety and success with technology transfer leads to new company creation.”
Los Angeles does not receive as much attention for its life sciences innovation as its counterparts to the north and south, but this may be about to change. The city has a strong track record of producing novel products that reshape the landscape, including synthetic insulin, open heart surgery, the paramedic system of responding to emergencies, and certain consumer health products including the nicotine patch. It has state-of-the-art hospital facilities, including Cedars-Sinai, home to its own business accelerator, as well as incubator spaces and accelerator programs like Cal State LA BioSpace and Heal.LA, powered by the Larta Institute.
Los Angeles historically receives less venture capital funding than other California clusters, especially compared to the Bay Area, but the balance has started to shift. The city currently receives ample funding from the National Institute for Health – US$1.15 billion as of 2021 – and the US$320 million fund inaugurating the creation of LA-based Westlake Village BioPartners in 2018 received another US$500 million near the end of 2020. These financial investments have translated into employment opportunities; the roughly 2,900 life sciences-focused establishments in the city support around 200,000 jobs locally.
This level of funding has allowed the sector to blossom. “A few years ago, there were only a handful of large life science companies in the region,” commented Panetta of Biocom California. “Gilead Sciences' acquisition of Kite Pharma for US$11.9 billion produced a new crop of serial entrepreneurs and other talent, leading to the launch of new companies.”
Overall, California gives the East Coast a strong run for its money in terms of innovation, funding and talent. While it is entertaining to compare the two coasts, however, the truth is that collaboration within and across hubs on both a national and global scale is what enables the industry to achieve such triumphs as its swift response to Covid-19. It will be this collaboration between regions and actors that will continue to drive forward a sector committed to helping people live longer, healthier lives.
Image courtesy of Natalie Chaney on Unsplash