In Land of Biotech Giants, Visitors Seek a Bit of Turf

The focus of the biotechnology industry’s convention next week in San Francisco will be on cloning jobs, not cells.

Among the throng of deal makers expected at the gathering are governors from six states eager for larger shares of the $40-billion business.

At swank receptions and parties, the governors will tout their states as business-friendly alternatives to California, which claims the headquarters of the world’s largest biotechnology drug companies: Amgen Inc. of Thousand Oaks and Genentech Inc. of South San Francisco.

Iowa boosters will hold a carnival at SBC Park, offering guests a chance to meet native son Bob Feller, a Hall of Fame pitcher for the Cleveland Indians. The Minnesota contingent is throwing a party where VIPs can talk business while quaffing Minnesota brews. Florida Gov. Jeb Bush plans to work the crowd at invitation-only receptions for chief executives and venture capitalists.

They will compete for attention with the governors of Kentucky, Massachusetts and Missouri. Also planning to be on hand are high-level commerce officials from Europe, Asia and Australia, despite the possibility that protests against global trade could mar the four-day event.

Gov. Arnold Schwarzenegger hasn’t yet RSVPd, but a member of his Cabinet will be on hand to defend California’s turf.

“We are still holding out [hope] for him,” said Joe Panetta, head of San Diego’s biotech business lobbying group. The conference “is an opportunity for him to show the value of doing business in California.”

The event -- BIO 2004, the annual gathering of the Biotechnology Industry Organization -- will begin Sunday; it is expected to draw 18,000 lawyers, executives and other deal makers from 56 countries. The convention will take place at the Moscone Center, but the real action will be at private parties at Union Square hotels.

Bush of Florida, for example, will hold an invitation-only breakfast for financiers and a reception for 250 guests at the Palace Hotel. Last year, Florida committed $500 million to persuade San Diego’s prestigious Scripps Research Institute to establish a campus in Palm Beach.

“When people think of Florida, they think of theme parks, orange juice and sunshine. We’re saying: Come to Florida to do biotech,” said Kim Prunty of Enterprise Florida, an economic development organization.

The biotech business tends to cluster in places with a certain mix of ingredients: top-flight academic centers, access to venture funding and an entrepreneurial culture. Many cities have one or two of those elements, experts say, but not all three.

Moreover, the industry employs just 200,000 people in all, making it too small to support widespread growth. And though biotech employment could grow by 15% this year, many of the 30,000 new jobs will probably be at existing companies in such established biotech hubs as San Diego, Boston and San Francisco.

California is the largest biotech state, with about 450 firms, more than double the total of second-ranked Massachusetts. One-third of the country’s biotech workers live here.

“My feeling is that if you don’t have a biotech industry already, it isn’t going to happen,” said Scott Morrison, an analyst with Ernst & Young in Palo Alto.

Some trade representatives privately concede that they face long odds. “Let’s face it, U.S. companies aren’t beating a path to Australia,” said a member of that country’s trade delegation.

Nevertheless, biotechnology is viewed as promising because the sector stands ready to supply new medicines to an aging population and disease-resistant crops to feed the world’s hungry.

And despite the odds, some states far from California have chalked up success -- at California’s expense.

In February, Incyte Corp., a company working on drugs for AIDS, closed its Palo Alto headquarters and shifted operations to Wilmington, Del., where it now employs 180. Wisconsin officials say Mentor Corp. of Santa Barbara has agreed to build a factory in the state, where the company will produce an anti- wrinkle drug similar to Botox.

Next week, Wisconsin Commerce Secretary Cory L. Nettles will be in search of more deals.

“We think San Francisco is a terrific venue to show the world the opportunities in Wisconsin,” he said.

Indeed, a report this month on California’s biotech industry reads like a sales brochure for Wisconsin and other rival states. The report, by the Monitor Group of Cambridge, Mass., lists incentives offered by 16 states and four countries that are generally unavailable in California. More than 100 cities and regions around the world consider biotech development a priority, according to the report, which was commissioned by Schwarzenegger’s predecessor, Gray Davis.

California is losing jobs to rival biotech hubs partly because it offers paltry incentives, Morrison of Ernst & Young said.

Amgen, through acquisitions, has research labs in Seattle and Cambridge, Mass. In addition, the company is shifting its manufacturing operations to Rhode Island and Puerto Rico, a haven for drug production.

California’s incentives for life sciences firms “are at the bottom of the list,” Morrison said.

The biotech industry is using the Monitor study to lobby the Schwarzenegger administration for change.

High on the industry’s agenda is legislation that would provide tax breaks for life sciences companies that build large factories in the state. Genentech, which last month broke ground on an expansion of its drug factory in Vacaville, is backing the bill; separate versions are making their way through the state Assembly and Senate.

Schwarzenegger has taken no position on the legislation, spokesman Vince Sollitto said.

“The governor is interested in the biotech industry and is committed to improving the climate for all industry sectors,” he said, noting that Schwarzenegger attended the Genentech groundbreaking.

Sollitto said it was too early to know whether Schwarzenegger might make it to San Francisco, because the governor was busy with budget matters. Sollitto said Sunne Wright McPeak, secretary of Business, Transportation and Housing, would attend the biotechnology convention.

Panetta of the San Diego biotech group said he understood that the budget required Schwarzenegger’s attention.

Still, the governors of “Florida, Iowa and Missouri are showing up,” Panetta said. “It’s an uncomfortable situation.”

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Biotech bonanza

California is home to more biotechnology companies than any other state or region. Most of the Golden State’s biotech companies are clustered in the Bay Area and Southern California.

Number of biotech companies in key regions of the country:

California* 412 New England 243 Southeast 133 Mid-Atlantic 101 North Carolina 88 New Jersey 77 Pennsylvania/ Delaware Valley 66 New York state 66 Texas 64 Pacific N.W. 57 Midwest 55 Colorado 24 Utah 19 Other 69

*Number represents only the Bay Area and the Los Angeles, Orange County and San Diego regions. Sources: U.S. Census, Ernst & Young