(Xconomy contributor Juliet Preston helped pull this story together)
One more sign that the U.S. life sciences industry is in upheaval became evident last month, when the Chicago real estate group Jones Lang LaSalle issued its 2012 report on life sciences clusters. The study revealed that biomedical clusters in several smaller U.S. cities are gaining influence at the expense of some of the major capitals for Big Pharma.
San Diego scored the biggest upset—placing second in the latest nationwide ranking of the most-active life sciences hubs (behind No. 1 Boston). In its jump from No. 7 in the 2011 rankings, San Diego surpassed both Los Angeles and San Francisco, displacing the New Jersey-New York City region—which fell to No. 7 in the 2012 rankings.
The Chicago real estate firm says its rankings are based on a weighted score derived from four criteria: the percentage of employees in the region who are working in life sciences, hospital, and medical fields; the percentage of life sciences establishments; federal NIH funding; and venture capital funding.
The biggest reason cited for the reshuffling of U.S. life sciences clusters, however, is the so-called “patent cliff.” Anticipating a big downturn in revenue (as much as $30 billion, by some estimates) as brand-name drug patents expire in 2013, Big Pharma companies consolidated their operations last year. As a result, their “right-sizing” is boosting activity in smaller markets like Raleigh-Durham, NC, Philadelphia, and San Diego, where there are premium academic resources, a well-educated workforce, and comparatively lower overhead costs.
In short, San Diego’s life sciences industry appears to be ideally positioned for the future. But what will that future look like? In a bid to get an idea, Xconomy invited some of the young leaders of the next generation of local life sciences companies to discuss a question: “What are the core areas of excellence that you see emerging in San Diego’s life sciences sector over the next decade or two?”
I dubbed our roundtable discussion the “San Diego Biotech Leaders of Tomorrow,” and we met Jan. 30 at The Green Acre Café, the garden-to-table restaurant in the heart of San Diego’s biotech cluster on Torrey Pines Mesa. The group quickly identified a number of specific clusters at the forefront of biomedical innovation that already are flourishing in San Diego—including genomics, biomedical diagnostics (especially genetic diagnostics), industrial biotechnology (especially algae-based biofuels), biologics R&D, stem cell therapies, and health IT technologies.
One of the recurring comments throughout the evening is the limiting effect that life sciences mergers and acquisitions have on San Diego’s innovation economy. “The knock on San Diego is that [startups] get to a certain size and then you get sold off,” said Adam Simpson, the former chief business officer and a co-founder of San Diego’s Meritage Pharma. As a result, relatively few life sciences companies here remain independent long enough to grow into a multi-billion dollar global enterprise.
Mergers and Acquisitions activity in San Diego totalled a “staggering” $13.8 billion in 2012, according to the Jones Lang LaSalle report—including AstraZeneca’s acquisition of Ardea Biosciences, Hologic’s purchase
