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Medical Devices, Related Sectors Poised to Add Jobs in 2013

Whither San Diego’s biotech sector? Only time will tell.

But at least one expert who follows the sector believes that 2013 will pretty much be a repeat of 2012.

Marney Cox, chief economist for the San Diego Association of Governments, or Sandag, noted that the region’s biotech sector is actually divided into three sub-sectors: medical devices, pharmaceuticals and research.

All enjoyed different rates of economic growth in 2012.

He said all three will continue to add jobs in 2013, especially as the industry prepares for the advent of so-called Obamacare, or limited national health care, in 2014.

That’s when millions of the previously uninsured will join the ranks of the insured, obtaining access to medical care.

Medical device makers will continue to enjoy robust growth as part of this trend.

Jobs in this area grew 21 percent between 2008 and 2010 (the latest data available), while jobs in the pharmaceutical arena grew 20 percent in the same period, according to a study Cox prepared for the agencies on the importance of economic clusters to the overall San Diego economy.

Average Wage of $107,000

The two sectors provide about 36,000 jobs in the region, and more jobs should be added this year, he said.

Meanwhile, Cox said one reason why the biotech cluster is so important to the economy is that the jobs pay so well, an average wage of $107,000 a year.

“Biomedical devices and products continue to be an important driver of innovation in the regional economy,” Cox said.

He said that the pharmaceutical subsector will grow about 2 percent in 2013.

Cox said the pure research end of the biotech sector will enjoy another positive year, thanks in large part to the large number of research agencies and institutions in the region.

Public and private dollars will continue to pour into local laboratories, anchored at the top by UC San Diego and The Scripps Research Institute, which attract several hundred million dollars a year in public dollars.

The one caveat could be the disruption to federal spending caused by the failure of Congress and the White House to come to an agreement on future budgets for Washington in the first week of the new year.

With or without an agreement, Cox noted that research coming out of the labs in San Diego won’t necessarily translate into financial gain for pharmaceutical firms, as they cope with dwindling interest on the part of venture capitalists, who have been abandoning the area in droves over the past few years.

The process of getting drugs to market takes too long, more than a decade in many cases, and that isn’t always a certainty given the vagaries of the FDA process.

However, it’s not as grim as it appears.

“Nearly half of all VC flowing into the region over the past few years funded biotechnology companies,” Cox said in his report. “These organizations can serve as a springboard for technological and entrepreneurial business development that helps to transform innovative ideas into viable products.”

While venture capital has retreated somewhat from the sector, Cox notes that investment dollars have remained steady at around $800 million a year. And he expects that level of funding for new and existing startups to continue in 2013.

Biotech guru Steven Burrill, who runs a private equity firm based in San Francisco specializing in the life science industry, said he expects the number of life science companies going public in 2013 to number 35 compared with the meager 11 IPOs that took place during the first 11 months of 2012.

“In 2012 life sciences companies enjoyed rising stock prices, successful financings, promising clinical results, and the approval of important new products,” said Burrill. “Though 2013 may get off to a choppy start if Washington is unable to reach a resolution that avoids the fiscal cliff, we expect a year of strong performance for the sector.”

It remains to be seen whether any San Diego companies decide to go public.

Burrill also noted that the cost of sequencing a human genome would drop tenfold to $100 from $1,000 in 2013, which could be of big benefit to Carlsbad-based Life Technologies Corp. and San Diego-based Illumina, both of which offer low-cost sequencing machines.

The drop in price will put the technology into small labs and medical offices, which could further revolutionize the practice of personalized medicine.

‘The Diagnostic of Tomorrow’

“It’s real. It’s happening. It’s the diagnostic of tomorrow,” said Burrill.

Ash Mehta, chief executive of Sorrento Mesa-based startup Patientclick.com, which provides electronic health record services to small clinics and sole practitioners nationwide, thinks that San Diego’s biotech sector and related industries will fare better than other parts of the nation, thanks in large part to the move to wireless technology on the part of the health care system and consumers.

“San Diego is now the new destination for health care IT for the U.S.,” he said, and noted that Qualcomm Inc. is at the forefront of this shift, along with several research entities, such as the high-profile West Health institute, which reorganized in the summer of 2012.

“I think new trends in wireless devices, especially wireless monitoring services for Apple products, such as exercise monitoring service Fitbit, heart monitoring service Digifit and blood pressure monitoring service iHealth, will revolutionize the health care delivery model,” said Mehta. “Patient care delivery is now becoming more proactive and the growing use of wireless devices is changing the patient-physician relationship, which will create lots of opportunity for San Diego in 2013.”

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