San Diego’s life science industry has boomed over the past five years, but a new report by local industry group Biocom is predicting employment in this sector will slow to a crawl.
The region is a hot spot for biotech and research, and one of the top-performing life science clusters in the country. It generates about $34 billion in economic activity to San Diego, with over 1,200 life science organizations in the county. That regional competence is reflected in the sector’s local employment, which saw job growth spike nearly 20 percent over the past five years.
But looking forward, the report estimates that employment will stall – in fact slightly decline – in four out of the five sectors within life science. The only subgroup expected to continue employment growth is a sector called “research and lab services,” which basically includes private and public universities, colleges, and contract research organizations. These are the organizations that often do the labor-intensive work in labs.
The predicted slowdown for the life science industry is not unique to San Diego. Biocom’s report looked at the entire state of California, and estimated a similar employment slowdown throughout the state’s life science industries.
Biocom’s president and CEO Joe Panetta said the slowdown in employment may be reflective of changing times in biotech. More and more, biotech companies are “virtual” ventures, meaning they only employ a handful of executives while labor-intensive work is outsourced to contract research organizations.
“The number of people in biotech companies per company is becoming smaller,” Panetta said. “Companies are relying on outside expertise more. In the past, they would have hired people in-house to do this work.”
Another factor for the slowdown could be San Diego’s lack of local venture capitalists, or investors with pockets deep enough to fund expensive, later-stage clinical trials. If local companies can’t find enough investment capital to fund their expensive research, they’re more likely to sell their company while it’s still small and then start another venture. This acquisition-focused model keeps San Diego companies small, and jobs fewer.
Mark Cafferty, president and CEO of the San Diego Regional Economic Development Corp., stressed the importance of the local life science industry to the overall economy following the release of the report.
Life science jobs are high-paying ones, and the community is very entrepreneurial, he said. Both factors support the overall economy in San Diego.