California: birthplace of biotechnology

It was no mistake that biotechnology was born in California. The industry relies heavily on technology to allow it to process the immense amount of data it produces so what better nursery playmates to have than the IT entrepreneurs of Silicon Valley? Invented through the joint efforts of Stanford University and UC at San Francisco, the original biotechnology venture was funded by the National Institutes of Health.

A third of a century later, the industry has grown into one of the most exciting and high profile sectors worldwide and California remains at its head.

The perfect mix
A prodigious mix of factors has nurtured the State's biotech industry. The easiest to quantify is the strength of the University of California's research network, which stretches right across the State and has been instrumental in the development of the sector. Combined with the non-profit research centres there are 87 research institutions available in the State.

The proximity of Silicon Valley and the technological expertise it fosters is increasingly important in the drive to generate information and process data more quickly. IT and biotech companies are now working together to create IT tools designed to meet the very specific needs of this industry.

The State Government has recognised the immense potential of the biotech sector from the early days and ensured that funding and support exists to nurture it. Dedicated initiatives encourage collaboration between the research facilities and biotech companies in the State and bids for Federal Government grants are supported at all levels.

Californians themselves contribute greatly to the success of the industry. A quarter of the State's adults have college degrees and, unlike other nations involved in the sector, a significant proportion of these are in science-based subjects. Annually 13,000 more science students graduate, ensuring that the State continues to develop its expertise.

Clusters of excellence
Naturally, California's biotech industry has developed in clusters throughout the State. This section gives an overview of each.

San Francisco Bay Area
The largest of the biotech clusters in terms of employment and proliferation of companies, the San Francisco Bay Area also benefits from 31 universities / non-profit research centres. Over 80,000 people from this area are employed by the industry and 713 companies are currently registered.

Sacramento
Inland from the Bay Area, Sacramento is the State capital and host to 106 biotech companies. Between them these companies employ five and a half thousand people. UC Davis is part of the new Center for Information Technology Research in the Interest of Society (CITRUS). Manufacturing for biotech companies is also increasing in this area.

Ventura / Santa Barbara
Further down the coats is the thriving community of Santa Barbara. Home to 133 biotech companies which employ nearly 11,000 people, this region also contains UC Santa Barbara, part of the California Nanosystems Institute (CNSI).

Los Angeles
LA is the third largest biotech community in the State, with 307 companies. They employ 46,000 people and there are 22 universities of non-profit research centres in this area alone.

Orange County
Orange County is home to the largest cluster of medical device companies in the world. 33,000 people here work in the biotech industry for 318 companies. UC Irvine is part of the new California Institute for Telecommunications and Information.

Inland Empire
This region is the smallest of all the biotech clusters with 91 companies but still employs over 5,000 people in the industry. UC Riverside and Loma Linda University both provide research facilities whilst the Keck Graduate Institute of Applied Life Sciences combines science and IT with business education.

San Diego
499 biotech companies are based in San Diego, employing a total of 30,000 people. There are 18 research centres at this end of the State and this area tends to draw interest from global pharmaceutical companies looking for biotech investment opportunities. UC San Diego is also part of the new California Institute for Telecommunications and Information.

A total of 225,000 Californians work in the biotech sector across 2,500 companies.

State Support
California biotech companies benefit from the highest research and development tax credit in the USA. Companies are allowed a tax credit of 12% for qualifying research and expenses and 24% for basic research payments.

In addition, companies can apply for substantial grants through the BioSTAR (Biotechnology Strategic Targets for Alliances in Research Program) and Cal TIP (California Technology Investment Partnership Program).

How We Can Help Investors
The CTTCA's biotech division can help investors find appropriate opportunities in California. The Agency has an extensive network of contacts across the biotech spectrum and can research and develop prospects in California that match your criteria. Additionally, California biotech organisations often make trade visits to the UK and Europe and the Agency can provide the required introductions to enable you to consult these experts.

The Agency makes no charge for this service.

Opening up Biotech

What is biotechnology?
The biotechnology sector has three divisions; therapeutic, reproductive and agricultural.

Therapeutic biotechnology companies investigate the human genetic make-up in order to discover which genes are responsible for the development of individual health conditions. Once specific genes are identified as causing / contributing to a condition, a medicine can be developed to tackle this gene alone. The new medicines developed as a result of biotech activity are more effective at talking specific health problems and cause less side effects.

Reproductive biotechnology focuses on finding new ways for humans to reproduce, for instance cloning. Human cloning is currently illegal.

Agricultural biotechnology develops foods with increased resistance to disease and that give an increased yield.

Issues in biotech
Biotech is a relatively young sector. People involved are still overcoming significant stumbling blocks and this section of the site aims to give you an insight into the issues facing biotech companies and work being undertaken to address them.

Data Explosion and Capacity
Biotech research generates a vast amount of data that then has to be processed. This requires immense IT capacity - it takes approximately 300 terabytes (300,000 gigabytes) to process one human genome. The lack of sufficiently 'big' technology is proving to be a massive barrier to investment as it significantly delays the speed with which a final drug product can be bought to market.

As a result, more companies are focusing on 'bioinformatics' - the development of IT specifically designed to process biotech research. For instance, IBM is developing a machine that will work at 1 quadrillion calculations (a million billion) a second. Speeding up the processing of data will obviously shorten the time to market for drugs, thereby creating a revenue stream more quickly for investors.

Standardisation
Each biotech company uses its own methods and technology but it's become obvious that, as collaboration increases, companies need to standardise on methods, processes and systems to increase time to market. In 2001 50 companies from the IT, biotech and pharmaceutical worlds announced the creation of the Interoperable Informatics Infrastructure Consortium (I3C) at the San Diego Biotech Conference. The goal is to introduce standardisation across the industry to ensure that data systems are compatible.

Screening
For every 100 drugs that go to trial, it is estimated that only one will ever make it to market. The ones that fail either have a low success rate or stimulate significant side effects in some users. Success and side effects largely depend on genetic make-up and screening can identify those patients that are most likely to benefit from the drug. Limiting testing to those patients with 'friendly' genes raises the success rate and, therefore, allows more drugs to be licensed. The more drugs a company can licence for trade the more money it can make, so screening is becoming an important issue.

Collaboration
There is increasing collaboration between pharmaceutical and biotech companies. Biotechs can generally produce the necessary research to develop a new product at a lower cost that an in-house pharmaceutical department so there has been evidence of joint ventures in this arena. There is some disagreement about whether this will evolve so that biotechs do the groundwork before selling the results to pharmaceuticals who will then to the sales and marketing, but it's worth noting that one large pharma has over 1,000 such collaborative deals currently in operation.

Antibodies
This is a fast growing class of medicine because antibodies target only the specific molecule that is causing the problem, leaving the others alone. They have been nicknamed 'magic bullets' or 'smart drugs'.

Approximately one quarter of all drugs currently being developed by biotechs are antibodies but they have a drawback. Antibodies can stimulate an allergic reaction that feels like a heavy dose of flu and there is a great deal of work being done at present to overcome this problem.

A final word
Biotechnology is an exceptionally exciting industry. The results of the work being done right now have the potential to save lives and ease suffering across the world. As with any young sector there are issues to be overcome, but these are surmountable and experts are already developing ways to move forward.

For additional information, contact Maria Corts at mcorts@californiahouse.org.uk