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April 21, 2003
Volume 81, Number 16
CENEAR 81 16 pp. 67-73
ISSN 0009-2347

Despite a shaky economy, California biotech still has solid opportunities for chemists


The biotechnology industry in California has developed a complex, Darwinian ecosystem all its own: spin-offs hoping to emulate or surpass the success of their parent companies, symbiotic support firms relying on the business of others for survival, and intense rivalry for a limited pool of venture-capital and human resources.

It's a state famous not only for its mild weather and bevy of cultural and outdoor offerings, but also for a biotech industry that's fast paced, highly competitive, and poised on the cutting edge of medical research and development. It is--in short--a fantastic place for an ambitious chemist to work.

The Brookings Institution report published last year, "Signs of Life: The Growth of Biotechnology Centers in the U.S.," locates three of nine major biotechnology centers in California: San Francisco, San Diego, and Los Angeles. And 2002 figures from the California Healthcare Institute (CHI), a La Jolla-based biomedical industry organization, placed more than 2,500 biomedical companies--directly employing approximately 225,000 people--in the state.

CHI's tally includes laboratory and instrumentation suppliers, medical device and diagnostic firms, dedicated bioinformatics units, and contract research and manufacturing services, but it does not include the legion of support personnel that has descended on California in recent years. Including financial service providers; marketing, architecture, and engineering firms; and patent attorneys, biotechnology accounts for a significant portion of the state's economy and workforce.

And biotech is still growing--albeit at a slower pace because of the slow economy--presenting plenty of opportunities for chemists looking for their first jobs or looking to make a transition to a different environment. "Biotech is doing better than any other high-tech sector right now," says David L. Gollaher, president and chief executive officer of CHI.

California holds a unique place in the biotech industry that helps it thrive even in tough economic times. San Francisco is home to the country's oldest biotech firm, Genentech, and the Los Angeles area houses the largest, Amgen. Depending on whether you count employees, companies, or revenues, the state constitutes 40 to 55% of the national industry. And the industry owes its origins, in large part, to the pioneering research of Herbert W. Boyer of the University of California, San Francisco, and Stanley N. Cohen of Stanford University, who collaborated in 1972 and 1973 on the discovery of early gene-cloning techniques. Boyer cofounded Genentech with venture capitalist Robert A. Swanson in 1976.

"Basically, we say that the biotech industry serendipitously formed in this area," says Caitlyn L. Waller, vice president of communications and business development at BayBio, a San Francisco-based biosciences industry organization.

That early head start has helped the state retain its primacy in biotechnology. Along with Boston, San Francisco firmly established itself as a research leader in the early days of biotech and continues to hold a dominant position.

ON THE JOB Jay Powers, a research investigator at Tularik, works on early-stage drug discovery.
"WE TRULY ARE the oldest and largest biotech cluster," Waller says. "We really do have all the elements of a cluster here, and that will keep us healthy and strong for many generations to come."

Michael Morrissey, senior vice president of discovery research at Exelixis, a genomics-based drug discovery company located in San Francisco, agrees: "There is a really strong critical mass of people and ideas and an almost cult mind-set of doing high-tech research in the area."

The industry has come a long way from its humble origins. In 2000, biomedical companies in California reported nearly $7.8 billion in worldwide revenue, invested more than $2.1 billion into research targeting unmet medical needs, and paid out $12.8 billion in salaries and wages, according to CHI. The average wage paid was $64,353. Those are tempting numbers for scientists looking for new jobs.

For chemists looking to enter the industry, the signs are mixed: Some companies continue to hire aggressively, but as venture capitalists become more selective in their funding, other firms are hunkering down for the moment. "Every biotech company knows it needs to manage its spending carefully and invest only in high-value areas," Morrissey says.

His firm, which employs about 550 people, is hiring. "We are expanding the chemical sciences group as we speak," Morrissey says. It's part of a major push--now in its second year--to aggressively expand the company. "We have openings in really all aspects of chemistry: medicinal, combinatorial, analytic, computational, and structural."

Smaller companies are apt to take a more conservative approach to growth. "Our hiring is very limited," says Ronald M. Lindsay, chief scientific officer at diaDexus, a San Francisco firm employing about 95 people. "Like a lot of private, limited companies, we are looking to stretch our budget out over the next couple of years."

Most biotech companies have the same end in sight--developing and bringing new drugs to market--and a chemist's role will ultimately be to hasten that process. Some chemists work on generating large libraries of drug candidates through combinatorial methods or designing promising compounds using more traditional chemistry, while others work on lead optimization and analysis. Depending on the company, chemists can follow a single candidate all the way from discovery to clinical testing or devote themselves more exclusively to a single phase of the process.

Drug discovery is a long process, and it can take a decade or more and nearly a billion dollars to progress from the initial steps to development and commercialization. Though many biotech companies cover only part of that process, contracting out at the clinical-testing stage or outsourcing to a larger company after optimization, biotech employees can often be married to a single product for a significant portion of time.

But whatever the ultimate role in the process, working for a biotech company is a lot different from a life in academia. "Biotech companies are much better resourced than academic labs--you have access to a full range of equipment and techniques," Lindsay says. "It's a faster paced environment, with faster decision-making and more opportunities to advance the team directly. It's a lot of fun."

The drive to develop marketable products underscores everything a scientist does at a biotech company. "You never, ever forget why it is that you are here," Morrissey says. "You never forget the drugs you are developing or what the business means to the patients you are developing them for. That can be very compelling for people."


"There is a disconnect between women's increasing participation in the workforce and their continued roles in the family."

THROUGH THE LOOKING GLASS Debbie Parkes of Berlex scrutinizes a Western blot evaluating the company's antibody products.
FUNDAMENTALS ARE the key to landing a job in the industry. "I look for the same things as anybody else filling a chemistry position: strong organic chemistry backgrounds, good schools, and good Ph.D. advisers," says Gary Phillips, director of chemistry at Berlex Biosciences, Richmond. Postdoctoral experience is a plus in some cases, especially for candidates coming right out of school, he adds, but is not necessary.

Some companies, especially smaller firms with more specific needs, seek out scientists with a focused background. "I look for organic chemists with specialties in nucleotide chemistry," says P. Dan Cook, president and chief scientific officer of Biota Inc., Carlsbad. "We are too small a company and don't want to do on-the-job training."

Others, such as Exelixis, recruit talented chemists of many backgrounds and take it from there. "Our success as a company depends on attracting the very best people," Morrissey says. "We are very interested in trying to find and recruit the very best synthetic chemists."

Tularik, a San Francisco-based biopharmaceutical company of about 400 people, falls somewhere in the middle of the hiring range. The company has one or two positions open and is looking for "people with a very strong synthetic background, particularly those strong in natural products synthesis," says Xiaoqi Chen, a research investigator at the company. He adds that completing a postdoc is not a requirement for chemists--excellent Ph.D. work will stand on its own--but a candidate with a complementary postdoctoral experience is an optimal match to the firm's hiring needs.

A job at small or medium-size companies such as these means a fast-paced, data-driven environment--and a chance for a chemist to affect much more of a company's trajectory than at a larger biotech or pharmaceutical company. "Working for a smaller company is very dynamic," Chen says. "You get exposure to a wide variety of projects in short order, and your discoveries have a larger impact on the company."

Another possibility for chemists with specific interests is finding a matching specialty company. XenoPort, based in Santa Clara, works on drug candidates that suffer from low bioavailability. "We're working on a new paradigm here--we're trying to trick the body into treating drugs like it does food," says Mark A. Gallop, vice president of chemistry. "There is a fundamental intellectual and scientific challenge in that that resonates pretty strongly with people here and the people we recruit."

But good scientific skills are only part of the story. Biotechnology is a highly interdisciplinary field, with a great deal of interplay between biologists and chemists. "Chemists work with biologists on a daily basis, both in interpreting data and in coming up with new ways to analyze compounds," Phillips says.

AT GENENTECH, things are no different. "Chemists here are going to be working in fully integrated product teams," says J. Kevin Judice, senior director of medicinal chemistry. "They need excellent communication skills and the ability to make contributions across disciplines."

Genentech continues to expand its medicinal chemistry group and is looking for chemists at all levels, including traditional medicinal chemists, analytical chemists, and toxicologists. "We are constructing a world-class small-molecule discovery and development group within a biotech company," Judice says. "We expect a lot from our scientists--we expect people to work hard and produce and be very focused." Like others, Judice says the key factors distinguishing applicants are relevant experience and strong references.

Amgen is also aggressively expanding. The company, which currently employs about 9,200 people, has several hundred openings in R&D at its Thousand Oaks site. And in the next few years, the company plans on hiring as many as a thousand or more new employees in a variety of positions, including manufacturing, operations, and quality-control jobs.

Master's- and bachelor's-degree holders face a different set of challenges than do Ph.D.s, but they certainly do not suffer from a dearth of opportunities. According to A. Stephen Dahms, executive director of the California State University Program for Education & Research in Biotechnology and San Diego State University's Center for Biopharmaceutical & Biodevice Development, the Ph.D.-to-master's ratio nationally in the industry is 1.2.

Without as rigorous a lab experience, these candidates might have more difficulties distinguishing themselves. Internships and research-intensive educational experience are always helpful, and previous industry experience is often necessary at smaller companies. For example, at diaDexus, there are about twice as many research associates at the bachelor's level as Ph.D. scientists, but the necessary experience can be gained without a Ph.D. "For entry-level applicants at the bachelor's level, we prefer two to three years' experience working at another company," diaDexus' Lindsay says.

At Genentech, Judice says, "at the B.S. and M.S. level, we look for people with enough technical skills that they can contribute somewhat right away, as well as a demonstrated ability to learn quickly." One of the best researchers he ever hired, he says, was a glove-box chemist who demonstrated her knowledge and flexibility with a very capable discussion about her research work.

And Judice thinks that B.S.- and M.S.-level candidates do have some advantages. "More diverse résumés will get through at those levels," he says. "Ph.D.s sometimes get too specialized after a point."

Another option for scientists who want to break into the industry but who are not keen on spending four or five years in school on a Ph.D. is to take advantage of a professional master's program. Though still rare, master's of bioscience or biotechnology programs are beginning to come into their own. They are especially important for candidates who are looking to enter the murky realm of regulatory affairs.

"Universities are just beginning to realize the importance of the professional master's degree," Dahms says. "And biotech companies continue to approve of professional master's. They better prepare people for a team approach to drug discovery than an academic setting." He points out as an example San Diego State University's master's of science in regulatory affairs program, which is tightly focused on regulatory issues affecting pharmaceutical, biomedical, and biotechnology firms.

Still, a Ph.D.--which can entail as much as a six- or seven-year commitment--"shows that you are really serious about science and drug discovery work," Cook says. And in tough economic times, heading off to graduate school instead of entering the job market is a tried-and-true technique.

For many scientists, strong salaries and the opportunity to do fast-paced, cutting-edge research are only part of the appeal of joining the California biotech industry. One of the biggest draws is the state's mild weather and scenic landscapes.

"The weather here is special," Cook says. "People would rather be in California than in Boston. It's not hard to recruit people from the East Coast, especially when they see how nice it is down here."

"You never forget the drugs you are developing or what the business means to the patients."

BUT LIVING in California also has some negative side effects. The state is an expensive place to live. Sacramento, Los Angeles, and San Diego all have cost-of-living indexes well above the national average, and San Francisco is one of the costliest urban areas in the country. California also continues to face significant traffic, energy, and infrastructure problems, and its high taxes and fees make it a costly place to conduct business--which may drive biotech business away to states offering better deals (C&EN, Feb. 17, page 85).

That's something the biotech industry is keenly aware of. "California is a backward state with regard to tax credits, net operating loss carryover, and related business incentives that other states have been very aggressive in pushing," Dahms says. "Other states have attempted to look more attractive than California to companies. Whether they have succeeded in attracting companies away is not well-known, but the general consensus is that there hasn't been much of an outflow of companies because of other states' amenities--yet."

But as the industry matures and looks for additional space, "there are major questions about where companies are going to locate their manufacturing facilities," CHI's Gollaher says. "Is the next phase of job creation going to be in California or somewhere else?" Amgen, he points out, is expanding faster in Seattle and Rhode Island than in California, and IDEC is building a new unit in California only after taking a close look at Texas.

"The real question is whether California can make accommodations that encourage companies to locate their manufacturing facilities in California, rather than going to another state or even another country," he says.

The state is now taking a large step in addressing these concerns. Gov. Joseph G. (Gray) Davis Jr. (D) "is having a set of summits on the biotech industry, dealing with concerns as it grows and struggles to retain its primacy in the U.S.," Dahms says. "The goal is to do something that California has never done before: have a strategic plan for the development of the industry."

A San Francisco summit was held in December, and additional summits are planned in San Diego and Los Angeles. A final statewide consensus document addressing workforce, infrastructure, and other industry issues is being targeted for October.

But while the expense of living in California may be driving some people away, Tularik's Chen warns not to put too much emphasis on it. "Don't be scared by the cost of living on the West Coast. It's a really worthwhile experience to get exposed to working in a small-company environment, and the reward is more than worth it."

And perhaps the most intangible advantage to working in California is the incidental progress that comes from having a high concentration of biotech professionals trading ideas back and forth. "There is a huge advantage in having a large community of people," Gollaher says. "A lot of scientific progress is luck. That's why growth often comes out of clustered areas where people are competing for the best ideas."

THAT ADAPTABILITY will be key to the industry's success in the years to come. As the industry matures and starts to bring more products to market, experts predict that the spread of biotech jobs will change.

"Most jobs now are in research and development and regulatory affairs, because most products are not to market yet." Gollaher says. "But the next phase of job creation is going to be moving from R&D to manufacturing." As more products enter the later stages of drug discovery, M.D.s and researchers experienced in clinical testing are going to become more important, as are scientists who are familiar with Food & Drug Administration approval processes, BayBio's Waller adds.

Chemists will play a major role in these changes. "Over the past 10 years or so, the role for synthetic chemists has expanded greatly in biotech," Gallop of XenoPort says. "There is now a much greater emphasis on synthetic chemistry playing a role in small-molecule drug discovery."

"There are areas and skill sets that still can't be met with the available labor pool and that rely extensively on foreign nationals," Dahms adds. "There are substantially more of these in chemistry than in cell or molecular biology."

But it's all for naught unless the industry can start to successfully commercialize products. "Biotech's biggest challenge is demonstrating success both from a clinical and from a business point of view," Morrissey says. "It needs a couple of home runs to demonstrate a significant return to investors. The industry needs an influx of chemists--and the only way that's going to happen is if investors see a return on their money."

The outlook for the biotech industry is certainly not as rosy now as it was in years past, but it still offers scientists plenty of opportunities. In the worst cases, the concentration of companies in the state makes it easier to find another job there than in other locations, and many chemists jump on opportunities to move to positions that offer more exciting work or better benefits.

And for the most ambitious of chemists, California's unique concentration of academic talent and venture-capital resources makes it one of the best places in the country to start a new company. Both Cook and Gallop helped to found their current companies--demonstrating that only the sky's the limit in the Golden State.


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Copyright © 2003 American Chemical Society

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