Local biotech expands overseas: What does it mean?












Banking on innovation



Innovation and creativity are what make San Diego biotech companies successful, Roth said. He foresees biotech outsourcing to countries such as India remaining pretty much along the Invitrogen model: The high-paying, research-intensive jobs will remain in the United States.

However, Prestowitz said the Indians have other plans. The country has produced many great scientists, a number of them trained in American universities, he notes. Now, they want to build their own biotech powerhouses.

"In many cases, they're capable of doing very sophisticated, world-class work," said Prestowitz, who recently toured Indian biotechnology centers. So don't stereotype Indians as low-tech laborers, he warned, or the United States may be in for an unpleasant surprise.

In the past, India didn't give much opportunity for biotech researchers, so many Indians who wanted a career in biotech came to America. A number of those wound up in San Diego, and have made major contributions to local biotech.

One of these bio-expatriates is Inder Verma, a professor in the laboratory of genetics at the Salk Institute. Verma is a world-known expert on the emerging field of gene therapy, which uses implanted genes to treat diseases. As a scientific advisory to biotech companies, Verma has also helped the commercial side of the field.

Shankar Subramaniam, a professor of bioengineering at UC San Diego, is another. He gained fame for developing the "Biology Workbench" software that works through the Internet to help biotechnology researchers analyze their data. This brought sophisticated biological data analysis tools within reach of anyone with a Web browser.

But India's expanding economy is now providing more opportunities in biotech. The story of people such as Mazumdar-Shaw, who chose to remain in India, will become increasingly common as biotech grows there.

Mazumdar-Shaw has been called "the poster girl of Indian biotechnology." The Economist magazine dubbed her "India's Biotech Queen" in a 2001 profile.

Trained as a zoologist, Mazumdar-Shaw founded a biotech company in 1978 -- Bangalore-based Biocon India Group -- to manufacture enzymes used for packaged fruit juices. Today, she is known as the richest woman in India.

"Biocon claims to be the first company to get approval in America to use solid-state fermentation for manufacturing statins, a group of cholesterol-lowering drugs," the Economist profile stated. "This has enabled it to branch out into high-growth pharmaceuticals, whose sales are now more than twice those of its enzymes."

It's a career that exhibits a combination of scientific acumen and business entrepreneurism that would be right at home in San Diego.

Education, research are key

Prestowitz said the United States' best response as India and other countries cultivate biotech is to improve its educational system and to supply highly trained scientists and business leaders who can innovate.

"We're doing a large number of the right things," such as providing large amounts of government funding for biotech research, Prestowitz said. The research-centered universities and scientific institutions where the research will be performed are top-notch.

The weak link is the secondary education system, which "stinks," Prestowitz said.

"Kids come out of high school, and most can't get into our best universities," which do have a large number of foreign students, he said.

Roth agreed with Prestowitz about the importance of education. In San Diego County's case, he said, the area has a tremendous asset from its huge biomedical research establishment. UCSD, The Scripps Research Institute, the Salk Institute, the Burnham Institute and other research centers provide a constant source of new ideas and talent.

Manufacturing: the big prize

These research establishments are springboards for new biotech companies. If these companies succeed in turning research into products, they will need to manufacture them. That is where the big payoff is.

Biotech manufacturing is seen as helping to fill the gap left with the decline of traditional manufacturing jobs. Biotech manufacturing employs more people than research, and the educational standards for a technician are not as exacting as for a research scientist. Most biotech companies have preferred to keep manufacturing close by their headquarters, for quality control purposes.

Anticipating a big increase in biotech hiring throughout the county, local universities and community colleges have added courses to train biotech manufacturing workers.

Biogen Idec's large manufacturing plant now under construction in Oceanside is the dream of local economic development officials who court biotech. If all phases are built out, the plant will cost about $1.3 billion to build, creating many construction jobs. When finished, it's expected to employ about 2,000 people.

Outsourcing locally

However, Roth said Biogen Idec, once the ideal of what San Diego County economic development officials wanted, may be the exception. Instead, biotech companies are considering outsourcing their manufacturing, Roth said. That can still be good for San Diego County, he said.

"Qualcomm is a good example," Roth said, pointing to the strategy of the San Diego-based telecom giant. "In the beginning, they made everything. They make very little today."

Qualcomm is at the heart a technology company, Roth said, dependent on its intellectual property. At first, Qualcomm had to convince skeptical customers that its cell phone technology would work and was superior to competing technologies. Today, Qualcomm finds it more efficient to contract out the manufacturing and concentrate on technology.

That is good news for San Diego County, Roth said, because Qualcomm spinoffs and others working with the company's technology have preferentially settled in the region.

Likewise, Roth predicts that contract biotech manufacturers will start popping up in San Diego, attracted by the large pool of customers.

"You don't want peaks and valleys" of intensive work followed by inactivity, Roth said, because these plants are so expensive to build. With many customers nearby, manufacturers can keep their pipelines full.

"The high-paying jobs will still be here," Roth said.


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