California Biomedical Industry Report 2015
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California Biomedical Industry Report 2015
Letter from the Governor
California leads the nation in the biomedical industry, supporting highly skilled and well-paying
jobs in communities across the state. The sector drives improvements in healthcare through the
development of new medicines and technologies.
Last year, California enacted several laws to strengthen our life sciences community and maintain
our competitive position, including AB 93 and SB 90, which made targeted investments in the
sector. This year’s state budget included 20 research grants to support the federal BRAIN
Initiative to map the human brain. The budget also set aside $3 million to advance the potential
of precision medicine.
Jerry Brown
Governor of
The state of California is committed to supporting innovation and fostering the biomedical
California industry. I look forward to continuing to work with leaders from companies and research
institutions throughout the state to find solutions that advance new medical technologies,
strengthen our economy and contribute to a healthier society.
Sincerely,
EDMUND G. BROWN JR.
Letter to Stakeholders
California is an innovation machine. From groundbreaking studies at world-class universities, to
entrepreneurial startups to global leading corporations, the state has shown the world how to build a
thriving life sciences community. Favorable policies have helped make California the world’s leader in
biomedical research and development. That success has, in turn, rippled through the state’s economy. In
2013, life sciences companies employed more than 270,000 Californians, with average wages that
topped $100,000.
Equally important, this innovation ecosystem permeates the state. In 2014, academic researchers in
California are projected to receive 7,400 NIH grants totaling $3.3 billion, by far the most in the nation.
Todd E. Gillenwater Many of the studies funded by these grants will lead to new insights into human biology and possibly
President & CEO new therapies and diagnostics. With 11 of the world’s top 100 universities (according to the Shanghai
California Healthcare Index), California is well-positioned to continue this dominance. Ultimately, intellectual discovery
Institute attracts venture capital. California companies are projected to receive more than $3.8 billion in VC
funding in 2014. These investments, as well as those from the NIH and other groups, have spurred even
more innovation and helped the state recover from a devastating recession.
As you read through this report, you will see other statistics that validate the breadth and quality of our
life sciences community. However, a word of caution is always in order. Open up any company’s financial
report and you will find these words: Past performance does not guarantee future results. The same is
true on the state level. While California’s biomedical sector has done well, we face increasing
competition from other states and nations. We cannot forget the sound ideas that got us here. But also,
we must find new ways to grow the innovation economy and remain world leaders in the life sciences.
That future will not get built on its own. The heavy lifting belongs to us.
Peter J. Claude
Sincerely,
Partner,
Pharmaceutical &
Life Sciences
Advisory
PwC Todd E. Gillenwater Peter J. Claude
President & CEO Partner, Pharmaceutical & Life Sciences Advisory
California Healthcare Institute PwC
The Innovation Pipeline Biomedical Industry
California holds a unique position in the worldwide life in California, 2013 (estimated)
sciences community. Golden State companies are leaders, Total revenue $101 billion
producing some of the world’s most innovative therapies Direct employment 270,300
and diagnostics. In turn, these corporations have made the Total wages and salaries $27.4 billion
state’s life sciences industry an economic juggernaut. Just Average annual biomedical industry wage $101,540
a few statistics from 2013 bear that out, as the industry Total NIH grants awarded $3.3 billion
produced: Total venture capital investments $3.8 billion
Total biomedical exports $22.2 billion
• $101 billion in total revenues Direct federal taxes $7.2 billion
• $27.4 billion in total wages Direct state and local taxes $3.7 billion
• $101,540 in average wages Number of life sciences companies 2,636
• $3.8 billion in venture capital investment
Biopharmaceutical Device and Diagnostics
California’s successful biomedical industry is the end result Companies Companies
of an extensive innovation pipeline. This ecosystem begins
Public
in the state’s outstanding academic centers and research 84
institutes, continues with an entrepreneurial, start-up culture Public
that rewards risk-takers and culminates with successful 169
companies that produce hundreds of new drugs, diagnostics 1,528
and devices. 1,108 total
total
The sector serves as an increasingly important element of
the state’s economy, with the biomedical industry employing Private Private
270,300 people in 2013. More importantly, California’s life 939 1,444
sciences community helps patients around the world, as
innovators from San Francisco to San Diego tackle many of
healthcare’s unmet needs.
Direct Indirect and Induced
Employment Employment
Biopharmaceutical and Medical Device Employment
by state, 2009-2013
2013 ranking Employees, Employment growth,
by employment change from 2009 2009-2013 270,300 497,000*
California 119,795 (5,015) 4%
New Jersey 41,089 (-8,371) -17%
New York 38,883 (-1,827) -4%
Indiana 35,967 (-2,247) -6%
Pennsylvania 35,956 (-4,605) -11%
Illinois 32,309 (-72) 0%
Minnesota 31,680 (-1,385) -4% Total Direct, Indirect and Induced Jobs:
Massachusetts 31,449 (-235) -1% 767,300
North Carolina 30,911 (1,371) 5%
*2014 California Biomedical Industry Report based on 2012 employment data
Florida 27,090 (-1,799) -6%
Texas 25,701 (393) 2%
Michigan 21,457 (1,864) 10%
Ohio 17,235 (1,198) 7%
Utah 16,605 (2,594) 19%
Wisconsin 15,951 (905) 6%
7
15 3 8
12
5 2
1
14 6 4 13
9
11
10
Academic Excellence
California’s life sciences industry is built on, and fueled by, National Institutes of Health (NIH) and other entities. For
world-class universities and ground-breaking biomedical federal fiscal year 2014, California institutions received more
research. According to the Shanghai Index, California has than 7,400 grants, totaling $3.3 billion, a 15.4 percent share
11 of the world’s top 100 schools. New York is the next of all NIH grants distributed. Massachusetts is the second
closest with five. most active state, with a 10.8 percent share. Among California
institutions UC San Francisco, UC San Diego and Stanford
One of the pillars of the life sciences infrastructure is a well- lead the pack, bringing in a combined $1.28 billion of NIH
educated workforce. In 2012, California universities produced funding.
more than 6,000 doctorates in the science and engineering
fields, including more than 1,200 in the life sciences. These Looking at the top ten Congressional districts for NIH
newly minted scientists will be among the next generation funding, aggregated by region, the San Francisco Bay Area
of trailblazing entrepreneurs. tops the list with more than $1.23 billion. After that, Los
Angeles and Orange County come in at $733 million, followed
In labs throughout the state, California’s academic by San Diego at $540 million and Sacramento/Davis at $187
researchers attract billions of dollars in grants from the million.
Top 10 States Receiving NIH Funding The True Measure of Success
2013 vs. 2014*
2013 While economic growth is important for any industry, life
2014* sciences brings an added dimension to the table — new
technologies and treatments that help people worldwide.
Awards Funding
California In 2014, California companies filed 1,205 investigational new
7,554 $3.21B drug (IND) applications.* Many of these emerging therapies
7,420 $3.29B are designed to treat cancer, infectious diseases and central
nervous system disorders. Overall, the California life sciences
Massachusetts industry has an impressive record of developing new
4,948 $2.29B treatments that improve survival and quality of life for
4,780 $2.29B millions around the world.
New York *through Sept. 5, 2014
4,768 $1.9B
4,672 $2.0B
Top 10 California Organizations
Receiving NIH Funding
Pennsylvania 2014*
3,319 $1.35B
3,268 $1.47B UC San Francisco
$525M
North Carolina UC San Diego
2,157 $922M
2,063 $378M
$965M
Stanford University
Texas $376M
2,454 $937M
2,456 $953M UCLA
$350M
Maryland UC Davis
2,059 $889M
1,950 $187M
$877M
Scripps Research Institute
Washington $185M
1,538 $776M
1,529 $858M USC
$171M
Illinois UC Berkeley
1,840 $697M
1,813 $113M
$683M
UC Irvine
Ohio $100M
1,579 $628M
1,484 $614M California Institute of Technology
$63M
Note: 2014 data reflect awards through September 29, 2014 Note: 2014 data reflect awards through September 29, 2014
*Data excludes R&D contracts and projects funded through the *Data excludes R&D contracts and projects funded through the
American Recovery and Reinvestment Act American Recovery and Reinvestment Act
California Products by Therapeutic Area
Investigational New Drug (IND) products through Phase III clinical trials
Cancer 319
Infectious Diseases (incl. HIV) 141
Central Nervous System 117
Hormonal Systems/
Nephrology (incl. Diabetes) 96
Immune System 78
Cardiovascular 66
Eye/Ear 64
Musculoskeletal 60
Pain 57
Respiratory 48
Hematological 45
Dermatology 43
Gastrointestinal 38
Genitourinary 16
Diagnostic/Imaging Agent/
Delivery 11
Miscellaneous 6
World Class Research Institutions
California continues to lead the world with the highest number of premier research institutions. The Golden State is home
to 11 of the top 100 universities on the Shanghai Index. These institutions include: Stanford University, UC Berkeley,
California Institute of Technology, UCLA, UC San Diego, UC San Francisco, UC Santa Barbara, UC Irvine, USC, UC Davis
and UC Santa Cruz. New York came in second with five institutions, followed by Pennsylvania and Texas with four apiece.
Number of Universities in the World Top 100 Doctoral Recipients in Life Sciences Disciplines
Shanghai Index, 2014 rankings Top 10 states, 2012
Total life sciences doctoral degrees
California 11 Massachusetts 3
New York 5 Arizona 2 California 1,228
Pennsylvania 4 Maryland 2
Texas 4 New Jersey 2 New York 874
Illinois 3 North Carolina 2
Texas 799
Mass. 699
3
5 Penn. 572
4
2 N. Carolina 483
3 California’s stellar
11 2 academic prowess
Illinois 442
2 was on full display
2 with over 1,228 life
Ohio 438
science doctorates
4 awarded in 2012. By
Maryland 432 contrast, New York
was awarded less
Florida 423 than 900.
Driving Growth Biomedical Employment vs. Other Key Sectors
in California, 2013
The confluence of innovative thinking, hard work
and ample funding has created a life sciences
powerhouse, which continues to be a major Computer and
peripheral 357,865
economic driver throughout California. As noted equipment mfg.
earlier, in 2013 California’s biomedical industry
employed more than 270,000 people, with an
average salary of around $101,540. Biomedical 270,289
industry
As a whole, the California life sciences industry
produced $101 billion in revenue, paid $7.2 billion Internet, tele-
in direct federal taxes and $3.7 billion in direct communications, 167,946
California state and local taxes. California’s data processing
biomedical exports in 2013 increased to $22.2 billion
from $20.9 billion in 2012. Other electronic 166,221
equipment mfg.
But the economic impact of the life sciences goes
far beyond the companies that develop our drugs,
devices and diagnostics. Hundreds of thousands Motion pictures 138,493
more Californians, in a wide variety of areas, support
the industry. As a result, the biomedical sector is
a key factor in sustaining growth throughout
California. Aerospace 71,655
Total Biomedical Employment by Cluster
in California, 2013
Cluster Employees
Bay Area* 60,636
Los Angeles County 53,093
Orange County 40,727
3% San Diego County 36,731
Riverside and San Bernardino counties 13,729
Ventura and Santa Barbara counties 11,193
Sacramento area** 9,840
4% Northern California*** 8,501
TOTAL 270,289
22%
Note: Clusters do not sum to total due to omitted counties and data suppresion at the county level.
* Includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara and Sonoma counties
**Includes Sacramento, Butte, El Dorado, Nevada, Placer, Solano, Sutter, Yolo and Yuba counties
*** Includes Monterey, Kings, Tulare, Inyo, San Benito, Fresno, Mono, Santa Cruz, Merced, Madera, Stanislaus,
Mariposa, Tuolumne, San Joaquin, Calaveras, Alpine, Amador, Mendocino, Lake, Colusa, Sierra, Glenn, Plumas,
Humboldt, Trinity, Tehama, Lassen, Shasta, Del Norte, Siskiyou and Modoc counties
California Biomedical Wages
by sector, 2013*
Avg. wage Total wages
Academic research $65,800 $2.69B
4% Biopharmaceuticals $153,801 $6.94B
5% Medical Devices, $86,901 $6.49B
20% Instruments,
Total Biomedical Diagnostics
Employment by Cluster Research & $110,661 $7.20B
as a percent of the total, 2013
15% Development,
Testing Labs
Wholesale Trade $92,529 $4.13B
14% TOTAL $101,538* $27.4B
* Total averageA Magnet for Investment
California’s academic excellence generates thousands of emerging companies, particularly those who are not yet
life sciences innovations. The basic science discoveries positioned for venture capital. These grants provide critical
funded by the NIH do not stay in the laboratory. They are seed funding to help small start-ups prove their technologies
often licensed to pharmaceutical companies, biotech firms and grow.
and start-ups. In many cases, the scientists who make these
discoveries start their own companies to carry the research Once again, California leads the nation in NIH small business
forward. grants. The state received 391 awards in 2014, which
translates into $146 million. Massachusetts is second on the
This constant flow of innovation attracts investment from list, with 175 awards for $73 million. While these numbers
around the world. It’s estimated that California life sciences seem small when compared to venture capital funding, they
companies will have received $3.8 billion from venture are critically important investments that help small
capitalists in 2014, or 45 percent of the $8.4 billion VCs are companies gain a toe hold in the competitive life sciences
projected to invest in the life sciences nationwide. Especially industry.
significant, $1.8 billion will support California’s early stage
companies as they work to bring new therapies, devices Mergers and IPOs
and diagnostics to market. As products come closer to market, smaller firms must often
seek more resources through initial public offerings or
These investments, at all stages, are felt throughout the mergers with larger companies. This process rewards
state. Silicon Valley is projected to receive $2.8 billion in investors for their faith in the company and allows them to
2014. San Diego is projected at $647 million and Los recirculate capital, investing in other innovative start-ups.
Angeles/Orange County at $254 million.
In 2014, the M&A market is on pace to eclipse 2013. Through
Life sciences venture capital investment is second only to late September, there were 70 completed biomedical M&A
software in California and is a significant contributor to deals where the target company was located in California,
California’s projected 60.1 percent share of all venture capital compared to 70 completed deals in all of 2013. Where terms
investments in the United States in 2014. were reported, these 2014 transactions have totaled more
than $34 billion.
Business Grants
The NIH also invests in California’s life sciences industry The IPO side has been equally busy. Through late September,
through their small business grants. The Small Business there were 20 IPOs in 2014, bringing $1.5 billion into
Innovation Research (SBIR) and Small Business Technology emerging companies. In 2013, there were 17 initial public
Transfer (STTR) programs provide significant support for offerings.
Venture Capital Investment, Biotech and Medical Devices Top 10 States for Life Sciences
by stage, U.S. and California, 2012-2014* Venture Capital Investment
2012-2014*
BIOTECH MEDICAL DEVICES
Calif. $2.68B
Start-up/ $2.91B
California U.S. seed stage $3.76B
$277M $130M 2012 $32M $81M Mass. $1.52B
$1.36B
$314M $122M 2013 $9M $52M $1.80B 2012
2013
$245M $114M 2014* $33M $72M Conn. $93M 2014*
$113M
Early $423M
stage Penn. $238M
$224M
$1.87B $817M 2012 $339M $778M $310M
$2.40B $1.0B 2013 $365M $634M Texas $238M
$140M
$3.14B $1.46B 2014* $356M $702M $284M
Expansion Wash. $161M
$263M
stage $267M
$417M $189M 2012 $270M $526M Ill. $183M
2013 $43M
$328M $191M $132M $302M $237M
$399M $181M 2014* $201M $588M Minn. $166M
$161M
Later $234M
stage Mich. $98M
$1.65B $438M $464M $1.17B $48M
2012 $195M
$1.61B $612M 2013 $477M $1.12B N.Y. $109M
$134M
$2.08B $880M 2014* $539M $1.14B $124M
*2014 data based on projection from first two quarters *2014 data based on projection from first two quartersMoving Forward Top Biomedical Employment
in California, 2012 vs. 2013
California provides a case study in how to build a robust
life sciences industry from scratch. It starts with a world- 2012
class academic system. In turn, the innate curiosity nurtured 2013
by outstanding education produces waves of innovators. Growth rate
Not satisfied with the status quo, these entrepreneurs often 40,523 0.1%
Academic research
dedicate their lives to making things better. By attracting 40,809
both public and private investment, their ideas are ultimately
transformed into life-saving products. 44,235 2.0%
Biopharmaceuticals
45,140
But this formula didn’t just happen. The innovation pipeline
was supported, in large part, by favorable public policies Medical Devices,
that have allowed creative minds to flourish. That approach 74,394 0.1%
Instruments,
has helped California’s life sciences industry become the Diagnostics 74,654
leader it is today.
Research & 63,355 2.7%
However, the world is changing rapidly, and the state cannot Development,
Testing Labs 65,081
afford to rest. Global competition has increased dramatically
in the past decade, and will continue to be a challenge. Both
44,065 1.2%
the state and nation must always remain one step ahead of Wholesale Trade
these dynamic market forces to ensure continued leadership 44,605
in biomedical education, research, investment and product
TOTAL 266,572 270,289 1.4%
development.
Report Authors Writing About California Healthcare Institute
Todd E. Gillenwater Josh Baxt CHI represents more than 275 leading biotechnology, medical device,
President & CEO Baxt Communications diagnostics and pharmaceutical companies, and public and private
California Healthcare Institute academic biomedical research organizations. CHI’s mission is to
Peter J. Claude Graphics and Design advance biomedical research, investment, and innovation through
Partner, Pharmaceutical & Paul Horn effective advocacy of policies to improve public health and ensure
Life Sciences Advisory the continued vitality of the life sciences sector.
PwC
CHI’s website is www.chi.org. Follow us on Twitter @calhealthcare,
Facebook, LinkedIn and YouTube.
Project Team Economic Analysis
Will Zasadny Kristen Soderberg Bernie See methodology and more at www.chi.org/2015biomedreport
Manager, Communications Manager, Health Policy
California Healthcare Institute Economics
PwC
Erin McInerney-Prichard
Manager, Pharmaceutical &
Life Sciences Advisory
PwC
About PwC
PwC’s Pharmaceutical and Life Sciences Industry group is dedicated to
SOURCES delivering effective solutions to the complex strategic, operational, and
financial challenges facing pharmaceutical, biotechnology, and medical
• Bureau of Labor Statistics Quarterly • NSF/NIH/USED/USDA/NEH/NASA; device companies. We provide industry-focused assurance, tax, and
Census of Employment and Wages; Survey of Earned Doctorates, 2012; advisory services to build public trust and enhance value for our clients
2007 Economic Census; (pages 1, 4, Shanghai Ranking Consultancy; and their stakeholders. More than 195,000 people in 157 countries across
back page) BioPharm Insight; IND filed through
Phase III, Sept. 5, 2014 (page 3) our global network of firms share their thinking, experience, and solutions
• Bloomberg (page 1) to develop fresh perspectives and practical advice.
• Thomson Reuters Financial (page 5)
• PricewaterhouseCoopers/National
Venture Capital Association
PHOTO CREDITS For more information visit:
MoneyTree™ Report based on data www.pwc.com/us/pharma and www.pwc.com/us/medtech
from Thomson Reuters (pages 1, 5) David Fulmer via Flickr Creative
Commons (California capitol photo,
• National Institutes of Health (pages cover)
1, 2)
David Schexnaydre via Flickr Creative
• IMPLAN modeling system (page 1) Commons (page 2)
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