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July 14, 2004 | Joseph Panetta recalls leaving the comfort of a pharma job in Philadelphia for a position in biotech in San Diego. That was 16 years ago.

"People said, 'You're going to the edge of the world. Your brain is going to turn to mush. All they do in San Diego is surf and ride mountain bikes and go to the zoo or the beach,'" Panetta muses. "You took a pretty big risk. If it didn't work out, you could pretty much count on ending up back on the East Coast."

Or not.

San Diego's fledgling biotech community not only survived stormy nascent years, but also mushroomed into a hotbed. Today, about 500 biotech companies are tucked between the sea and the desert in greater San Diego.

"Some are involved in developing medical devices. Some are involved in diagnostics. A few are mining the ocean to look for potential genes to develop all kinds of products. There's even one or two in genetically engineering fish and shrimp. So there's a real diversity in that number of 500, and they're all within 30 miles of each other," Panetta gushes.

San Diego's universities and private research institutes spawned much of the growth and were especially fertile in the 1990s. According to a report in Nature*, the University of California at San Diego produced 69 biotech and high-tech firms, The Salk Institute for Biological Studies launched 17, and The Scripps Research Institute developed 40 companies. Recently, Big Pharma has discovered the region: Pfizer, Novartis, Johnson & Johnson, and Schering-Plough all have major facilities there.

Panetta has also been transformed. For the past five years, he's been president and CEO of BIOCOM, San Diego's biotechnology industry organization, helping stoke the region's company creation and growth machine. After years of being overshadowed by the San Francisco Bay area — the birthplace of biotech in the United States — and Boston/Cambridge, the "surfers" of San Diego are shedding their laid-back manner for competitive zeal.

"We're always in a rivalry with Mass Biotech Council," Panetta says. "Although we don't think it's fair to try to compare (the Bay area or Boston) in terms of the numbers of biotech companies, the numbers of patents, or the amount of VC funding because those areas are so different [in size]. The Bay area is five times the size of this biotech cluster. Boston/Cambridge is huge."

On the other hand, he says, "We're the second largest organization [of its kind] in the country after BIO. We have 15 people on staff. Last year we created a new 10-year strategic plan. More NIH research dollars per scientist come to the UCSD than any other university in the country, and it's always, from a total grant standpoint, in the top five."

From San Diego's new leadership position, it is perhaps more interesting to consider regional challenges. Attracting new VCs, for example, is a major need, and BIOCOM has launched an initiative to do that.

San Diego's fledgling biotech community not only survived stormy nascent years, but also mushroomed into a hotbed.
* Nature (Dec. 11, 2003)
"The funding has been there to get a company out of the starting blocks," Panetta says. "What's more of a problem is mid-level companies being able to raise the funding they need to take an idea from animal trials to clinical trials. One [local law firm] has an entire room with failed company logos on the wall — lost opportunities. The VC community that's here is limited, and they've made their investments and they're re-investing to just try to keep those afloat and they're not looking, for the most part, at new opportunities."

The state could also do more, he says. "Something like $400 million in the Calpers (California Public Employees Retirement System) fund is supposed to be invested in biotechnology in the state, and less than $100 million is." Having its own FDA "is pretty duplicative," he says. "California companies simply say, 'I'll manufacture somewhere else rather than deal with the California FDA and the federal FDA.'"

We won't talk about real estate prices and shrinking space for development. But amid the growing pains, the sun and surf remain. There's also a symphony and art museum. There are few obviously mushy brains. And, Panetta says, "If you want to ride a mountain bike or surf, you can do that too ... 365 days a year." * 

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