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Bay Area Biotechs Poised to Win '07 VC Honors, But Living Costs Unnerve New Blood

NEW YORK (GenomeWeb News) — Bay Area life-science companies this year are poised to collect the lion’s share of the nation’s biotech venture capital, an Ernst & Young biotech observer told an industry conference held in the region last week.
 
Yet despite these gains, a shortage of entry-level workers, fed by the region’s sky-high housing costs, could affect future growth.
 
During the first half of 2007, VC funding in the four sub-regions comprising the San Francisco Bay Area increased 42 percent to $708.3 million from $494.7 million year over year, according to E&Y.
 
By comparison, the Boston-Cambridge region’s share grew 10 percent to $351.3 million during the same period while the San Diego region’s take nearly doubled to $464.1 million.
 
The Bay Area is the only one of the nation’s top three biopharma clusters to already raise more money in the first half of this year than in all of 2006, according to Scott Morrison, E&Y’s US life sciences leader. San Diego finished 2006 with $694.5 million and Boston-Cambridge collected $553.4 million.
 
“I think the race in the US is over, and it [the biopharma industry] is going to be concentrated in these three geographic areas,” Morrison said at GeneAcres 15, a day-long biotech conference hosted last month by the Bay Area life sciences industry group BayBio.
 
“I’m having to travel less and less East than I had in the past,” he said. “I think the critical mass in those three areas will continue to accelerate. I think it’s going to be very tough for new geographic areas to get into this in a big way.”
 
Gail Maderis, president and CEO of Five Prime Therapeutics in San Francisco, told BioRegion News that contributing to the region’s posture are factors such as brainpower and the availability of seasoned biotech management talent.
 
“There is a tremendous group of people that, once they built companies, have spent a lot of time mentoring and helping grow future leaders in biotech. That was important because we never have had a huge pharmaceutical contingent,” Maderis said. “The talent pool here is truly remarkable, both on the management and business leaders’ side and also on the science side.”
 
However, despite these attractions, the Bay Area faces a shortage of entry-level workers, victims of the region’s sky-high housing costs, Maderis said. While the number of homes sold in the San Francisco suburbs of San Mateo County fell 5.9 percent in August to 611, the median price of those houses as of Aug. 31 rose 7.9 percent to $809,250, according to real estate information provider DataQuick. That figure reflects medians of $541,000 for condominiums and $900,000 for existing or “resale” single-family houses.
 
“We have to continue to work on workforce development,” Maderis said. “We have a need for more people in lower-skill positions. We need technicians. We need clinical research associates for trials.
 
“A company needs only one CEO, one chief scientific officer, but it needs hundreds of research associates and manufacturing workers,” she added.

The complete version of this article appears in last week's issue of BioRegion News, a GenomeWeb Daily News sister publication.

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