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California Lawmakers Weigh Creation of Biotech Recruitment/Retention Chief

By Alex Philippidis

NEW YORK (GenomeWeb News) — A California bill creating a new state government position charged with attracting and retaining life sciences employers and their jobs has cleared two committees of the state Assembly, with a third expected to take up the measure later this month.

Assembly Bill 1733 calls for the state to hire a director of California biotechnology retention and recruitment within the office of Gov. Arnold Schwarzenegger. The bill requires the director to be "responsible for serving as an informational resource for biotechnology, life science, and medical companies, as specified."

According to an April 21 bill analysis by the Assembly appropriations committee, the position would cost "in the range of $300,000 to support a high level staff member conversant in biotechnology generally and life science regulatory affairs specifically, including expertise in garnering support of companies from outside of California.

"This cost estimate includes a half-time support staff and a travel budget to support out-of-state travel," the analysis added.

AB 1733 has passed the state Assembly's health, and business and professions committees, but the appropriations panel has held the bill by placing it in its "suspense file" for later action. The Appropriations panel is expected to consider the measure among other suspense bills by the end of May; bills not voted out by then will die.

Assembly member Jerry Hill (D-San Mateo), who chairs the state Assembly's Select Committee on Biotechnology, told GenomeWeb Daily News the bill is an attempt to address increased competition by states, cities, and regions for California life-sciences employers.

One example, but not the only factor according to Hill, was the expansion of three San Diego-area research institutes into Florida, where Sunshine State officials have showered the Scripps Research Institute, the Sanford-Burnham Medical Research Institute, and the Torrey Pines Institute for Molecular Studies with nearly a billion dollars in state and local economic subsidies.

Hill's district includes South San Francisco, Calif., the headquarters for among others, Genentech, which on April 6 opened a pharmaceutical fill/finish plant in Hillsboro, Ore., where 300 employees are expected to be based by 2015. He said executives have cited Oregon's lower taxes through a corporate property tax cut called "single sales factor apportionment," which bases future income tax payments primarily on company sales within Oregon. California adopted a similar measure last year.

At a hearing of Hill's committee last September, a Genentech representative said the company receives monthly calls from undisclosed governors hoping to duplicate Oregon's success in attracting a facility of the company within their states. The biotech giant, which began as a South San Francisco startup in 1976, was acquired last year by Swiss-owned Roche — a situation that over time, Hill said, could prompt the company, along with other employers, to shift additional expansion plans or jobs from the Bay Area.

"There's no longer that loyalty, or that geographic convenience aspect of it. It gets down to dollars and cents," Hill said. "That's why it's more important, as the industry has matured, to look toward this particular bill and the idea of having someone overseeing, or paying attention to, and spending the resources that are necessary for recruitment and retention."

Hill said he has discussed the bill with Schwarzenegger, who made no commitment to sign it.

The Golden State looks increasingly less golden to life-science companies and research institutes, judging from the results of a survey included in the annual California Biomedical Industry 2010 Report issued in January by the California Healthcare Institute, a public policy research organization representing the state's life-science and healthcare employers.

Two-thirds of executives at California biomedical companies told a survey by CHI and PricewaterhouseCoopers they expected to expand their out-of-state manufacturing operations over the next two years. Only 30 percent of executives anticipated expanding manufacturing within the state.

More than half of CHI-PwC respondents, 58 percent, said they expected to add more research and development operations outside California, though 48 percent said they planned to expand their in-state R&D.

"R&D is fine, but there are more jobs that are available through manufacturing as well. We don't want to limit [California's life-science sector] to R&D because of the intellectual capital. We want to make sure we create the incentives for manufacturing as well," Hill said.

With California struggling to plug an $18.6 billion budget shortfall, Hill's bill calls for hiring a single individual rather than creating a costlier state-funded one-stop agency for businesses and nonprofits seeking to grow biotech jobs — as Maryland did last year with its Maryland Biotechnology Center, for which the state appropriated $3.9 million in the fiscal year ending June 30. Massachusetts also created such an entity in 2008 when Gov. Deval Patrick signed into law a $1 billion, 10-year expansion of the Massachusetts Life Sciences Center, founded two years earlier by his predecessor Mitt Romney.

Hill's bill differs from a more expansive economic development effort sought by the Milton Marks Commission on California State Government, or "Little Hoover" Commission.

In a February report, the independent state oversight commission recommended consolidating the state's far-flung job attraction and retention activities into a new "high profile" state economic development office of several professionals within Schwarzenegger's office. The office would develop an economic development strategy and oversee "action" teams organized either by industry or region.

"The Governor's Office of Economic Development, by its actions, must establish that it is not an additional bureaucratic layer or a hollow gesture. It must be invested with the imprint and influence of the governor. It must be a credible networking operation, staffed with experienced and capable professionals," Little Hoover concluded in its report, Making Up for Lost Ground: Creating a Governor's Office of Economic Development.

Within Schwarzenegger's administration, life-science projects involving the state are handled by Kathryn Lowell, deputy secretary for life sciences and health systems in the state Business Transportation and Housing Agency.

"She has been very responsive to the industry, at least in the instances where some of our membership has needed assistance within the state bureaucracy. We look at the bill as an opportunity to expand upon that type of an advocate, someone who can provide a resource in the relationship between the industry and the state," Jimmy Jackson, vice president of public policy for the San Diego regional life-science group BIOCOM, told GWDN.

"The reality of our California budget situation is that you wouldn't be able to create an entire agency. If we had one person who was dedicated to this mission, and had significant expertise, it would at least be helpful," Jackson said.

Also supporting AB 1733 is BayBio, the group representing life-science employers in the Bay Area and northern California.

While the state has passed single source sales and extended the carry-forward on net operating losses from 10 to 20 years, "what's missing from the state is any sort of ability to track what is occurring within the industry. And because of that, [the state] cannot pay attention to, and speak as well as it should to, what industry activities and attitudes are," BayBio spokesman Travis Blaschek-Miller told GWDN.

"If you're gong to push any sort of economic development, start off with something you know is a powerful economic driver. And start with any resources you can.," Blaschek-Miller added. "A single director is better than none."

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