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Report: More Life-Science Jobs Despite Recession; Fewer Patents in Top-10 States

By Alex Philippidis

NEW YORK (GenomeWeb News) — Job creation by US life sciences employers survived the first year of the recession in 2008, and thrived over most of the previous two years, according to a new state-of-the-industry study released last week.

The Battelle/BIO State Bioscience Initiatives 2010 reported two-year gains in life-science jobs — along with increases in academic bioscience R&D, and bioscience higher education degrees awarded through 2008, and in NIH funding between the federal 2007 and 2009 fiscal years. A six-year stretch between 2004 and last year also showed increases in venture capital financing over 2002-07. But during those two overlapping six-year periods, each of the top 10 states saw declines in the number of bioscience patents awarded, in some cases by double digits.

Overall the life-science industry gained 19,000 jobs, or 1.4 percent in total jobs for 2008, compared with the previous year, even as overall private-sector employment fell by 0.7 percent, according to the report, released by Battelle Memorial Foundation and the Biotechnology Industry Organization.

"When I got involved in the bioscience industry in the early 1990s, I was counseled with the words, 'It's a marathon, not a sprint.' In some ways it's a marathon: You've got to get the fundamentals right," Mitchell Horowitz, vice president of Battelle's Technology Partnership Practice, told GenomeWeb Daily News. "You've got to be in it in the long term. But when I look at this sector, in some ways it's a sprint now. We really are growing. It's generating big job numbers. It's high-quality jobs. It's growing through the first year of the recession. How many sectors can say that?"

Horowitz spoke Tuesday, a day after the report was released at BIO's 2010 International Convention in Chicago. He said the job gain reflected growth in both basic research institutions as well as smaller and larger biotech and pharma companies.

The report illustrated two effects of the recession. One is the 14.6 percent jump in NIH funding between federal FY 2004 and FY 2009, when funds from the $862 billion federal stimulus measure are included. When American Recovery and Reinvestment Act funds are subtracted, NIH funding between FY '04 and FY '09 dipped by 4.7 percent, from $22.5 billion to $21.5 billion, according to the report.

The other recession-related effect is a sharp, nearly 37 percent drop in VC financing between 2008 and 2009, to just $7.77 billion. That's just under the $7.79 billion recorded for 2004 — though between '04 and last year, the states with the most life sciences activity saw VC gains compared with the 2002-07 period studied in the last Battelle/BIO report, released in 2008.

This year's 75-page report acknowledges that it does not address fully the recession's effect on life-science hiring since 2008. "The real impacts of the recession are likely to be reflected in the 2009 data once these data become available," the report stated.

According to the report, more than 1.4 million people finished '08 employed in any of four life-science specialties: research, testing, and medical labs; agricultural feedstock and chemicals; medical devices and equipment; and drugs and pharmaceuticals.

The 2008 data showed a 2.3 percent year-to-year dip in pharma employment, a 7,445-job loss reflecting the onset of industry consolidation. Among the other specialties, between 2007 and 2008 research, testing, and medical labs grew by 11,670 jobs, or 2.1 percent; medical devices and equipment increased by 10,140 jobs, or 2.4 percent; and agricultural feedstock and chemicals saw the greatest percentage gain at 4.6 percent, adding 5,021 jobs.

A look at three key job titles studied by Battelle/BIO report this year, and in its previous report, showed the greatest job growth among medical and clinical laboratory technicians, whose numbers rose about one-third between '06 and '08, from 305,470 to 404,680 employees.

Job growth among biological scientists and technicians grew more slowly at 12 percent between '06 and '08, from 207,700 to 232,390. Among biochemical and biomedical scientists and engineers, employment increased 14 percent from 32,710 to 37,450 jobs.

Among the states, California maintained its national lead in life-science employment with 91,670 jobs, up 5 percent or more from 69,600 in 2006. Second in number of jobs created was Texas, where the bio workforce grew 32 percent, or almost 15,000 jobs, to 49,160 jobs in '08. The third-highest growth was in Massachusetts, which enjoyed a 25 percent increase in jobs, from 30,780 to 38,520.

Employment was one of several measures where the report found growth in life-science activity in recent years.

In addition, the report found that academic bioscience R&D spending rose steadily since 2004, and was up almost 9 percent from $29.3 billion in 2006 to $31.8 billion in 2008. California led all states with $4.4 billion in '08, followed by New York ($2.7 billion), and Texas (about $2.5 billion). The three states finished in the same order two years earlier, when California spent $4 billion, New York $2.5 billion, and Texas $2.2 billion.

According to the report, the number of bioscience higher education degrees increased 13 percent between 2006, when 143,000 students received degrees, and 2008, when the number was 162,000. California graduated the most bioscience students with 19,999, followed by Texas (10,504), and Illinois (10,355). California was also on top two years earlier with 17,051 degrees, but Illinois (9,622) surpassed Texas (9,096).

Despite being top-three in degrees, Illinois was the only state among the top-10 in life-science employment to lose jobs between '06 and '08, as the number of positions slid by 1,400, to 22,310. The state has scrambled to compete for life-science employers, and hold onto home-grown startups, against neighboring states such as Indiana and especially Wisconsin, which awards annual tax credits for angel and venture investors in life-science companies.

Also showing a decline were the numbers of bioscience-related patents awarded in each of the top-10 states for two overlapping six-year periods. California researchers led the nation with 23,162 patents between 2004 and last year, though the number was about 1,000 under the comparable figure for 2002-07.

California's roughly 5 percent dip in patent production was better than the almost 2,200 fewer patents awarded to researchers in Massachusetts, with the figure sliding during the six-year periods from 9,443 to 7,250 patents. Pennsylvania researchers generated about 3,500 fewer patents, resulting in a 40 percent drop to 5,041 patents from 8,522.

Factors behind the patent decline in top-10 states, Horowitz said, vary from biopharma consolidation, to the growth of research programs outside the largest bioscience clusters, to the general unpredictability of developing intellectual property.

Speaking with GWDN in February, Ashley Stevens, president of the Association of University Technology Managers, noted two additional factors behind a year-to-year decline in patents recorded by his group: The prospect of a change in patent law, and the US Supreme Court's decision in KSR v. Teleflex, which eased the legal path to invalidating patents by broadening how the Federal Circuit can interpret "obviousness."

AUTM recorded a 9 percent dip — from 3,622 in FY 2007 to 3,280 in FY 2008 — in patents issued to research institutes and universities between the 2007 and 2008 academic years in its most recent annual US licensing survey.

Horowitz noted that the overall national number of patents rose last year compared with 2008 — to 13,150 from 11,911 — and that the number has yo-yoed in recent years, from a low of 10,990 in 2005 to a high of 13,652 the following year.

"You may have a year where if you're an individual university or a company where you're doing a lot of patents one year, and then the next year, you don't issue as many, and then the next year after that you issue again. It's a bit volatile, but the basic level remains intact," Horowitz said.