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Despite Pharma Cuts, Biotech Propels Phila. Region to 2nd Behind Boston in Update of 2005 Milken Study


ATLANTA — Greater Philadelphia surpassed the San Francisco Bay Area and placed second only to Boston/Cambridge, Mass., in an updated ranking of the nation's top life sciences clusters released Tuesday by the Milken Institute.

The report, The Greater Philadelphia Life Sciences Cluster 2009: An Economic and Comparative Assessment, gave the City of Brotherly Love and 11 surrounding counties in Pennsylvania, New Jersey, and Delaware top marks for regional impact, citing advances in biotechnology R&D, continued top-tier performance in healthcare services, and life science supporting industries.

Released during the Biotechnology Industry Organization's BIO 2009 International Convention at the Georgia World Congress Center, the 110-page report defined life sciences not only as pharmaceuticals, biotech, life sciences R&D, medical device, and support industries, but added "healthcare services" such as those provided by hospitals and diagnostic labs.

Employment data cited in the report was compiled in 2007, just as pharmaceutical layoffs and job reductions were well under way — but a year before the double whammy of the global economic upheaval and accelerated job cuts as the pharma industry scrambled to make up for revenue it will lose when patent protection expires for some lucrative drugs.

According to the report, the number of life science jobs in the region outside of healthcare services grew from 53,479 reported in 2005 report to 56,600. The job gain wasn't enough to budge the core life-sci sector's share of the total 12-county job market above the 2.2 percent recorded in the 2005 study, The Greater Philadelphia Life Sciences Cluster: An Economic and Comparative Assessment, which used data from 2003.

In the Philadelphia area, pharma employment still accounted for the biggest slice of the region's life-sci pie, with 26,417 jobs – but dipped 3,611 jobs, or 12 percent, from the 30,028 jobs recorded in the 2005 report. Philly placed second to Greater New York, which led with 33,189 jobs in the current report, up 2.9 percent from 32,256 five years earlier.

That falloff was more than made up by life sciences R&D, which gained more than 5,000 jobs between 2003 and 2007, rising 36 percent from 14,342 to 19,496. During the period, Greater Philly climbed one position, from third to second, sandwiched between number-one Boston/Cambridge and number-three Seattle; in the 2005 report, Phily finished third to San Francisco and Greater New York.

Greater Philadelphia's biotech sector picked up 1,274 jobs during that period despite recording a 52-percent employment gain to 3,702 jobs in 2007, from the 2,428 biotech jobs recorded five years earlier. But the Philadelphia region finished seventh in the category in this year's report, with Greater New York leading with 14,670; back in the 2005 report, greater Los Angeles held the top spot with 10,680 jobs.

The Philadelphia region's medical device employment barely budged from report to report, gaining only four jobs, from 6,681 to 6,685. LA led in both reports in medical device workers, though its number of jobs dipped just under 1 percent, to 26,568 from 26,818.

"Philadelphia maintaining some [life sciences job] growth is actually quite an accomplishment," said Ross DeVol, director of regional economics at the Milken Institute, answering a BioRegion News question during a press briefing on the study.

He said the results also showed early signs that the Philadelphia region's once fractious community of academic and business life sciences stakeholders had begun to work better together. A key purpose of that effort is to accelerate tech commercialization in a region whose historically weak tech-transfer effort was faulted by a group of CEOs in a 2007 report.

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CEO Council for Growth, a group of more than 70 business leaders in Philadelphia and nearby counties, concluded in Accelerating Technology Growth in Greater Philadelphiathat the region's tech-commercialization effort did not reflect the volume of commercial tech activity, including biotech startups, of its concentration of academic institutions and pharmaceutical companies [BRN, Oct. 15, 2007].

When indirect and induced economic effects are included, the report's employment total for Greater Philadelphia's life sci sector swells to 380,300 jobs, generating $20.2 billion in revenue and $39.7 billion in economic output. Back in 2005, Milken recorded 276,000 total life-sci plus healthcare services jobs generating $13.7 billion in revenue and $15.5 billion in output.

Indirect impacts consist of jobs, earnings, or value of economic activity generated from all supplier industries. The high wages associated with life-sci jobs are expected, in turn, to yield induced impacts such as more purchases of goods and services.

Rounding out the study's ranking of top 10 bioclusters were Greater New York, Greater Raleigh-Durham, Greater Los Angeles, Chicago, San Diego, Minneapolis, Washington DC, and Seattle.

"What this report says is that we cannot rest on our laurels. And we're not trying to be naïve about that. We're very happy to come right out and say this is something we have to continue to work hard at," Susan Windham-Bannister, president and CEO of the Massachusetts Life Sciences Center, told BRN from her state's pavilion at BIO 2009. The center is the quasi-public agency charged with overseeing how the Bay State spends the $1 billion promised over 10 years to the life-sci industry under the Massachusetts Life Sciences Act, signed into law last year by Gov. Deval Patrick.

"We just have to keep working hard. We are. The state is showing its commitment," Windham-Bannister added. "But let's be realistic: We know that the competition is increasing. It's increasing from other states. It's increasing from other countries. It's because everyone is realizing how important life sciences and biotechnology are."

The Philadelphia region, according to Milken, finished third in developing workers who specialize in biomedicine, chemistry, microbiology, and other science and tech fields — two positions better than its fifth-place showing in the category in the earlier study. As in 2005, Greater Philly ranked third in its "innovation pipeline" of technological advances and production, though the region closed much of the gap between it and the number-two Bay Area.

Greater Philadelphia's worst showing was its ninth-place ranking on Milken's small business vitality index, which measured the performance of its life-sci startups versus those of other regions. But when only therapeutic and medical device startups were measured, the Philadelphia area placed as high as fifth due to 21 percent growth since the 2005 study.

Dennis (Mickey) Flynn, President of Pennsylvania Bio, told BRN that the index has yet to reflect the full impact of Pennsylvania's efforts to fund startup life-sci companies — notably its Ben Franklin Technology Partners, which assists early-stage life-sci and other tech companies, and the Keystone State's network of incubators or "greenhouses" funded through part of the state's proceeds from the tobacco settlement of a decade ago.

"We haven't been able to get all of the results of the funding that has actually gone into place. So I think the next time around when we do this, we're going to see that jump up."

In its press release announcing the new report, Milken came to a different conclusion: "The region has yet to develop the entrepreneurial sophistication of places such as Greater San Francisco, Boston, San Diego, or Greater Raleigh-Durham."

Joining Milken in releasing the study were PricewaterhouseCoopers; the Pharmaceutical Manufacturers Association, or PhRMA; and six regional life-sci or business groups — Select Greater Philadelphia, the Greater Philadelphia Life Sciences Congress, industry association Pennsylvania Bio, its New Jersey counterpart BioNJ, and the Delaware BioScience Association.

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