U.S. funding drop threatens San Diego life sciences industry

The life sciences job juggernaut in metro San Diego expanded through the ongoing economic downturn and will produce another 6,000 jobs through 2014, according to a new report. But a big drop in government science funding and a continued decline in venture funding could threaten future growth.

Ominously, grants from the National Institutes of Health to greater-San Diego companies and research operations dropped by half in just the last two years, according to The San Diego Union-Tribune article highlighting the report, from $1.6 billion in 2009 to about $835 million in fiscal 2011. The big reason: Stimulus spending peaked in 2009.

Initially, the extra federal spending helped offset a continued drop in venture spending and private investment, according to the report compiled by Hendershot Economics and commissioned by regional trade group Biocom, as cited by the article. And the venture funding decline for regional biotech and medical device companies points to an uncertain future. Those companies in San Diego County alone nailed down $343 million in venture dollars during the first three quarters of 2011, according to the story, but that's the lowest so far since the recession landed more than four years ago. (The region attracted $530 million in venture money during the same period in 2008.)

All of this begs the question: Will San Diego be able to keep growing life sciences jobs as investment funding dries up? Jobs typically ramp up a few years after initial investment, so the more telling data will be over the coming months and years, to see if the funding decline will undo job growth fueled by higher levels of private, and government funding just a few years ago.

So how does the Biocom-commissioned report quantify the jobs growth? It sees San Diego, Orange, Riverside and Imperial counties forming a hub of about 3,500 biotech or life sciences companies that employ almost 100,000 people, or nearly 150,000 if you count peripheral job growth. The report concludes that the region's biopharmaceutical, research and lab services, biofuels, medical devices and life sciences trade sectors will all add jobs, or generate related positions in accounting, insurance and other peripheral industries, in the next 24 months. (But biotech will lose about 150 workers.)

- here's the story

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