NORTHERN CALIFORNIA SPOTLIGHT
Despite All Obstacles, Science
and Technology Leadership Abounds
and Technology Leadership Abounds
A study of California's biomedical
industry released in 2004 by the California Healthcare Institute and
PriceWaterhouseCoopers found that more than 230,000 Californians work
in the industry, earning more than US$14 billion in pay. The state leads
all others by a long shot when it comes to life sciences investment,
topping $2.1 billion in both 2002 and 2003. 
Almost all the firms with out-of-state manufacturing said they expect to expand those operations within the next two years, yet 93 percent expect their manufacturing to expand or hold steady within the state. And while 66 percent of biomedical firms said they expect to expand R&D outside the state within the next two years, 60 percent expect to expand within the state.
But even the big successes aren't coming easy. Take the $600-million expansion announcement in spring 2004 by homegrown biotech star Genentech. At the groundbreaking in Vacaville, Genentech President of Product Development Susan Desmond-Hellman said the company wouldn't have expanded in California if it weren't already there. And she went on to say that California was not competitive in business development, lagging other states in financial incentives. That climate wasn't helped by the Jan. 1, 2004, expiration of the 6-percent Manufacturing Investment credit, originally enacted in 1994. Another bill that would have helped out didn't survive either: it would have allowed fledgling bioscience companies to sell financial losses for cash, and allowed the buyer to use that purchase to lower its own taxes.
Desmond-Hellman's colleague Todd Kaufman, Genentech's director of state government affairs, was quoted in the biomedical industry report:
"While other states are offering up investment and job creation tax credits, machinery sales exemptions, training subsidies, electricity sales tax exemptions and other attractive tax and direct incentives, California has no economic development funds, expensive water quality discharge requirements and a generally bleak fiscal picture."
But Genentech is staying and expanding anyway. So are Abbott Vascular Devices and Hitachi Global Storage Technologies. What they and others have found is that, despite state corporate tax rates that are 40 percent higher than the national average and a cost of doing business that hovers around 32 percent higher, local support and flexibility go a long way.
Almost all the firms with out-of-state manufacturing said they expect to expand those operations within the next two years, yet 93 percent expect their manufacturing to expand or hold steady within the state. And while 66 percent of biomedical firms said they expect to expand R&D outside the state within the next two years, 60 percent expect to expand within the state.
But even the big successes aren't coming easy. Take the $600-million expansion announcement in spring 2004 by homegrown biotech star Genentech. At the groundbreaking in Vacaville, Genentech President of Product Development Susan Desmond-Hellman said the company wouldn't have expanded in California if it weren't already there. And she went on to say that California was not competitive in business development, lagging other states in financial incentives. That climate wasn't helped by the Jan. 1, 2004, expiration of the 6-percent Manufacturing Investment credit, originally enacted in 1994. Another bill that would have helped out didn't survive either: it would have allowed fledgling bioscience companies to sell financial losses for cash, and allowed the buyer to use that purchase to lower its own taxes.
Desmond-Hellman's colleague Todd Kaufman, Genentech's director of state government affairs, was quoted in the biomedical industry report:
"While other states are offering up investment and job creation tax credits, machinery sales exemptions, training subsidies, electricity sales tax exemptions and other attractive tax and direct incentives, California has no economic development funds, expensive water quality discharge requirements and a generally bleak fiscal picture."
But Genentech is staying and expanding anyway. So are Abbott Vascular Devices and Hitachi Global Storage Technologies. What they and others have found is that, despite state corporate tax rates that are 40 percent higher than the national average and a cost of doing business that hovers around 32 percent higher, local support and flexibility go a long way.
