Hiring in San Diego’s life science sector was down last year as a result of layoffs and companies tightening budgets.
Despite layoffs and scarce financing sources last year, San Diego’s leading life science sector contributed $56.6 billion to the region’s economy.
Biocom California, the voice of the life science industry across the state, published its 2024 Life Science Economic Impact Report to offer a snapshot of the sector that is one of the county’s biggest employers and produces lifesaving drugs, therapies and health technology.
The report tracked hiring, funding and economic trends influencing the life science industry from October 2022 to October 2023. San Diego’s economic output was slightly down compared to the previous year’s report ($57.4 billion in 2022), but remained relatively stable.
For years, San Diego has remained one of the top three life science hubs in the country alongside Boston and San Francisco. For instance, last week, thousands of industry professionals from around the world descended on the San Diego Convention Center for the 2024 BIO International Conference.
“The reason that we do so well is not something that you can boil down to numbers and data,” said Joe Panetta, CEO of Biocom California.
The San Diego region had 75,815 workers across 1,966 life science establishments in 2023, according to the report.
While the Bay Area may have more life science workers (156,454), these employees are spread out across multiple clusters, Panetta said. In contrast, Boston also boasts a high concentration of workers within about a square mile of Kendall Square, but in San Diego County there is density and room to grow new developments.
“What makes San Diego so unique is the geography, the demographic and the fact that biotech in San Diego is so densely clustered,” Panetta said. “That enables our companies to collaborate better, enables the employees in the industry to have kind of a nucleus of where they work.”
The average yearly salary for San Diego County life science workers was $163,177. That average wage is greater than annual salaries recorded for the greater Los Angeles ($109,071) and Orange County ($107,862) areas, but not far off from the Bay Area’s offering ($186,982).
“San Diego is becoming a much more attractive location for biotech employment than the Bay Area is because of the cost of housing and the cost of living,” Panetta said.
Life science employment in the San Diego region declined about 2.5 percent from 2022.
Last year saw a spate of layoffs from life science companies big and small for a variety of reasons: high interest rates, pullback in venture capital funding and a drop in demand for COVID-19 products.
“We can’t ignore the drug pricing stipulations within the Inflation Reduction Act,” Panetta said.
The federal law, which went into effect in 2022, caps the price of insulin, requires Medicare rebates for rising drug costs and requires Medicare price negotiation with companies for certain drugs.
“We’re already beginning to see pharma companies look at their investments and even some becoming a little bit downsized … when they put pencil to paper and calculate what’s the best return on investment in discovering and researching certain types of drugs,” he said.
The report breaks down the life science industry into six subsectors: biotechnology, biopharmaceuticals, medical devices and equipment, research and testing, scientific/research tools, and food and agriculture biotechnology.
San Diego County’s biopharmaceutical segment, which includes diagnostic test-makers, saw the largest annual decline in jobs by 5.3 percent.
Panetta noted that while there were a lot of industry layoffs last year, the report only reflects results through October. Since then, he said there have been positive signs for 2024 in recent months that will be reflected in next year’s report.
The only subsector that increased employment annually was scientific/research tools, which had an 8.4 percent bump in hiring. This local segment includes companies manufacturing lab equipment used by businesses and researchers to develop drugs or therapies.
Companies like gene-sequencing giant Illumina and San Diego’s Element Biosciences make the machines that allow scientists to analyze DNA, for instance.
Panetta explained that companies are “looking for more efficient, less time consuming, more accurate tools that they can use to discover and develop drugs,” including artificial intelligence tools.
“It’s all about faster, cheaper, more accurately doing the work,” he said.
San Diego was also awarded $2.2 billion in research funding through the National Institute of Health (NIH) and National Science Foundation (NSF) – the most in California right behind the Bay Area ($2.33 billion). Panetta said that Biocom spends a lot of time working with the government agency to educate San Diego’s small companies on how to apply for NIH grants.
“I think another thing that differentiates San Diego is the fact that when you look around on the mesa, you’ve got a multitude of research institutions and the university of course,” he said. “There are new incubators being built every six months here in San Diego – I didn’t see that 10 years ago. And I think a lot of it is just the result of the fact that there’s so much great research going on in the universities and research institutes and other companies.”