Why biotech business is bypassing L.A.

Why biotech business is bypassing L.A.

Los Angeles is missing the biotech train.

In the 18 years since DNA was first spliced, no major biotechnology company has set up headquarters in L.A. County.

While scientists and investors point to a lack of business-minded universities and biotech venture capitalists, they mostly blame smog, crime and high housing prices.

Few efforts are under way to bring biotech here. The county's top business boosters, the L.A. Area Chamber of Commerce and the Economic Development Corp., have no campaign to spawn biotechnology, as they do to retain aerospace, moviemaking and other resident industries.

The welcome mats are indeed here - a concentration of high-tech industry and a world-famous reputation for entrepreneurship.

Instead, firms have chosen San Diego, the San Francisco Bay Area and the Northeast to further the blossoming science that applies high-technology to living organisms. In less than two decades, those regions can now claim a small but growing economic engine that employs thousands of workers, from scientists to lawyers to janitors.

While U.S. biotech sales amount to only $2 billion today, they should skyrocket at least 20-fold to more $40 billion by the end of the decade, according to the U.S. President's Council on Competitiveness.

And institutional investors reportedly have plowed more than $1 billion into the young industry. They hope biotech will prove a 21st-Century success story to rival the computer industry's.

But somehow the lure of creating new treatments for hemophilia, or practicing X-ray crystallography to investigate biomolecular structures, hasn't jumpstarted L.A.

"Quality of life" was paramount in site-hunting for Amgen Inc., the biggest biotech company in the nation, with sales last year of $361 million. Amgen was established in Ventura County, on the more rustic outskirts of L.A., in 1980.

"We had to attract scientists to a place where they would want to start a family," said Bruce Wallace, one of three original Amgen employees. "Issues of schools, air quality and open space, are ones that helped us attract molecular biologists to Newbury Park."

The handful of small biotech companies here - according to the industry trade group California Industrial Biotechnology Association - includes Bachem Inc. in Torrance and Phytogen in Pasadena, which employs about 20.

Of course, many firms depend on biotech products, like Santa Monica-based Specialty Laboratories Inc., which uses enzymes and DNA primers to detect diseases.

The high-technology magazine Upside recently devoted two editions to biotech, publishing extensive lists of who's who and what's hot.

The results:

* No Los Angeles companies were among the firms engaged in clinical trials. Conducted in phases on different groups of patients, lasting two to five years or more, the tests must precede final approval by the Food and Drug Administration to take a product to market.

* No Los Angeles-based entrepreneurs were profiled along with legendary founders like Robert Swanson of Genentech Inc. or Dr. George Rathmann of Amgen.

* No Los Angeles-based scholars were mentioned on the same pages with Nobel Prize-winning molecular biologist Dr. Walter Gilbert at Harvard. The stock analysts and fund managers touted make their homes elsewhere, too.

Dr. Deb Nicholl, a molecular biologist on UCLA's payroll, said there's no suitable L.A. firm for her specialty. At UCLA's cardiovascular research labs, she studies the role of protein in regulating cardiac contractions. "If my position here was nearing an end, I would look in San Diego, because I know there's more there," said the Chicago-area native.

Wallace, now Amgen's manager of corporate environmental health and safety, said employees love their suburban town. "Newbury Park is not a cheek-tm-jowl community, like Sherman Oaks. And we have the Conejo Unified School District," which he said most employees feel is superior to the L.A. Unified School District. "An L.A. city school is not somewhere you'd want to send your children."

Amgen has ambitious plans to boost its staff of 1,400 to 2,000 by March 1991. But it won't relocate. There is room to grow at its industrial park location.

More importantly, moving a biotech operation is far tougher than transplanting a data-entry force. Because of the uniqueness of product development, new staff could not be rehired elsewhere, nor one-of-a-kind laboratories duplicated easily. Wallace said moving is out of the question.

Other industry leaders may not have sought idyllic surroundings in picking their headquarters - Genentech is in South San Francisco, Centocor Inc. in Pennsylvania and Xoma Corp. in Berkeley - but still L.A. held no magic allure for them.

Los Angeles-based biotech attorney Joel S. Marcus, of Brobeck, Phleger & Harrison, pointed to quality of life and two other perceived deficiencies here - lack of local venture capitalists and market-minded universities.

"Historically, venture capitalists sit on boards of directors, and I think they like to be near the action," said Marcus. "Most of the biotech venture capitalists have offices in Silicon Valley, or back East in Boston or Connecticut."

Marcus represented Amgen in its venture with Kirin Brewery and does law work for major Japanese pharmaceutical firm Shionogi, which has sales offices in Torrance.

Further, no local university "has distinguished itself in the leading-edge technologies," said Marcus. He said UCLA comes closest, but it hasn't developed the kind of spin-offs that MIT, Harvard and others have pulled off.

Also, there are no big L.A. drug companies or adequately ambitious hospitals with which to cross-pollinate, said Marcus. "The infrastructure isn't here."

For instance, Stanford's Office of Technology Licensing was founded in 1968, and it excels in funneling discoveries into the market, according to Cynthia Robbins-Roth, principal of BioVenture Consultants of San Mateo. The Stanford office offers to licensees about 170 technologies a year, which brought in about $24 million in gross royalties last year, she said.

PHOTO : A researcher at Amgen, the nation's largest biotechnology company: An Amgen spokesman said, "We had to attract scientists to a place where they would want to start a family. Issues of schools, air quality and open space are ones that helped us attract molecular biologists to Newbury Park'