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The Shaky State Of California Biopharma

Nearly every city and state want biopharma.

They fiercely compete for the relatively clean industry and the well-paid, highly educated jobs it brings. But only a handful of cities, regions and states have successfully established clusters: Cambridge, MA, Seattle, WA and San Francisco, Los Angeles, San Diego and the O.C. in California. But a new report says my homestate could be in danger of losing a level of its preeminence.

The San Francisco Chroniclerecently reported that the Cali life sciences industry actually added more than 2,000 jobs last year. And The Wall Street Journal reports todaythe economy along the California coast, where tech is king, is bouncing back while the inland areas are still struggling. California still has 12.5 percent unemployment and President Obama is talking about job creation as I write this.

Against that backdrop comes a 100-plus page reportout this afternoon from PricewaterhouseCoopers and the California Healthcare Institute detailing the current state and future of the state's biomedical business. Cali is home to big biotech companies like Genentech and Gilead Sciences in the north, Amgen and Amylin in the south and a whole bunch of others in between.

The authors of the report are worried about the potential impact of health care reform and California's budget crisis on the industry's big footprint in the Golden State. "More than ever, the sustainability of California's biomedical industry is influenced by decisions made in Sacramento and Washington," they write. Their concern comes, in part, from the results of a survey they did showing two-thirds of respondents expect to move more manufacturing out of state within the next two years. And in that same time frame 58 percent said they anticipate doing more research and development outside California. PWC and CHI surveyed 200 C-suite execs at California's largest (by workforce) life sciences companies.

"Our biomedical industry's formidable assets and future value are offset by daunting liabilities and serious risks. Of these, the most immediate stem directly from the Great Recession," the CHI President and CEO and PWC's Life Sciences Partner write in the preamble to the report.

I hope to get the perspective of two California biopharma CEOs in live interviews at the BIO CEO conference in New York City next Monday. Representing the north, Dr. David Hung from San Francisco's Medivation. And representing the south, Michael Narachi from San Diego's Orexigen. The state of the industry in California isn't why I'll be interviewing them, though. With MDVN, it's all about the late-stage experimental Alzheimer's drug that's partnered with Pfizer. And with OREX it's all about its two experimental diet drugs that are, as yet, unpartnered.

Both companies are working to make progress in the war against two of the biggest medical problems facing the country. As Governor Schwarzenegger writes in the report's cover letter, "This community of thinkers and doers is an engine that powers our economy, generating revenues that will certainly help us emerge from the economic challenges of our times."

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Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman