Can L.A. Stop Being a Slacker In Biomedicine?

The Ingredients For Supremacy Are All Here. We Just Need To Step Up Our Game-Slightly.

If you haven’t already forgotten the London Olympics, and any competitors from those games come to mind, you probably think of the big winners, like Usain Bolt or Michael Phelps. You might also remember some silver medalists and a few bronzes. But do you remember Tyson Gay? He’s the fellow who came in fourth after Bolt in the 100-meter dash. Gay is a world-class athlete. It was an impressive achievement. However, no medal, no glory.

Los Angeles has a similar problem–the Tyson Gay problem–when it comes to biomedicine. Certainly, the region turns in a performance that’s impressive in many ways. A 2011 study by Jones Lang LaSalle concluded that Los Angeles–thanks to its many hospitals, research universities, and college-educated inhabitants–has the makings of a world-class biotechnology sector. However, when it comes to rankings, Boston, New York, and the Bay Area claim the gold, silver, and bronze, respectively, while Los Angeles comes–you guessed it–fourth.

What makes a regional winner? It begins with novel research and innovation at local research institutions. This innovation gives rise to promising startups that form a cluster. That cluster is in turn nourished by a self-reinforcing local ecosystem of informed investors, skilled businesspeople, technical resources, government agencies, and economic development efforts. It’s an ecosystem that nourishes high-growth companies that lay down roots and mold a pool of experienced entrepreneurs, who likewise lay down roots and go on to create the next generation of startups–based on breakthrough ideas from the local research institutions. It’s a tough cycle to get going, but it’s great when it works!

L.A. has the beginnings of biomedical victory in place already. The region boasts one of the strongest concentrations of research power in the world. The California Institute of Technology, the University of Southern California, and University of California, Los Angeles alone account for more than $2 billion in annual research funding and collectively boast 38 Nobel Laureates, 66 National Medal of Science recipients, and 126 members of the National Academy of Sciences. The Los Angeles County Economic Development Corporation reports that approximately 38,000 people in L.A. County work in the life sciences sector, as do 40,000 people in neighboring Orange County, according to BIOCOM estimates. The region is home to many wealthy investors, angel networks, and venture capital firms. It has the largest manufacturing base in the U.S., a major network of hospitals, and an emerging biotech economic development corridor supported by local government.

Los Angeles research institutions are already generating many viable startups. Over the past 15 years, for example, 39 startups based on research conducted at USC raised more than $800 million in investment capital, and more than $380 million of that was raised in the past three years, at the height of the financial crisis. In 2009 alone, Caltech’s research launched an impressive 18 new companies. As for UCLA, Abraxis BioScience, acquired by Celgene for $2.9 billion, is a formidable success story.

That’s the good news. The bad news is that many of the companies that start here don’t stay here. In most places in the United States fewer than 10 percent of startups leave the region where they were incubated, according to a report by the Battelle Technology Partnership Practice. In the Los Angeles region, 50 percent leave, and that number may be growing.

Why don’t companies in Los Angeles want to stick around? I got some insight into this several years ago, when I was helping biomedical companies to develop their strategies and find the resources to execute them. One client, a cancer therapy company, relocated to San Antonio, Texas, because the cost of living was lower and there was a better defined network of resources and investors. Another client, a stem cell therapy company, could not find adequate lab space in Los Angeles. It moved to San Diego.

Later, I worked at USC to help develop an innovation ecosystem to encourage the launching of startups–and I often coordinated my efforts with UCLA, Caltech, and other institutions in the area. We made the following observations:

First, when we had scientific researchers with breakthrough discoveries, we had trouble consistently finding experienced Los Angeles-based biomedical entrepreneurs to help advise on the best way to commercialize the technologies. You need experienced entrepreneurs–the “been there, done that” folks with deep domain expertise–to help identify what markets a new, early-stage technology best addresses and what specific development steps will position it for success. Ideally, these entrepreneurial advisors also fall in love with the technology and help create and lead a startup based on it.

Second, even if we were lucky enough to connect the inventors and their technology to an experienced mentor, any startup formed around the technology would often struggle to find nearby “incubators”–entities that provide wet lab space and other technical and business resources. In Boston and San Francisco, biomedical incubators are plentiful.

Third, we found that many local private investors were poorly informed on local emerging technology opportunities, and few local venture capital firms were willing to invest in early-stage biomedical start-ups.

Finally, as anyone who has tried to get from Pasadena to the Westside at the wrong time can attest, Los Angeles is geographically dispersed. Life-science entrepreneurs and other folks in the innovation ecosystem lack a central physical location to mingle and have the valuable chance encounters that lead to the sharing of ideas and resources.

While the above litany of issues might sound intimidating, most can be addressed without as much trouble as we fear.

Let’s turn back to the Olympics for inspiration. Sixteen years ago, at the Atlanta Olympics, Great Britain won only a single gold medal. This year, it won 29. What happened? After 1996, each sport’s governing organization appointed a “performance director,” a person responsible for setting goals, identifying promising athletes, tracking progress, and locating and coordinating the best coaching and other resources. It was simple, but it worked. The difference between fourth and first isn’t necessarily so big. It simply involves looking at the whole system, using what you have as effectively as possible, and doing a lot of small things slightly better than you were before. Then success breeds success.

Los Angeles could benefit from having something similar: a “Biomedical Sector Performance Director” to accelerate the development of the greater Los Angeles life sciences ecosystem. Coordination, communication, and timely connections will help startups emerging from our leading research institutions avoid having to reinvent the wheel as they look for resources to grow. They can be connected quickly to local incubators, experienced local entrepreneurs, investors, and other local startup business resources. Just cataloguing local resources and making them available to emerging startups would be a simple improvement with huge effects. It’s an example of the power of a small thing done better than before. A coordinator could help align local governments and other partners in the ecosystem, identifying gaps and encouraging approaches to address them.

Who would appoint such a performance director? Our “sport” of Los Angeles biomedicine does not have a governing organization, but it does have within each major research institution well respected technology transfer organizations dedicated to identifying research with commercial potential and devising strategies for how to exploit it. I would suggest having the performance director report to a board comprised of the heads of these tech transfer organizations. This would have the added benefit of positioning the performance director to cross-pollinate ideas emerging from the various research institutions as well as connect them to resources when they are ready to emerge. A second small thing done better than before.

Some might ask, “Do the rankings matter? Isn’t fourth place still pretty good?” Well, it’s pretty good, but it’s nowhere near as useful as third place. Being higher on the list would make Los Angeles a far more powerful magnet to attract investors, experienced biotech entrepreneurs, and other elements of a self-reinforcing life science ecosystem. Setting goals, measuring progress, and then bragging about it in the right way to the right people is essential–a third small thing that we can do better. By the way, Tyson Gay is also an American record holder in speed, the second-fastest athlete ever, and one of only three sprinters who have defeated Usain Bolt in the 100 meter distance. But who’s going to get the best endorsement deals?

Richard Hull is an entrepreneur and investor. He lived and worked in Los Angeles for 15 years before recently moving to Olympia, Washington.

*Photo courtesy of Miss Krin.


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