Biotech has tanked....but it's not due to the recent downturn. It's a long term trend only exacerbated by current conditions!
There has been no growth in biotech in the region in the last 10 years. In fact, Seattle and the NW's ranking nationally probably looked better a decade ago".
Zero growth in employment among major northwest biotech non-profit's and public traded for-profits over last five years
* This has occurred despite the continuing allocation of millions annually by state and local government in direct and indirect taxpayer subsidies to promote biotech development in Washington State
In 2004, Governor Gary Locke signed a bill authorizing a continuation of millions of dollars worth of annual tax breaks (B & O and Sales Tax breaks) to biotech companies involved in "research and development". He signed that bill in the brand new offices of what he called a "growing company", Targeted Genetics. Since then tens of millions in state revenues effectively were diverted to stimulate biotech development in Washington State. These tax breaks were recently extended again to this industry through 2015. During the 2009-2010 biennium, it is estimated that 160 million dollars in tax revenue (B & O and Sales Tax breaks) will be diverted (meaning pulled from the state's general fund) to pay for these "incentives". source: http://www.eoionline.org/tax_reform/fact_sheets/ClosingTaxBreaksIncreaseBOCredit.pdf
In 2005, on top of these tax breaks, Gov Gregoire sought and obtained the legislature's approval for creation of a $350 million "Discovery Fund" drawn from tobacco settlement receipts and to be given out annually in the form of grants to biotech firms over 10 years. This year $39 million from that fund will be doled out (In 2008, the state doled out over 60 million in grants from this fund). Gregoire boldly proclaimed in 2005, this fund would lead to creation of 20,000 new biotech jobs "over the next 10-15 years" source:http://community.seattletimes.nwsource.com/archive/?date=20050202&slug=lifesciences02
In five years since Gregoire praised the role of biotech in generating thousands of new jobs, there has been "0" job growth in the State attributed to the biotech sector
The following are highlights from articles written by Luke Zimmerman, biotech journalist for his national blog Xconomy.com and drawing from research and data from both local and national studies of the local biotech scene. We've provide links to his articles and studies he refers to contained below. Zimmerman also writes occasionally for the Seattle Times:
Zimmerman points out that:
* Seattle and the NW's ranking as a location for biotech development has fallen. New England has 25 times the cash on hand as Seattle biotech companies according to a recent (2009) report by Ernst and Young. San Diego has raised 10 times the amount of revenue annually than Seattle.
* This fall-off in biotech is not the result of the current downturn but represents a steady erosion in the Northwest's share of the biotech business nationally over the last decade (see links and info below for details and sources)
See entire article by clicking this link http://www.xconomy.com/seattle/2009/04/24/why-should-you-care-about-biotech-business-government-allies-say-jobs-high-wage-jobs/
For a copy of the full Archstone 2006 report to confirm Zimerman's information, click on this link to view it http://www.washingtonlifescience.com/industry/annrpt/WA_WorkforceTrainingReport2006.pdf
And parenthetically, the company offices of Targeted Genetics where Gary
Locke in 2004 signed the bill extending tax breaks to biotech is in the process
of being sold off. The cash strapped company just slashed their staff by 2/3rds
and is on the verge of possible bankruptcy.
http://www.bizjournals.com/seattle/stories/2009/06/22/daily2.html
http://www.xconomy.com/seattle/2009/06/22/targeted-genetics-cuts-workforce-in-half-in-bid-to-survive-into-august/
Here are specific quotes from the Zimmerman articles contained in the April and May issues of Xconomy:
Archstone Consulting was hired by “We Work for Health" an effort to unite business, academic, and community partners with company employees, vendors, suppliers, and the public around a common goal: To communicate to policymakers and key opinion leaders the important role the life sciences sector plays in Washington’s economy, to analyze the economic impact, with financial support from the Pharmaceutical Research and Manufacturers of America. This study revealed nothing surprising or groundbreaking. But here are a few bullet points.
—There were 19,291 people directly employed in biopharmaceuticals in Washington state in 2006, the year the most recent data was available.
- if this study had been done 10 years ago, Washington probably would have ranked higher as a biotech center than it does now. In fact, when I examined biotech job growth for The Seattle Times in 2004, I found there were 19,300 people employed in the sector in the state the previous year, citing data from the WBBA (Washington Biotechnology and Biomedical Association). That suggests there was zero job growth in Washington biotech from 2003 to 2006—years during which the rest of the economy grew.
Seattle's ranking as a location for biotech development has fallen. New England has 25 times the cash on hand as Seattle biotech companies according to a 2009 report by Ernst and Young. San Diego has raised 10 times the amount of revenue annually than Seattle.
more quotes from Zimmerman's articles
Pacific Northwest. This life sciences cluster, where yours truly (Zimmerman) calls home, has some things going for it with the Bill & Melinda Gates Foundation financing global health research and some strong basic research institutions, but it also had some pretty dismal biotech industry numbers to report to Ernst & Young (click here for link to their full report).http://www.ey.com/CA/en/Newsroom/News-releases/Media-2008-Global-Biotech-Survey (copies of report may be ordered from them free thru this link)
The Pacific Northwest ranks No. 9 in the U.S. in number of public biotech companies with 15, which puts it in a tie with Pennsylvania and the Delaware Valley. (By contrast Boston has 59 publicly traded companies, and San Diego has 40).
The Pacific Northwest’s biotech companies had a relatively puny market valuation of $1.5 billion—nowhere near hailing distance of Boston or San Diego—and that figure represented a 45 percent drop from a year earlier. Spending on R&D was about $481 million combined, a 19 percent drop from a year earlier.
And even while they’re cutting back, Northwest companies haven’t been able to build up much of a financial cushion to ride out the recession. Only about $241 million combined showed up on the balance sheets of Northwest companies, a 28 percent drop from a year earlier. company-by-company cash analysis here.
This forced me to do a double-take about the $241 million. It’s not a misprint. It means New England biotech companies have about 25 times as much cash on hand, and San Diego companies have 10 times as much as the companies here in the Northwest. Something to consider next time an elected official tells the public about how competitive the local cluster is with the big boys around the country.
(quotes italicized from Luke Zimmerman - links to specific sources included above)
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Our Update of Archstone 2006 Biotech Report shows drop in biotech jobs since 2006 within major IPO's and Non-Profits doing business in Seattle and the NW.
Here's job information taken from a chart contained in the Archstone 2006 report. Figures below for employment thru 2005 were taken from that report. I updated the figures to 2009 by going to each companies current websites and tallying what they said their current employment levels happen to be.
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Has the Mayor's $800,000,000 South Lake Union Agenda produced jobs commensurate with the investment in our tax dollars - No!
About 7000 jobs were created in South Lake Union from 1995-2000 (see figures below). Since 2003 - about the time the Mayor launched his vaunted South Lake Union agenda and committed tens of millions of our tax dollars, 2461 jobs have been created.
* South Lake Union ranks 15th among neighborhood/commercial areas experiencing a percentage gain in jobs since 2003 behind areas like Pioneer Square, Pike/Pine, Uptown, Columbia City, and Ballard
* South Lake Union ranks 3rd in areas/commercial districts experiencing net increase in total jobs since 2003. Pioneer Square and the Duwamish generated more jobs than South Lake Union over the same period
* South Lake Union makes up less than 1.2 percent of our city's land area and contributes to about 4% of the City's employment base yet receives the lion share of city revenues (see immediately below)
Charts below only include areas of the city that have experienced gains in employment. Does not include areas of the City (including downtown) that experience a drop in total jobs since 2003 thru 2007 - most current data sources - more details below
Note below that the biggest gains by far in employment since 2003 occurred in Seattle's Industrial Area - 6219 jobs added. Pioneer Square was next with 2538 jobs added since 2003
* South Lake Union
makes up less than 1.2 percent of our city's land area and contributes to about
4% of the City's employment base yet receives the lion share of city revenues
(see immediately below)
For more details on amounts we are spending in the city's budget and CIP for South Lake Union click here: http://www.zipcon.net/~jvf4119/SLU09cost.htm#Citys%2009%20Budget%20contains%20$129%20million%20for%20Paul%20Allens%20South%20Lake%20Union%20Plan;%205-Year%20CIP%20top%20$862%20million!
Additional Development added to South Lake Union (SLU) since 2002 has NOT lived up to expectations:
* About half of Vulcan developments are vacant
* About 42 percent of all new development remains vacant
* Only a small percentage of the new development is biotech in SLU.
* A large percentage of new developments are occupied simply by businesses relocating from other parts of town so it's no real net gain in jobs for Seattle
* Of the 1.8 million sq. feet added (significantly less than the Mayor's prognostications - which he estimated at one point would reach over 4 million added sq feet by now - about 1.1 million sq. feet are occupied. Assuming an employee takes up 275 sq ft. of space that means that amount of new space produces 4000 jobs. However many of these were jobs simply relocated from somewhere else in Seattle into South Lake Union. The City's 2007 jobs report taken from State and Regional data sources shows a net gain since 2003 of 2400 jobs in South Lake Union
To compile above chart we surveyed existing new developments and went to websites for the existing properties for listings and then calculated available space from those listings - what was vacant, what was occupied