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CALIFORNIA HEALTH CARE TECHNOLOGY COMPANIES: 4,786 NEW JOBS CREATED

Executive Summary

CALIFORNIA HEALTH CARE TECHNOLOGY COMPANIES: 4,786 NEW JOBS CREATED by firms founded since 1988 account for 10% of the state's total job growth from 1988 to 1992, according to preliminary results of a survey sponsored by the newly formed California Healthcare Institute. In the midst of California's slumping economy, revenues for its health care technology industry grew 18.6% in 1992 to just under $12 bil., the institute reports. About 143,000 Californians are employed by the companies and related research organizations that were included in the survey -- the 138 largest health care technology companies in California. More than 800 high tech health care companies are based in the state, the institute estimates, including almost 30% of the U.S. biotech firms. A full report on the survey findings is scheduled to be released in late September. The industry survey is one of the first projects undertaken by the California Healthcare Institute, a South San Francisco-based organization that will focus on public policy issues affecting California's "high technology health care" industry. The formation of the institute was announced Aug. 16. CHI will be headed by former FDA Commissioner Charles Edwards, MD, who served until recently as president and CEO of the Scripps Institutions of Medicine and Science. As president of the institute, Edwards will work closely with Genentech President and CEO Kirk Raab, who will serve as the first chairman of the institute's board of directors. "We see the institute as a catalyst for those engaged in health care R&D to come together to advance responsible policies that serve the interests of the community as well as the industry," Edwards explained. Among the issues the CHI says it plans to address in the near future are state and national health care reforms that preserve incentives for breakthrough medicines while helping to contain costs, low-level radioactive waste disposal and future funding for the state's universities. Raab noted that the industry survey is an attempt to "quantify, for the first time, the economic contributions of California's biomedical/bioscientific communities, including research and manufacturing." CHI members include biotechnology, medical device and pharmaceutical companies active in California, as well as research organizations. To date, CHI has 59 members. Joining Raab on the institute's board of directors are Amgen's Gordon Binder, Shaman Pharmaceuticals' Lisa Conte, Isis Pharmaceuticals' Stanley Crooke, Baxter's Michael Estes, Syntex' Paul Freiman, Hybritech's Donald Grimm, Athena Neurosciences' John Groom, Gensia's David Hale, Allergan's Gavin Herbert, COR Therapeutics' Vaughn Kailian, Merck's Richard Lane, Ligand's David Robinson and Cell Genesys' Stephen Sherwin. A recent survey of New Jersey's health product manufacturing sector sponsored by the New Jersey Health Products Council reveals that the industry's growth in employment levels has slowed on average over the last two years. Among 13 companies reporting employment figures, job growth during the two-year period from 1991 to 1992 averaged .3%, compared to 3%-4% in previous three- year periods. Applied to the industry's statewide employment of 61,700, the job growth rate figure suggests that fewer than 200 new jobs were created in New Jersey's drug industry in the last two years. Nevertheless, the survey showed the industry is continuing to grow in other respects, the council reported. Compared to 1990, payroll was up more than 11.5%, sales were up nearly 18%, taxes paid to state and local governments were up almost 30%, and R&D investments were up more than 19% to $2.3 bil. in 1992, a new high in the portion of sales dollars invested in R&D -- almost 20%. The R&D spending increase of $364 mil. accounts for 57% of the estimated $640 mil. gain in sales revenues in 1992 over 1990. In total, the survey found, the health products industry added $9.6 bil. to New Jersey's economy in 1992 in both direct payments (close to $7 bil. in wages and salaries, purchases from New Jersey vendors, capital expenditures, taxes and contributions) and indirect payments (almost $3 bil. through such means as bank deposits, retail purchases and payments for services). Capital expenditures in 1992 increased 75.5% from 1990. The New Jersey drug industry survey is the latest in a series of studies begun in 1968, conducted by Hal Eastman, Rutgers School of Management. The 16 participants in the current survey were: Bristol-Myers Squibb, Carnrick Labs, Carter-Wallace, Ciba-Geigy, Hoechst-Roussel, Hoffmann-La Roche, Johnson & Johnson, Knoll, Lederle, Merck, Pfizer, Reed & Carnrick, Sandoz, Schering-Plough, SmithKline Beecham and Warner-Lambert.

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