Phila. near top in life-sciences industry: Study

The Philadelphia area ranks behind only Boston in terms of the vibrancy of its life-sciences industry, according to a new national study.

A report, being issued today at the BIO 2009 convention in Atlanta, shows how a 12-county Philadelphia region compared with 10 other areas with significant clusters of pharmaceutical, biotechnology and medical devices firms, research institutions, and health-care services businesses.

Conducted by the Milken Institute, the study is an update of one issued nearly four years ago when the BIO trade association held its convention in Philadelphia. At that time, Philadelphia was in third place, behind Boston and the San Francisco Bay area.

By many measures, the Philadelphia region improved its competitive position over the last four years. The report uses data from 2007 that show the life-sciences sector in the region employed 94,400 people. Of that total, 56,300 worked at pharmaceutical, biotech, medical devices and R&D companies or organizations.

Only New York, with 68,062 jobs, had a bigger employment base.

Much of the Philadelphia-area's employment in the "therapeutics and devices industry" is centered in Montgomery County, which had 24,745 people working for life-sciences employers. The biggest there is Merck & Co. Inc., which employs more than 12,000 in the county.

Compared with other areas, Philadelphia stood out for its strength in "human capital," according to Milken researchers. They considered factors including the number of academic degrees awarded, post-doctoral graduate students in life sciences, and institutions granting Ph.D.'s.

However, the researchers noted some vulnerabilities. In particular, "economic realities" are driving consolidation in the pharmaceutical industry, creating the prospect of significant job losses among the largest drug companies.

The Philadelphia region was particularly weak in creating new biotech firms that might be able to absorb those let go during the current recession. The study said the region ranked ninth out of 11 in terms of the number and growth of small life-sciences businesses.

Philadelphia "has yet to develop the entrepreneurial sophistication" of places such as Greater San Francisco, San Diego, Boston, Greater Los Angeles, or Greater Raleigh-Durham, according to the report.

Over a 10-year period, Philadelphia experienced a "relative low birth rate" of small life-sciences firms, the Milken report states. Worse, the death rate of Philadelphia's small firms was the highest of the 11 metro areas between 2002 and 2007.

The Milken researchers recommend that the Philadelphia area start "incubating programs" that match the needs of local life-sciences entrepreneurs. In particular, those programs need to offer opportunities to collaborate with Big Pharma, such as Merck, GlaxoSmithKline and Wyeth.

"A culture of collaboration will create a dynamic and renewable supply chain of innovation and production," the report concludes.

The 114-page report defines "Greater Philadelphia" as the following counties: Bucks, Chester, Delaware, Montgomery and Philadelphia in Pennsylvania; Burlington, Camden, Gloucester, Mercer and Salem in New Jersey; New Castle, Del.; and Cecil, Md.

Researchers ranked 11 metropolitan areas by an overall composite index score that incorporates the life-sciences sector's current impact, innovation pipeline and small-business vitality.

Here's a full list and each city's overall composite score:

1. Boston (100.0)

2. Greater Philadelphia (97.7)

3. Greater San Francisco (92.1)

4. Greater New York (92.0)

5. Greater Raleigh-Durham (88.2)

6. Greater Los Angeles (86.8)

7. Chicago (80.1)

8. San Diego (78.7)

9. Minneapolis (78.2)

10. Washington (74.8)

11. Seattle (69.2).

The study was sponsored by BioAdvance, PhRMA, PricewaterhouseCoopers, Select Greater Philadelphia, BioNJ, Delaware BioScience Association, Greater Philadelphia Life Sciences Congress, and Pennsylvania Bio.