The Downside of Biotech Offshoring

by: Paul Kedrosky

There is a worth-reading piece in today's San Diego U-T on the changing world of biotech, and the implications for everyone from venture capitalists to urban planners. The gist: Re-purposing existing drugs is steadily more important than creating new ones, and companies created that way are generally minimally staffed. They're virtual companies, built around a web of contractors all over the world.

While that might not seem such a bad thing, it is if your local economy is built around catering to biotech booms. Among other things, it makes your lab-heavy commercial real estate mix look skewed; and it changes your anticipated tax base if most of said startup's employees are elsewhere, not in San Diego County, or wherever people have decided to bet the proverbial farm on biotech.

During the height of the biotech boom in 2000, about 1.7 million square feet of laboratory space was leased, the biggest year ever for San Diego. In the first nine months of this year, 375,000 square feet of lab space was leased.

Keeney anticipates that a total of 450,000 to 500,000 square feet of lab space will be leased by the end of year, roughly on par with the 521,000 square feet leased in 2005.

"Typically, you see a biotech startup raise a certain amount of money, and the next event would be that they lease some laboratory space," Keeney said. "But this is not now the case."