Executive Summary:

Publicly- and privately-held corporations belonging to the biotechnology, medical device, pharmaceutical, biopharmaceutical, and agricultural biotechnology family of industries are commonly and collectively lumped together into the generic biotechnology industry.  They share a dependency upon a cluster of exciting, new technologies flowing from the molecular life sciences, chemistry, biology, applied physics, several engineering sectors, and applied mathematics/computational sciences.

California is not only the generative force for the industry but is also home to three of the four largest biotechnology companies and 40-55% of the nation’s total biotechnology presence, depending upon whether you measure the number of companies, revenues, or the number of employees.

National and regional biotechnology industry clusters now identify workforce development as the second or third largest hurdle to commercialization and economic success.  Dramatic workforce shortages exist across California’s biotechnology industry, as indicated by several recent studies, including those studies evaluating and quantifying the dependency of California biotechnology companies upon foreign workers, i.e., H-1B visa holders.  About 9% of California’s biotechnology workforce is composed of these foreign workers who possess skill sets that are either largely unavailable in the general U.S. labor pool or are in high-demand areas which California higher education currently cannot provide due to the paucity of key training programs and inadequate resources to address rapidly changing technologies in the applied sector.

A series of public hearings has been held to identify key roadblocks to the evolution of the state’s biotechnology industry, including those related to the current and future workforce.  These hearings have included a representative cross-section of 22 biotechnology and medical device companies ranging from start-ups, to research boutiques, to very profitable mature Fortune 500 companies.

The Hearings have pointed to the most critical short-term and long-term industry workforce needs being in the applied sector (pertaining to those skill sets associated with the transition of companies from the discovery, basic research mode into FDA approval, commercialization and manufacturing). These applied sectors include translational research, applied research and development.

The Hearings point to the need for allocation of new state higher education-directed resources and the creation of new academic-industry-government partnerships to create the future workforce and to continue California’s primacy in biotechnology.
 

Background:

Defining the perimeter of the biotechnology industry is difficult, and frequently one resorts to terms such as biocommerce or the bioscience industry, with the understanding that it includes the agricultural biotechnology, bio/pharmaceutical, pharmaceutical, environmental and medical device industries.  There exist low level barriers between these related industries, which are becoming even lower.  The industrial biological playing field is in an incredible state of flux and the various sectors of biotechnology are combining in interesting, exciting, and frequently challenging ways. While biotechnology is being applied in a number of market sectors, including agricultural biotechnology, genomics, human diagnostics, medical devices, medical therapeutics, scientific equipment/supplies, scientific services and other areas such as environmental protection and veterinary medical applications, the largest sector in California and the nation is medical therapeutics.

An additional caveat: biotechnology does not mean just molecular and cell biology, a common error. Biotechnology includes a complex array of scientific and engineering disciplines, frequently synergistically intertwined. Modern techniques of chemistry, biology and physics combine to form a life science focused array of technologies including monoclonal antibody, cell culture, biosensor, antisense, protein engineering, nano, information, quantum computing, proteomic, microarray and recombinant technologies. For an industry perspective see http://www.bio.org/aboutbio/whatis.html. These and other technologies, fertilized by capital investment from government, venture capital funds, the banking and investment community and the pharmaceutical industry have helped to create this new industrial sector, propelling us into the age of industrial biology. Currently the main applications of biotechnology are in medicine, agriculture, industrial processes, and environmental management.  Notably, biotechnology exists in close union with academia, which not only supplies important fundamental, discovery (i.e., basic) research in the underlying sciences and engineering but also provides a skilled workforce in the basic research, applied/translational research, development, manufacturing, production, sales and distribution arenas.

Understanding the terms basic research, applied research, and development is important relative to comprehending the changing status and workforce needs of the industry. The National Research Council and the National Academies of Science and Engineering have recently defined several of these terms:

Basic research: the objective is to gain more complete knowledge or understanding of the fundamental aspects of phenomena and of observable facts, without specific applications toward processes or products in mind.

Applied research: the objective is to gain knowledge or understanding necessary for determining the means by which a recognized need may be met.

Development: the systematic use of the knowledge or understanding gained from research, directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. It excludes quality control, routine product testing, and production.

The workforce of the U.S. industry is in excess of 180,000, growing at 12-17% annually over the last five years, with one prediction being made that it may grow to over 1 million by the year 2015. More conservative predictions place the workforce to be around 500,000 by the year 2010, with California contributing over half that amount.  The rapidly evolving nature of the industry is impacting both the nature of its current and future workforce and, ultimately, the competitiveness of California companies.

According to Michael Porter’s seminal studies, there are five fundamental competitive forces that determine the ability of firms to earn above-normal returns on investments: “…the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors.”  As companies and dynamic industry clusters such as biotechnology mature, the nature of competitive advantages shifts and, as refined recently by Jeffrey Pfeffer, sustenance of competitive advantage relies not only on corporate technology, patents and strategic position, but also on how companies develop and manage their workforce.  Biotechnology company survival, maturation and success is ultimately linked to the nature of the organization and its employees, a point not lost on the industry’s Human Resource executives who are challenged with maintaining a particular company’s competitive advantage through the contrapuntal orchestration of both their management and human resource developmental skills. The additional challenge of course is that the industry is not static but it is evolving with extraordinary shifts in technologies as well as market- and capital-driven business models, making the acquisition and retention of employees second or third highest on lists of the ten or more greatest hurdles to commercial success. There are a number of other factors which are impacting the creation and maintenance of an adequate California, U.S. and indeed global workforce in the biotechnology and medical device arenas, and these include unnecessarily burdensome regulatory oversight, drug importation, adverse event reporting, reimbursement, and acceptance, etc.

The U.S. technical workforce is estimated to be 19% Ph.D., 17% MS, 50% BS, and 14% combined voc-ed/community college trained. The nature of the workforce in the past has largely reflected that of the typical biopharmaceutical research boutique with emphasis on early stage innovation and discovery, drug target and lead candidate identification, etc., basically the “R” of R&D, or better yet the “R” of these “R&d” companies.  The biotechnology workforce has been largely recruited from the large pool mostly produced by traditional programs in U.S. institutions of higher education, institutions that have performed commendably in the quality and quantity of their student products over the past 15 years.  As shown by several U.S. National Academies of Science and Engineering studies over the past five years, the pool of these traditional basic research-trained university products has been more than sufficient to drive the “R” component.

Relative to the growth and transitioning of companies, three overviews in Figures 1 to 3 show the change in human resource needs that a company experiences as it moves from research boutique (the R&d stage) to process and product development and finally manufacturing (the mature r&D stage). In a medical therapeutics company these breakpoints can happen as follows: a small company of between 1 and 49 employees is involved in research and development (Figure 1); as processes and products are developed the company will grow to between 50 and 149 employees (Figure 2); and when the company goes into manufacturing and production, the company will grow upwards of 150 employees (Figure 3).  Notably, research and discovery goes on in all three phase of Figures 1-3.  Although discovery research is a central and essential component, requiring an elite corps of well-trained investigators, the major growth in the workforce of a maturing company occurs in the operation, development, quality, clinical, regulatory, manufacturing, finance business development, marketing and sales. Many companies that were formed in the late 1980s and early 1990s now have products that are beginning clinical trials and/or entering commercial manufacturing. The larger companies, which have already entered clinical or commercial manufacturing of one or more products, are expanding their product base, and therefore, their manufacturing capacity. Furthermore, these companies are developing their own marketing and sales divisions, areas which will probably see a major expansion beginning in the latter part of this decade or the early part of the next.

Realistically, with the explosion of new drug and biotechnology discovery technologies, including admixtures of combinatorial chemistry, microfluidics, applied genomics and bioinformatics, nanotechnology, DNA and expression arrays, proteomics, transcript profiling, cheminformatics, automation and robotics-based ultra high throughput screening and predictive pharmacology, over the past few years U.S. HR executives have been greatly challenged in further developing their workforce, especially as their companies shift from “a R&d” into an “r&D” status.  Their hope has been that the available pool stemming from these traditionally-focused higher-education science programs will have exposure to, or hopefully even some in-depth knowledge in, one or more of these new relevant technologies.

Currently, companies seek individuals who possess fundamental leading-edge knowledge in the traditional areas such as biochemistry, molecular biology, pharmacology, computational science and chemistry, but also with skill sets from the above dynamic zoo of new technologies.  Realistically, even the most prescient U.S. institutions of higher education are hard-pressed to develop specialized training programs and add more to the traditional curriculum, which by itself is exploding from the amount and depth of new basic knowledge.  There is, however, great resistance to expanding the time-to-degree from all circles, including the public taxpayer who underwrites the greatest part of U.S. higher education.  In short, the modes to the education and training of the future biotechnology workforce is not at all clear given the pressures of content, timing and costs.

Company expectations of their future new science and technical employees include possession of knowledge and appreciation for aspects of business development, impact and management, regulatory matters and FDA compliance, quality issues, Good Manufacturing Practice, technology management, project management, data management, interdisciplinary aspects of product creation, the drug development and approval mechanics, etc., a proverbial “wish-list”.  At work here is another Hobsen’s Choice.  When given the option, company executives and HR specialists will always mandate maintaining fundamental science education and training rather than their compromisation by replacement of fundamental knowledge with new curricular content covering the above “wish-list”. Knowledgeable and clever traditionally-trained students however will usually find ways to acquire exposure or even deeper knowledge in the “wish-list” areas, if adequately advised of the need or the opportunities to do so.  Unfortunately, student advising in this area is a major problem in the U.S., due to the restrictive viewpoint of the biotechnology industry held by most faculty members, that is, that the industry is solely “R”-based and is mainly dependent upon gene-jockeying and cell-culture experts.  The three aforementioned U.S. National Academies of Sciences and Engineering formal studies and reports since 1995 recommending the better advising and exposure of future scientists and engineers to “alternate careers” are having effects, but only slowly due to the inherent preservative nature of the university research infrastructure at U.S. research institutions.

Prospective employees also need to be aware of the “soft” side of the industry, which in fact is not soft at all but rather mandatory when company success is at stake.  The environment inside a successful biotechnology company is characterized by high standards, intense and fast-paced activities, highly rewarding, science and technology applied on a large scale, highly regulated, “high tech and high touch”, and  “team-based-everything”. Companies want and need individuals versed in consensus-building with interactive and team skills, a customer focus, and leadership and management potential.  Regarding team-based approaches, even the few U.S. universities who recognize the need for such are challenged in shifting part of their modus operandi into a team-based process. In fact since the time when the University of Bologna first formed, institutions of higher learning have fostered the exact opposite, non-team approach, promoting independence and self-motivation.  The penalties of team-based approaches at examination time are legion.  Despite the difficulties of introducing team-based approaches, several prescient universities in states other than California have introduced team-based student learning and research approaches and these will serve as a stimulus and as paradigms for the other more conservative academic or less well-funded institutions found in California.

Currently biotechnology employees recognize that they will have 5-7 career shifts over their lifetime, a dramatic change from the recent past. In this regard, incumbent employees will face the reality of a continuing mode of skill upgrading throughout their career to compensate for the dynamics of the industry and its underwriting technologies, a form of “continuing ‘continuing’ education”.

The nature of the job of professional and training programs for future and incumbent employees are shifting dramatically as a consequence of E-commerce and the Internet.  New modes of web-based delivery, both synchronous and asynchronous are bursting forward, changing perhaps forever aspects of the traditional university, much to the concern of the traditional and in most cases fortunately self-preservative, conservative academy.   Currently, California institutions of higher learning are ill-prepared to address the reality of the digital learning environment that embraces industry and key federal agencies.  Recruitment of new employees is also shifting over to Internet modes.  Many biotechnology companies are now getting over 20% of their applications via the Internet, only exceeded by the applications received by current company employees referrals.

Despite the defibrillation of U.S. institutions by the industry to encourage the preparation and production of specialists for the industry, in phase with its needs, a shortfall has been continually present, requiring access to individuals outside of the U.S. labor pool.  The role of the foreign worker (H-1B visa holder) in the U.S. biotechnology industry was not appreciated until early 2000.  Surveys conducted under the aegis of BIOCOM San Diego and the Biotechnology Industry Workforce Committees have demonstrated that, depending upon the region in the U.S., between ~9-10% of the U.S. biotechnology workforce (~17,000 employees, 8,500 in California) is composed of H-1B visa holders.   Representative of the special nature of these talented individuals and their importance to the companies, about 85% of H-1B’s will be converted to Green Cards as company employees.  The 2001 national H-1B survey shows that the companies now spend about $10,200 for each H-1B visa holder, for processing fees and legal expenses through to the Green Card.

Nationally, biotechnology industry H-1B visa holders are mainly in highly-sought after areas such as analytical chemistry, instrumentation specialists, organic synthesis, product safety and surveillance, clinical research/biostatistics, bio/pharm quality, medicinal chemistry, product scale-up, bioinformatics and applied genomics, computer science, cheminformatics, pharmacokinetics, pharmacodynamics, etc. Also representative of the skilled nature of the California H-1B foreign worker is the fact that 40% are at the Ph.D. level, 35% MS, 20% BS and 5% MD. Hearings held in San Diego, the Bay Area, Boston, and Washington DC clearly show that the H-1B worker skill sets sought by companies match identically the most pressing employment needs of the biotechnology industry.  The H-1B route provides a temporary solution to shortages in the national and domestic biotechnology labor pools, shortages mirroring the inadequate production of appropriately-trained U.S. nationals by U.S. institutions of higher learning.  The reality is that universities, California institutions in particular have inadequate resources for expanding its training pipeline, especially in the specialized areas represented above, areas that reflect the need for people mostly below the Ph.D. level.

In summary, the biotechnology industry workforce is in a state of dynamic flux.  Dramatic increases are expected in phase with the new “R&d” and “r&D” associated with unanticipated new technologies and the human genome initiative, impacts that might accelerate the growth of the industry beyond 250,000 California employees by 2010.   Whether academic institutions will be able to meet the challenges, especially the reality of the “r&D” environment, are unknown, especially without the influx of new state and federal resources to create new programs.  The Internet will have a great impact, especially in the areas of professional development and on-line continuing education. Clearly, competitive success is reached through people, and California’s workforce is one of the most vital and dynamic sources of competitive advantage. University programs and the degree to which they are in phase with industry training needs and expectations will be major determinants of the success of California’s companies, which in turn will have significant impacts on regional economic development as well as university growth.
 

Summary and Recommendations from the Hearings:

Much of the excitement of California’s industrial base a stems from the promise of new technologies—especially those of the molecular life sciences and the cognate fields that comprise biotechnology.

The nation’s biotech industry is now “in play” and will remain so for many decades, especially as the fruits of the genome projects are harvested to address the many problems of human disease, the food supply, and the environment.

California is embarking on a dawn of new therapeutics and biomedical devices that will transform medical care and lower the overall cost to government and the taxpayer.

California is an extraordinarily competitive, innovative and entrepreneurial state and it can assume a dominant position in the application of these over-arching technologies of the 21st century, but such a position cannot be guaranteed.

A skilled workforce is one of the top three critical hurdles to commercial success in biotechnology in California

California needs to make a greater investment in biotechnology workforce preparation if it is to capitalize on its significant R & D investment and if the promise of this industry is to penetrate to the working men and women of California.

Despite California’s prominence in academically-led basic research and research training, we have to get from concept to commercialization, from test tube to pharmacy.

Although California’s biotechnology industry is shifting from R&D into manufacturing and commercialization, new jobs in basic will be created, but less so in proportion to those in development and manufacturing,

New programs need to be created that address applied/translational research and development and training of the future workforce, a workforce that focuses upon the transition from the research boutique mode to commercialization, from start-up to maturity, production and sales, and if California cannot provide that workforce, the industry will have no choice but to locate elsewhere.

To avoid this loss of what could be California’s primary industry in the 21st century, California must invest additional funds for current and future company employee training needs in specific areas at all degree levels, in particular BS and professional graduate degree levels, workforce fully in phase with industry needs and expectations.

Three “Centers of Excellence in Biotechnology, Applied Research and Workforce Development,” analogous to the UC Centers of Excellence in discovery research are required for the California State University system, Centers of Excellence that also link with clusters of community colleges in the San Diego, Los Angeles and Bay areas.

New applied research institutes need to be created that bridge the chasm between industry and the university, ones that accelerate training and the movement of ideas into products.

Specialized training facilities are needed that provide capstone training for students across both public university systems, especially in areas such as bioprocess engineering, the cost of which is beyond higher education’s current funding ability

New funds are needed to assist in long-distance delivery of courses and the creation of digital learning opportunities that engage multiple instructional partners.

Regional, intersegmental training facilities should be created that can address the training, space and equipment needs of universities, junior colleges and vocational-education institutions so that together, they can do a better job of meeting fast-changing industry workforce needs. Such facilities should be funded through a combination of state, federal and company sources—but the state of California must step up and put a stake in the ground if it is to hold this promising industry in California.

Support is needed that facilitate new inter-university and inter-university system partnerships, optimizing past state investments and sharing resources.

The universities need to experiment with new degrees.  A Ph.D. in the biomedical sciences now requires on average 8.2 years and that duration is lengthening at a rate of a month a year. Shorter, faster, more focused, industry-responsive educational opportunities are needed.  New professional graduate degrees that deploy company scientists in unique academic-industry partnerships must be considered.  Seed funds are necessary to jump-start these new approaches.

New industry-focused and responsive programs need to be created to eliminate the dependency of California’s biotechnology companies on foreign workers with H-1B visas.

California has an extraordinary window of opportunity to transition biotechnology to commercialization. This is not luck; it was earned it through expensive investments in R & D. If the working people of California are to enjoy the benefits of those investments, we must address the critical issue of workforce production.  Other states have given extraordinary attention to and funding of biotechnology workforce development, proclaiming in some cases the existence of a “state of emergency” in frank competition with California for its nascent and existing companies.  California has not addressed such workforce issues in the past, and they must be attended to before it is too late.

• The driving goal should be to have California remain recognized as the birthplace of the biotechnology industry.  The industry is still in the birthing process. Some region or state will claim it by 2010 and it should be “us”, not “them”.
• The competition for top candidates among companies remains fierce and the 2001-2002 job market will be the best in years.  There is 1.4% unemployment for chemists in bio/pharmaceuticals. Wage escalation and employee poaching is getting out of hand.
• Competition among companies is affected by a10-year low in undergraduate and graduate enrollments in the natural sciences, forcing dependency upon foreign workers.
• More Ph.D.’s are now entering industry directly, by-passing the post-doc stage.
• Training is required in the areas of regulatory affairs and FDA compliance, bio/pharmaceutical and medical device quality control and quality assurance, Current Good Manufacturing Practice, clinical affairs, clinical biostatistics, technology management, project management, data management, management of drug development,  bio/pharmaceutical marketing, and biotechnology entrepreneurialism/business development.
• The industry is the most regulated in the world, driven by governmental scrutiny, oversight, and enforcement, leading to an unsatisfiable need for regulatory specialists whose presence are a major source of competitive corporate advantage.
• California currently lacks appropriate, targeted, industry-responsive training programs, and there is a need to identify new state resources to craft university-based programs in the largely, if not exclusively, applied research and development sectors.
• New professional graduate degrees need to be created in many of these areas which train the future and current workforce.
• Recruitment periods now average 4 months, with some critical positions requiring 14-16 months.
• Industry should be involved at the front-end and look for obvious win-win opportunities, especially in the area of new academic-industry partnerships in creating and sustaining new degree and training programs.
• We must “grow our own workforce” and recruit new employees directly from academia at all levels that can “hit the ground running” without experiencing culture shock.
• UC programs are too theoretical, and state university programs are often too applied.  California requires a better balance of both.
• The science knowledge of California undergraduates is generally strong and adequate, but more hands-on laboratory skills, especially from a trouble-shooting perspective, are needed.
• Undergraduate skills in reading, math, statistics, and large database manipulation need improvement.
• Although there are distinct differences between workforce development (0-5 year time-line) and education (8-15 year time-line), California must improve the numbers and quality of math and science teachers, especially through the California State university system.
• Industry should work with state and key organizations like the CSU Program for Education and Research in Biotechnology to develop curricula that directly match company needs, to provide intern/co-op opportunities that are required for graduation, to build both financial and intellectual partnerships, to create a faculty internship program,  to build company adjunct professor slots in the universities, and to build student internship programs.
• The success factors needed for the future bioscience workforce (from the perspective of the individual) are science/technology educational- and experience-based credentials,  well-honed interpersonal and communication skills, team-work ready and able, leadership-prone, professional excellence-focused, change tolerant, multi-tasking capable, and management skills-enriched.
• The success factors needed for the future bioscience workforce from the perspective of academia are: preparation of students for working in a government and statutory law regulated environment, developing team-based instructional and research environments within the university, honing students’ communication skills for science and technology, and developing internship programs as part of the curriculum.