Monitor Sacramento Life Sciences

TAKING
ACTION FOR
TOMORROW
Sacramento Life Sciences
Strategic Action Plan
Prepared by:
Paul Yu-Yang, Gabriela Lee, Sungene Ryang, Tod Stolz
UC Davis Graduate School of Management
Faculty Advisors:
Andrew Hargadon, Faculty, UC Davis School of Management
Larry Fox, Director of the Technology Transfer Center
Nicole W. Biggart, Dean of the UC Davis School of Management
CONNECT organized The Governor’s Sacramento Region

Life Sciences Summit.
Copyright © April 2004
SARTA
TAKING
ACTION FOR
TOMORROW
Sacramento Life Sciences
Strategic Action Plan
Prepared by:
Paul Yu-Yang, Gabriela Lee, Sungene Ryang, Tod Stolz
UC Davis Graduate School of Management
Faculty Advisors:
Andrew Hargadon, Faculty, UC Davis School of Management
Larry Fox, Director of the Technology Transfer Center
Nicole W. Biggart, Dean of the UC Davis School of Management
CONNECT organized The Governor’s Sacramento Region

Life Sciences Summit.
The Sacramento Regional Technology Alliance (SARTA) commends the efforts of the University of
California including the Office of Research, the Technology Transfer Center, UC Davis CONNECT and
the UC Davis Graduate School of Management for their ground breaking efforts in the development of the
regional Life Sciences sector in the Sacramento region.
This sector is flourishing with numbers of developing companies being formed and cooperative rela-
tionships being developed both in the academic community and the private sector. The Sacramento
Regional Life Sciences Summit is one more giant step in establishing the region as a viable Life Sciences
hub. The investment community and entrepreneurs alike will directly benefit from this conference.
The breadth of speakers planned for this event exceeds any prior effort of its kind in the
region. Regional, national and international organizations and individuals involved in the bio-
sciences will be represented.
Planning for future efforts in the evolution and expansion of the Life Sciences in our area has also been
a key part of the preparation of this Summit. The comprehensive nature of the Sacramento Regional Life
Sciences Strategic Action Plan will be a template that will guide the future of technology development in
the region for years to come. The efforts of University staff, faculty and students should be commended
for their extensive data collection and assimilation efforts in deriving a meaningful document that will edu-
cate and direct many of our state and national decision makers.
This type of leadership at the regional level is essential for the development of the economy and
unlocking the true potential of our institutions of higher education and research facilities. Setting the stage
for similar events and activities, this event and planning effort raises the bar for others competing for the
recognition gained here through these efforts. The next step for this area is a true commitment by local
leaders, the government, and the University to make these plans a reality.
Congratulations to all. We hope to support your efforts at every turn.
Sincerely,
Roger Akers
Chair
Sacramento Regional Technology Alliance
iv SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
March 4, 2004
Business development interests have discovered the promise of Sacramento, including its
location near the San Francisco Bay Area with many of its advantages but without the liability
of the high cost of living and overcrowding.
The greatest potential is the growth of the Sacrtamento area’s life sciences industry.
UC Davis, historically a major research center in agriculture, is developing an international
presence in life sciences subfields such as genomics, proteomics, and bioengineering, and in
medical therapeutics and diagnostics.
The nationally ranked UC Davis Graduate School of Management is playing a major role
by offering first-class business talent and expertise to commercialize the discoveries and
inventions that are emerging from the campus and the region.
This plan assess the elements in place and emerging possibilities that can form the founda-
tion of a robust life sciences business cluster in Sacramento. There is much to build upon,
but as the report notes, having the right ingredients for a cake does not guarantee that a cake
will rise; a good recipe is critical.
Four UC Davis MBA students, a highly skilled group with deep experience in science
fields, have produced a useful and insightful document that inventories the region’s “ingredi-
ents.” This is an important resource for the region and will provide guidance to business
people and political leaders looking to enhance the economic future of Sacramento.
I look forward to participating in the conversations and actions of the months and years
ahead that may yield a high-quality recipe for this community.
Sincerely yours,
Nicole Woolsey Biggart

Dean
ACKNOWLEDGMENTS
We would like to thank the following people for their assistance in the organization of this meeting.
Gussie R. Curran Patty Garamendi Nora Moore Jimenez
UC Biotechnology Research& Education State of California, Business, Transportation UC Davis CONNECT
Program and Housing Agency
Jesse Szeto
Oleg Kaganovich
Gregory S. Davis SARTA
Tricia Valenzuela
Joan Dean Judy Kjelstrom
UC Davis Biotechnology Program
Jean Wigglesworth
Todd J. Feinberg Deb Matsumato Entrepreneur Development
UC Davis CONNECT UC Davis CONNECT
The following people allowed us to interview them to expand their comments at the Summit.
Walid Aboul-Hosn Katherine Ferrara Barry Klein

Oma Medical, Inc. Department of Biomedical Engineering, Office of Research, UC Davis
Roger Akers UC Davis Kit Lam
Akers Capital, LLC Chris Gill Division of Hematology & Oncology,
Nordine Cheikh McClellan Technology Incubator UC Davis Cancer Center
Monsanto Calgene LLC Jon Gregory Scott Lenet
Richard Dorf Golden Capital Network DFJ Frontier
Department of Electrical and Computer Todd Kaufman Michael Palombo
Engineering and Graduate School of Genentech City of Vacaville
Management, UC Davis Jim Kitchel Charlie Soderquist
Sacramento Angels
The following people have provided valuable feedback and comments in review of this plan.
Roger Akers David Gruber David R. McGee

Akers Capital, LLC Workforce Strategy Center Technology Business Development,
Nicole Woolsey Biggart Fran Kennedy UCD Medical Center and Office of Research,
Graduate School of Management, Employment Development Department, UC Davis
UC Davis State of California Kristan Otto
Sue Markland Day Martin Kenney Economic Development Department,
Bay Area Bioscience Center Dept. of Human and Community Development, City of Sacramento
Chris Gill UC Davis Diane Richards
McClellan Technology Incubator Barry Klein City of West Sacramento
Jon Gregory Office of Research, UC Davis Tom Zeidner
Golden Capital Network Judy Kjelstrom Economic Development Department,
Biotechnology Program, UC Davis City of Sacramento
We would also like to thank Cynthia Yang for proofreading and copy-editing portions of the plan and Christina Lozano
for design and page layout assistance. Monitor Group provided final editorial and design assistance with this report. The
Monitor team was led by Matthew Le Merle and Joan Chu, who are Partners in the firm's San Francisco and Los Angeles
Offices, respectively, and consisted of Marielena Gutiérrez, Ryan Kaiser and Steve Szaraz. Lily Rappoli and the Design
Studio at the Monitor Group illustrated, designed and created the layout of this report.
vi SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
CONTENTS
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
1. Introduction:
Developing the Sacramento Regional Life Sciences Cluster . . . . . . . 1
2. Business Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4. Intellectual Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5. Financial Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6. Social Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
APPENDIX
Clusters of Innovation Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow vii
viii SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
EXECUTIVE SUMMARY
By Andrew Hargadon, PhD

Associate Professor, UC Davis Graduate School of Management
The Sacramento Region has contributed to the global Life Sciences for more than 50 years. This impact
has traditionally built on the interaction between several critical factors—leading research institutions, a
dominant agricultural region, a strong history of local and international outreach, and critical research support.
In addition, proximity to Bay Area Life Sciences companies and capital, the emergence of a prominent
medical center and healthcare community, and an increasing number of Life Sciences start-ups and ven-
ture capital firms promise to give the region even greater impact in the future.
The potential for significant regional economic growth in the Life Sciences over the next several decades
reflects this confluence of factors. Indeed, the Sacramento region sits on the edge of transition. Much of
the groundwork for this transition—for the development of a vigorous and competitive Life Sciences
cluster in the Sacramento region—has already been laid. There are approximately 86 Life Sciences
companies, and over 2,500 people employed at those companies throughout the region. While these
numbers are small relative to the three mature Life Sciences regions in California—the Bay Area, San
Diego, and Los Angeles—the wide diversity of the companies in the region is encouraging. Sacramento
is home to companies specializing in pharmaceutical biotech, agricultural biotech, medical devices, diag-
nostics, and manufacturing.
The lifecycle of robust economic communities is long, however, and marked by different needs at dif-
ferent stages. Later stages highlight the role of financial and social capital in creating sustained economic
growth among firms and investors but in doing so downplay critical early investments. The early stages
require significant investments in basic research and infrastructure to develop human and intellectual cap-
ital—an educated and entrepreneurial workforce and body of intellectual property located mainly in
research institutes. The Sacramento region is transitioning from these early stages, reflecting an emerging
social and economic community where established firms, new ventures, and investors combine to shift the
locus of innovation from research institutes into the commercial domain. This plan considers the current
state of the Life Sciences in the Sacramento region and summarizes recommendations for moving forward.
The Challenge
Building a robust business cluster around the Life Sciences is an extremely challenging effort. Many
regions are pursuing a strategy of replicating or displacing existing clusters, despite initial studies that have
found such efforts to be costly and unsuccessful. According to Joseph Cortright, author of a Brookings
Institution study, “Signs of Life: The Growth of Biotechnology Centers in the U.S.,” 83% of local devel-
opment agencies place Life Sciences as one of their top two priorities, and 41 states have initiated Life
Sciences programs. It is unlikely that such direct strategies will work.
One difficulty lies in understanding and appropriately supporting the economic and social processes by
which a Life Sciences cluster evolves from a loose agglomeration of research efforts to a tightly knit region-
al economy. Replicating the features that distinguish today’s Life Sciences clusters (e.g., the Bay Area, San
EXECUTIVE SUMMARY ix
Diego, and Boston) will not be as effective as identifying the appropriate measures for the Sacramento
region’s current stage of development and emerging technological and market opportunities. The
ingredients of relatively mature Life Sciences clusters (e.g., a large number of start-ups, access to ven-
ture capital, and strong entrepreneurial networks) cannot simply be identified and recreated. The
notable components of any one stage often recede into the background in later stages as others take a
more prominent role. This plan considers the current needs of the region within a framework of the
overall lifecycle of evolving economic clusters.
Another difficulty lies in attempting to replicate the existing focus and competencies of established
clusters. The cultivation of new regional advantages requires exploiting new scientific and technical break-
throughs that fall outside traditional boundaries. Fortunately, such breakthroughs tend to take place at the
borders between industries or fields, where emerging technologies and markets create new commercial
opportunities. The Sacramento region is well positioned to exploit the diffusion of Life Sciences tech-
nologies and techniques into relatively untapped markets in which it holds a leading position. This plan
considers how this position gives the region unique advantages that can be used to create a Life Sciences
cluster distinct from others.
Finally, while the Sacramento region holds considerable potential, it remains a relatively fragmented set
of communities involved in disparate aspects of Life Sciences research and commercial ventures. While
such diversity makes it difficult to develop the tightly integrated social networks that enable the smooth
flow of capital—human, intellectual, financial, and social—underlying the successful evolution of a clus-
ter, a diverse Life Sciences cluster provides a more robust engine of regional economic growth than would
a highly specialized cluster. This plan concludes with recommendations for creating the dense networks—
the social capital—that can foster the smooth flow of human, intellectual, and financial capital into the for-
mation of new ventures and pursuit of new opportunities.
Answering the challenge of ensuring the continued growth and leadership of the Life Sciences in the
Sacramento region will require the coordinated efforts of a range of commercial, academic, and govern-
ment agencies. This plan summarizes the contributions of participants in the 2003 Sacramento Region
Life Sciences Working Summit regarding the current state of the region and the necessary next steps.
The State of the Region

Economic communities can be considered along five distinct but interdependent attributes: their busi-
ness infrastructure and their stocks of human, intellectual, financial, and social capital.
The Sacramento regional infrastructure is fundamentally sound—there is an availability of relatively
inexpensive commercial and residential real estate, a major freeway system that also provides access to the
nearby Bay Area, and a strong communication network offering high-speed Internet access. The needs of
Life Sciences ventures also require wet laboratory space, and several developments are underway in West
Sacramento and at the University of California, Davis, to provide such facilities for funded firms and sim-
ilar incubators for early stage ventures. Support for these developments and others will be critical to the
rapid evolution of the Life Sciences community.
Additionally, the University and surrounding research institutes both produce and attract a highly
educated workforce—a necessary characteristic of human capital in the Life Sciences. However, as the
x SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
intellectual property developed within these settings spawns new commercial ventures, there will be an
increasing need for a workforce equipped with the demanding skills of Life Sciences laboratory and
manufacturing work. Addressing these emerging needs in the workforce will require increased com-
munication between academic institutions, firms, and government agencies.
Within the Life Sciences, intellectual capital plays a leading role and depends upon sizable investments
in basic research. The University of California, Davis continues to attract large investments in basic
research from such agencies as the National Institutes of Health and the National Science Foundation.
Such investments are increasing the size and scope of research institutes in the region: for example, the
recently established Center for Biophotonics, Science and Technology and the M.I.N.D. Institute. History
suggests such basic research investments are a necessary foundation on which successful Life Sciences
clusters are built. For instance, research conducted at UCSF and Stanford University in the 1960s and ’70s
generated much of the intellectual capital that fueled commercial ventures in capital, in the form of tech-
nologies and patents but also human capital, in the form of highly skilled professional and technicians.
To transfer the human and intellectual capital generated in basic research settings into the marketplace,
greater levels of financial and social capital will be needed in the region.
Financial capital takes several forms—from the early investments in basic research to early and late stage
venture financing. Some of this capital has come in the form of grants from government agencies direct-
ed at small business innovation and technology transfer (e.g., SBIR/SBTT grants) or from similar public
institutions (e.g., UC Discovery grants). A small but increasing amount of venture financing, relative to
established Life Sciences clusters, is also starting to occur. In 2002, for example, 55% of venture capital
investments were directed to medical device and biotechnology start-ups. It remains difficult to determine
whether the relatively small flow of financial capital into the Sacramento region reflects the lack of new
ventures or vice-versa. However, given the current state of the region’s Life Sciences cluster, it appears to
reflect the early stages of a shift in focus from research to commercialization.
These new ventures also require the support of social capital to connect them with the disparate
resources necessary to support their entrepreneurial efforts (for example, access to early stage investments,
advice networks, and skilled labor). Social capital describes the network conditions that foster or impede
the combination of human, intellectual, and financial capital around new ventures. Dense connections
between researchers, entrepreneurs, and investors give new startups access to the resources they need to
succeed (and make scarce resources more productive). The Sacramento region may lack the larger net-
works of established regions, yet much can be done to increase the density—or connections—within the
existing network to facilitate economic growth.
The Life Sciences Strategic Action Plan

It was from within this context that the office of the Governor of California, UC Davis CONNECT,
the Sacramento Regional Technology Alliance (SARTA) and many others, along with support from the
Graduate School of Management at University of California, Davis, undertook the effort summarized in
this document:
To develop a coordinated and actionable Strategic Action Plan to ensure that the Sacramento
Region continues to grow and develop a leadership in Life Sciences over the next decade.
EXECUTIVE SUMMARY xi
At the Sacramento Region Life Sciences Working Summit held on September 30, 2003, in the working
sessions of many interested parties, and through the interviews and surveys conducted by the Graduate
School of Management at UC Davis, many of the region’s leading individuals, firms, and institutions con-
tributed their views to the development of this strategic action plan. The result: a set of shared values,
common interests, and recognizable themes that focus on enabling the Sacramento region to continue its
evolution as a vital Life Sciences Cluster. This process resulted in a full list of recommendations, described
in detail in the following chapters and summarized in the following table.
RECOMMENDATIONS
• Regional land-use and transportation decisions should reflect and enhance the advantages of the
region’s proximity to the already well-established Life Sciences cluster of the Bay Area.
• Industry representatives should work with local and state officials to define the infrastructure
needs of the industry, identify and target geographic particular zones for growth, and develop pub-
lic support for development of enterprise zones and incubators for start-up and young Life
Sciences companies funded by public investment with financial and management assistance from
the private sector.
• K-12, College and University, and state officials should undertake a collaborative effort to promote
Life Sciences education and employment opportunities.
• Current and future Life Sciences employment needs by skill category should be established and
communicated in order to drive educational and training activity.
• Regional academic centers should be designated to spearhead statewide efforts to expand collabo-
ration between state community colleges, universities and industry to develop more clinical sci-
ence and laboratory programs.
• Regional leaders should publicize the presence and success of current Life Sciences firms in order
to attract needed human and financial capital to the region.
• University, industry, and local governments should aggressively pursue the development of
research institutes similar to the Lawrence Livermore National Laboratories, the Center for
Biophotonics, Science and Technology, and the M.I.N.D. Institute.
• Research institutions must facilitate increased communication and collaboration between
researchers and potential industry partners in order to ensure the transfer of technology from
research to commercialization.
• University officials should develop a clear strategy and priorities for commercializing the intellec-
tual capital developed under their auspices that reflect the necessary balance between maximizing
the returns of any one license agreement and fostering regional economic growth.
• Regional leaders from industry, academia, and government should, individually and collectively,
construct the dense social networks that facilitate the smooth flow of human, intellectual, and
financial capital towards new ventures and emerging opportunities.
• Regional research institutes, and particularly the University of California, Davis, should focus
efforts on supporting the entrepreneurial process through outreach, education, and introduction to
the existing Life Sciences community.
• Dialog between the Life Sciences industry and government should remain a high priority: the
government should appoint a senior Administration official as a liaison with the Life Sciences
industry and the industry should establish a CEO advisory group for Life Sciences to present a
shared industry voice.
xii SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
INTRODUCTION: DEVELOPING THE SACRAMENTO
REGIONAL LIFE SCIENCES CLUSTER
By Paul Yu-Yang 1
This chapter provides an explanation of the Life
Sciences cluster as an evolving regional economic Over the last four decades, Silicon Valley has generated
community of growing importance to the Sacramento
high-technology firms which have become icons of the
area. We outline the emerging trends shaping the evo-
region’s success and have defined entirely new industries.
lution of this community and frame a strategy for
As a region, Silicon Valley embodies Joseph Schumpeter’s
reaching the next stage of its development.
ideas about technical innovations creating “new economic
Clusters are key factors in the economic success
spaces,” but its most striking feature is that these new
and competitive advantage of a region. Clusters, as
spaces have been created repeatedly…. If the world is
defined by Harvard University Professor and
entering a New Economy, then one would expect other
Monitor Group Partner and Co-Founder Michael
regions to experience the development of Silicon
Porter, are considered to be large, geographically con-
Valley-like institutions.1
centrated groups of interrelated companies and their
- Martin Kenney, Professor of Community Development, UC Davis
supplier networks that sometimes compete and
sometimes collaborate.2 Clusters are distinct from
industries and markets because participants may often compete in different markets and be officially
associated with different industries. These diverse organizations and institutions are linked in a cluster,
however, because they share a range of critical social and economic relationships that are mutually sup-
portive (see Exhibit 1). The theory underlying this notion of a “cluster of innovation” derives from an
examination of the critical factors necessary for fostering innovation, competition and growth in a wide
variety of regions and industries. The theory is described more fully in the Appendix.
Exhibit 1: Life Sciences Cluster Definition
CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 1

The Life Sciences cluster, for example, describes the community of organizations and institutions that
includes firms in pharmaceuticals, biotechnology, medical devices, agricultural biotechnology, diagnostics,
and medical information technology. This community also includes professional service firms such as law
firms, real estate developers, and venture capital firms with experience working with Life Sciences firms.
In addition, due to the central role of basic and applied research through academic and private research
institutions, funding agencies play critical roles, as do industry and regional development associations.
This discussion on cluster development will serve as a framework for establishing a strategic plan for the
Sacramento region.
Patterns in the Emergence of High Technology Clusters

This chapter reviews well-known regions that have succeeded in developing technology clusters and
discusses the patterns that are found throughout their historical development.
Companies that market new technologies, if successful, can significantly impact society. If the impact is
large enough, as is often the case with high tech companies, then entire new industries that significantly
impact a region’s economy are born. Over time these industries can become clusters. High tech indus-
tries can be defined as industries that spend large amounts of revenue on research and development
and that employ a relatively large number of technologically oriented employees such as scientists,
engineers, mathematicians, programmers, etc.3 All Life Sciences industry companies can be consid-
ered high tech companies.
The Life Sciences industry consists of distinct, though sometimes related, industry segments. Various
regions in the United States have developed successful clusters in one or more of these categories. The
Bay Area is not only famous for pioneering semiconductor technologies but for also beginning the
biotechnology age with the success of Cetus and Genentech. By examining regions with notable high tech
industries, patterns in cluster development can be found. The regions examined in this section are the Bay
Area, San Diego, Austin, Seattle, and the Twin Cities regions. Exhibit 2 summarizes the stages each region
went through before becoming a mature cluster. Additionally, the exhibit highlights significant other fac-
tors attributable to cluster success. Each region will be briefly summarized in the next few paragraphs.
The Bay Area/Silicon Valley earned its namesake by establishing itself as a world-leading center in semi-
conductor technology. The family tree of companies4 began with Shockley Labs in 1955. Gordon Moore,
along with Robert Noyce and six others, left Shockley and went to Fairchild Semiconductor where they
formed a collective group of engineers who laid the foundation for the future development of semicon-
ductor chip design. This served as the basis for the waves of companies that emerged years later to form
the core cluster of chip manufacturers in the Bay Area.
The Development of Clusters

The emergence of the cluster can be represented by four phases. We describe these phases as the
research, entrepreneurial, critical mass, and mature phases (see Exhibit 3). Phases appear successive but
one does not necessarily displace the other, e.g., the research phase continues throughout the entrepre-
neurial and critical mass phases. Research has to do with basic science and engineering research. This
occurs in universities, research institutes, and companies. The research phase is continuous and overlap-
ping, and it serves as constant input for the other phases. High tech research is often compelling enough
for a handful of scientists and engineers who pioneer the cutting edge technologies to bring these concepts
to market.
2 SACRAMENTO REGION LIFE SCIENCES STRATEGIC PLAN: Taking Action for Tomorrow
Exhibit 2: Stages in the Emergence of Technology Cluster
Exhibit 3: Phases of Cluster Development
The entrepreneurial stage involves this subpopulation of scientists and engineers who are in turn often
combined with business people. This phase results in a bloom of start up companies that compete with
each other to bring the new technology to market. These companies can go on to become successful,
medium-sized companies that are like “base hits.” A strong, healthy cluster can be established on the basis
of base hits. Another result could be a “homerun” success. Examples of well-known homerun companies
are Intel, Genentech, Chiron, Guidant, and Oracle. A region that has more startup companies competing
in a given technology has a higher likelihood of producing a homerun.

The next stage is critical mass. The formation of a critical mass of companies that are committed to the
successful deployment of certain technology is a necessary condition for cluster development. If the tech-
nology is truly a breakthrough one, as in the case of the semiconductor transistor chip, then it serves as a
wellspring for interrelated technologies to emerge. The progression can be natural as employees at the
wellspring company see new possibilities for the technology. These employees find niches and specialties
that in turn can become wellsprings for other new ideas and products. The microcomputer industry
(Osborne, IBM, Apple, etc.) emerged as a closely related industry to the chip industry. The microcom-
puter industry gave rise to peripherals, workstations, and network computing (Seagate, Sun, Silicon
Graphics, Cisco).
The critical mass stage blurs into the final mature stage as interrelated companies form complex net-
works of partnerships and suppliers. Startups in this stage, particularly in biotechnology, often serve the
purpose of outsourced R&D for large corporations who partner with or fund these companies. In the Bay
Area, this is one of the models for research-intensive industries that have not yet had products become
commodities.
This cluster development cycle has played itself out in other regions as well. San Diego has had success
in biotechnology as well as wireless telecommunications. Hybritech alumni are credited with around 40
startups in the San Diego region. QUALCOMM’s lineage can be traced back to Linkabit and serves as a
wellspring and anchor for the telecom growth.
Seattle’s long history of medical device development starting with ATL Ultrasound and Physio-Control
in the 1950s has resulted in a multitude of medical imaging and cardio-related startups. Seattle’s biotech
growth traces back to the 1981 founding of Immunex. Immunex saw the potential of using recombinant
DNA technology to treat immunological diseases.
Other examples vary slightly in the evolution of regional cluster formation. Austin started out with a
public sector economy as did many other regions. Early on, the city attracted and formed an electronics
manufacturing base. Later, Austin was able to boost R&D capacity by leveraging its manufacturing sector
to attract consortia and a few large companies’ R&D departments. Austin has become successful in vari-
ety of high tech industries.
The final example involves the Bay Area’s birth of biotechnology. The success of Genentech began with
a partnership that leveraged the financial services network of the semiconductor industry with research in
genetic engineering and biochemistry. This cross-industry relationship kick-started a billion dollar
wellspring industry which arguably would have more appropriately started in partnership with large
pharmaceutical corporations. This example belies the underlying entrepreneurial network and culture
that needs to exist within a region to make possible cluster and cross cluster development.7
Exhibit 4: Key Factors in Cluster Development
Other factors that were important to cluster formation in the case studies are summarized in
Exhibit 4. Some regions had key leaders who connected resources that attracted more research funding,
helped form new companies, or encouraged entrepreneurship. Research and personnel from universi-
ties and institutions, industry consortia, or large companies were also critical to regional success.
Measuring Regional Innovation Capacity

The potential of the Sacramento region is evident in rankings given by the public policy organizations,
the Milken Institute and the Progressive Policy Institute. These rankings are fairly broad and a brief
examination, though not specific to the Life Sciences industries, will impart confidence in the region’s
relative strength in innovative capacity. The first set of rankings below is from the Milken Institute’s Best
Performing Cities. The Milken Institute’s Best Performing Cities 2003 study was based on regional com-
parisons of the 200 largest metropolitan areas. Factors that went into the rankings included a metro’s
entrepreneurship, capital access, human/creative capital, innovation capacity, and globalization attributes.

Sacramento placed in the top ten percent of the 200 largest metropolitan areas in the United States. The
next study, the America’s Health Care Economy, utilized the Milken Institute’s Health Pole Index. The
index is a measure of a region’s healthcare concentration and mix with a national perspective. Healthcare
is broadly defined to include drugs, medical instruments and supplies, health practitioners’ offices, hos-
pitals, labs, and services. Here, Sacramento finished in the top third of the 200 largest metro areas.
Exhibit 5 summarizes the rankings that were studied.
Exhibit 5: Various Rankings Related to Innovation and Life Science
Source: Sacramento Life Sciences Action Plan Team Analysis
Rankings from the Public Policy Institute’s Technology Project give emphasis to regions that have inte-
grated the digital economy into regional infrastructure. Most of the key factors measured are relevant to
the Life Sciences industries as well. The Sacramento metro area finished in the top ten percent of the 261
metro areas studied. Optimistically speaking, these rankings illustrate the Sacramento metro area’s rela-
tive strength and capacity for innovation.
Building the Critical Mass for Cluster Formation

The Sacramento region houses a considerable number of Life Sciences companies.11 For the purposes
of this plan, the counties that define the Sacramento region are El Dorado, Placer, Sacramento, Solano,
Sutter, Yolo, and Yuba counties. Most of the companies in the Sacramento region are below 100 employ-
ees in size (see Exhibit 6).
Exhibit 6: Distribution of Company Sizes
Source: California Technology, Trade and Commerce Agency
Solano County has become a mini-manufacturing cluster for large Bay Area biotechnology and drug
delivery corporations such as Genentech, Chiron, and ALZA.
The task of pushing the Sacramento region to the next level will be challenging. A recent assessment
of biomedical clusters in California by PriceWaterhouseCoopers showed that Sacramento is behind com-
pared to other regions in California (see Exhibit 7). It is important to note that the Bay Area, Los Angeles,
Orange County, and San Diego regions have mature clusters in one or more Life Sciences segments.
Relative to the more mature clusters listed in the previous exhibit, the Sacramento region needs to
increase the number of companies by three to seven fold and employees by six to thirteen fold in order to
look more like a mature cluster.
Exhibit 7: California Biomedical Clusters12

Attendees of the Working Summit held in September 2003 were surveyed to assess the strengths and
weaknesses of the region. 46 people responded to over twenty questions that were designed to sample
opinions in business climate, workforce, and regional cluster strength (see Exhibit 8).
Exhibit 8: Survey Results from Participants of the Life Sciences Working Summit13
In general, local perceptions demonstrate a shared confidence in the potential of the region. Business
costs and well-trained workforce were generally regarded as very favorable. Questions related to financ-
ing and commercializing technology were not regarded as high. Furthermore, questions related to cluster
specialization did not really register at all. However, local institutions that support and develop companies
are generally regarded as helpful.
Regional perceptions serve to reinforce other data mentioned throughout the plan that point to the
Sacramento region as a great place to live and work but a region that does not have a well developed Life
Sciences cluster. Strong negative reaction occurred in the areas of local financial capital and efficient tech-
nology transfer. The lack of local capital has not stopped companies from obtaining monies through other
resources. The lack of an efficient technology transfer process is a significant issue for local companies
particularly because the Life Sciences industry is so strongly tied to technology. The issue is critically
important with regards to Life Sciences startups.
Life Sciences Startups

The formation of new Life Sciences companies must happen for the region to develop into a cluster.
A critical mass of companies is needed, and proper support needs to be given to particular Life Sciences
sectors. Bottlenecks in the development cycle of startups need to be addressed.
The Sacramento Valley has industry strengths in other areas as telecommunications, defense, agricul-
ture, wine and real estate. These industries have much different constraints and timelines than the Life
Sciences industry. These differences must be understood for effective decisions about regional resources
to support a Life Sciences cluster to be made.
The startup process needs capital: human, intellectual, financial, and social. Key to sustained success is
building the communities that support and supplement startup efforts. As communities grow around new
technologies, they create the necessary social capital that sustains them. The process is an integration of
human, intellectual, financial, and social capital. All capital exists to a certain extent at every stage of a start-
up and the boundaries between each can blur as well.
Although there are differences across the pharmaceuticals, biotechnology, agricultural biotechnology,
medical devices, and diagnostics sectors, the startup process is similar. The Life Sciences new venture
process generally involves the following steps pictured in Exhibit 9.
Exhibit 9: Stages in a Life Sciences Startup

Variations of this theme occur within each Life Sciences industry segment (see Exhibit 10). The main
causes of variation are a result of differences in regulatory and manufacturing practices. Regulatory
requirements control what a company must do to legally market a product in the United States and
Europe. For biotech, this includes pre-clinical testing, human clinical trials, and review with the Food and
Drug Administration. Medical devices and diagnostics are under the jurisdiction of the FDA, as well.
AgBio is regulated by the United Stated Department of Agriculture and sometimes also the EPA and FDA.
Exhibit 10: Life Sciences Startup Stages and Differences
Moving through the stages requires shifts in management style and company culture. The early stages
of a startup are characterized by research and development and are generally staffed by scientists. The
largest shift occurs when the startup evolves into a multifunctional organization that includes regulatory
affairs and sales and manufacturing concerns.
The Life Sciences industry has its own distinctions. There can be significant capital investments for Life
Sciences companies to bring products to market. For example, the cost of manufacturing facilities
especially current good manufacturing practices (cGMP) facilities is very high. In addition the cost of
intellectual property and in-licensing can be very expensive and is frequently a “capitalized” asset.
Ingredients for an Innovation Economy and Finding the Recipe for Success
While creating a Silicon Valley-type cluster is desirable, some argue Silicon Valley cannot be duplicated.14
Moreover, caution is advised for regions looking to simply clone the structure of a cluster based on a set
of identified ingredients in a mature cluster.15 As Saxenian noted, the recipe, in addition to the ingredients,
is crucial.16
Various papers and reports listed in Exhibit 11 were examined to derive a broad set of innovation
growth success factors. This kind of information is abundant since many regions are trying to accomplish
the same. Even successful regions are undergoing self-examination to ensure continued innovative capac-
ity and concomitantly regional competitive advantage.
Exhibit 11: Summary of Various Success Factors
For the purposes of this strategic plan, the various success factors that produce innovative regions have
been summarized into five parts and are depicted graphically in Exhibit 12. These parts relate to doing
business and the people and ideas that make up businesses:
Business factors – infrastructure, environment, cost of doing business, incentives
• Human capital
• Intellectual capital
• Financial capital
• Social capital
Each factor will be discussed in greater detail in the body of this plan. All factors must be considered in
order to develop a strong innovation capacity in the region.
Chapter 2 will discuss key business infrastructure factors that relate to doing business. Business factors
are necessary for most businesses, not just Life Sciences companies, to succeed and grow. Business factors
serve as a backdrop to companies and industries as they grow.

Chapters 3, 4, and 5 will cover the next three factors—human, intellectual, and financial capital. These
serve as the raw material for the innovation process. In general, the quality of people, the flow of new
ideas, and access to money are vital in building industries where innovation is critical.
Last, Chapter 6 will evaluate what can be done in terms of social capital. Social capital is a determining
factor for a region’s sustained success as a cluster. In contrasting the Silicon Valley to Route 128, Saxenian
concluded that social aspects of the business community such as social and professional networks, attitudes
towards risk-taking, and loose industry structure were important differences.
Exhibit 12: Key Aspects in Building Innovation Capacity
BUSINESS ENVIRONMENT
By Gabriela Lee
2
The business environment refers to the climate in which all business takes place. It includes those areas
that significantly impact the ability of businesses to grow and succeed, such as the physical infrastructure,
the regulatory climate, the local tax structure, and the information infrastructure of the region. The state
government determines much of the business environment while federal agencies and local governments
heavily influence other aspects.
The business environment can be seen shaping Genentech’s decision to locate in the region.
GENENTECH – A CASE STUDY IN BUSINESS ENVIRONMENT FACTORS

Selecting a biotech manufacturing site is a time consuming and expensive process in light of
the cost of construction and relocation costs. The Genentech decision to site a manufacturing
plant in Vacaville (Solano County) is a good illustration of the confluence of various important
factors in site selection.
• Business environment. “A significant factor in our decision to locate in Vacaville
was the professional city management that made clear from the start it was willing
to work with us to get things done. This local government is an ally, not a
hindrance or an obstacle. In an industry where delays can mean millions in lost
sales, this is in itself a very significant financial incentive.” - Frank Jackson,
General Manager of Vacaville facility.17 The town’s welcoming attitude manifested in
fast-track permits service, a package of financial incentives, and a promise to ration
the company’s water only during an emergency.
• Location. Vacaville’s proximity to the South San Francisco company headquarters
makes it easy for scientists who developed the drugs maintain oversight of large-
scale production.
• Affordability. Open, affordable space was available for facility construction and future
expansion. In all, Genentech has 100 acres in Vacaville, but it has developed only
30 so far.18 Also, affordable housing attracts and helps retain employees. The com-
pany reports that it experiences only 4% turnover at its Vacaville facility.19
• Workforce. The company has access to a skilled pool of production workforce, as
well as engineering talent from nearby major universities, including UC Davis.
CHAPTER 2: BUSINESS ENVIRONMENT 13

The company also takes advantage of the great utilities infrastructure. The city of Vacaville is
extremely well equipped to continue to provide water to industry even through a protracted
drought, as it has three independent sources of water supply. Also, its wastewater treatment
plant is currently undergoing expansion from a dry weather flow capacity of 10 to 15 million
gallons per day. However, more recent wastewater discharge permit limits from the
Environmental Protection Agency will require installation of extremely costly advanced waste-
water treatment facilities, which will triple sewer fees and quadruple connection fees.
Producers of large volumes of wastewater such as Genentech will be greatly affected by the
new regulations.
Tax Policy
The state of California is widely recognized as a global leader in Life Sciences in general and biotech-
nology in particular. State government has actively supported the industry’s growth and development
through legislative and fiscal policies designed to strengthen both industry companies and state-funded
academic institutions.
Current status and needs

Specific tax policy incentives that apply in the state of California are listed below.20
• 15% in-house and 24% outsourced research and development tax credits. For in-house research,
businesses may elect an alternative incremental research expense credit of varying percentages
instead of the 15% tax credit. Corporate taxpayers are allowed a credit of 24% for basic outsourced
R&D, for research conducted within California.
• Net Operating Loss (NOL) carryover. Biotechnology and biopharmaceutical companies are
allowed preferential treatment on their NOLs. The entire amount of NOL may be carried for-
ward for up to 8 years. The normal NOL carry forward is 60% for taxable and income years
beginning on or after January 1, 2002 and before January 1, 2004; and 65% for years beginning
after January 1, 2004.
• 7% job-creation tax credit
However, one of the most successful incentives that helped offset the higher costs of doing business in
California, the Manufacturers’ Investment Credit (MIC), expired in January 2004. Removal of the MIC
results in a tax increase for manufacturers in California, which might be an additional reason for compa-
nies to abandon this state for more hospitable places to do business in the future. Efforts to permanently
extend the MIC were unsuccessful.
RECOMMENDATIONS
Research indicates “…public policy aimed at innovation must focus not only on R&D, but also on com-
plementary assets, as well as the underlying infrastructure. If government decides to stimulate innovation,
it would seem important to clear away barriers that impede the development of complementary assets that
tend to be specialized or cospecialized to innovation. To fail to do so will cause an unnecessary large por-
tion of the profits from innovation to flow to imitators and other competitors. If these firms lie beyond
one’s national borders, there are obvious implications for the internal distribution of income.”21
Complementary assets are defined as capabilities or assets, such as marketing, competitive manufacturing,
and after-sale support, which must be used in conjunction with technical know-how for the successful
commercialization of an innovation. Specialized assets are those where there is unilateral dependence
between the innovation and the complementary asset. Cospecialized assets are those for which there is a
bilateral dependence.
To encourage additional companies to locate in California and to ensure that existing businesses do not
leave the state, the government must support both R&D and the development of complementary assets.
Government should consider steps like changing the apportionment formula for corporate income tax,
harmonizing the NOL rules with federal tax law (which provides a carryover of up to 20 years), re-estab-
lishing the Manufacturer’s Tax Credit for new and expanding Life Sciences investments with a tie to job
creation, and allowing for large Life Sciences companies (either headquartered in California or employing
a large number of Californians) to purchase discounted tax credits and deductions from small research and
development firms. As discussed in detail throughout this plan, various factors contribute to Sacramento
region’s potential to become a manufacturing-oriented cluster for Life Sciences companies located in
Northern California.
Regulatory Climate
The regulatory climate deals with all of the rules, policies and requirements that government places on
business in order to meet various objectives. These include environmental regulation and permits,
building permits, land zoning, unemployment, disability, ergonomic requirements, workplace safety,
and compliance in a number of specialized areas. Industry and government should work together to
eliminate redundancy and duplication between state and federal agencies that considerably increases the
cost of doing business by adding direct regulatory and indirect administrative costs. For example, state
and federal agencies like Cal-OSHA and OSHA, Cal-EPA and EPA (especially the environmental
review process) and other agencies like the Nuclear Regulatory Agency should review and harmonize
their regulatory processes.
The Life Sciences community
should inform local building
and planning officials about the “Under a very competitive climate, the state of California should create a
special needs of the industry, more corporate-friendly environment, through financial incentives like tax
especially biotech companies, breaks and utilities reimbursements or credits. Although California is a
and lobby for permitting facili- leader in Life Sciences in general and biotechnology in particular, some
ties for Life Sciences projects. other states are providing more incentives. It would be interesting to find
out how California compares with other states in this regard. Also, a study
Incentives
that would summarize the specific reasons leading to businesses failing
Because of their sophistication and businesses leaving the state (be they biotech, life science, or other
and high knowledge content,
companies) would be useful in pointing out real factors that contribute to
biotechnology companies strongly
companies staying in or leaving California.”
favor locating their production and
distribution operations as close as - Nordine Cheikh, Site Leader, Monsanto Calgene LLC.
possible to the R&D and other
critical support functions. The

Sacramento region should capitalize on this and actively solicit local and Bay Area companies to locate their
manufacturing and distribution facilities here.
Current Status and Needs

Currently, Sacramento Area Commerce and Trade Organization (SACTO) is the regional marketing
organization in the Greater Sacramento Area responsible for business recruitment from throughout the
world. SACTO publishes and distributes marketing materials and data, and encourages firms to locate in
the region by facilitating their site selection needs. Also, each city’s Economic Development Department
plays an active role in marketing and facilitating private investment within their areas of jurisdiction. Other
organizations dedicated to helping startup companies, by giving entrepreneurs access to mentors, peers,
resources, education, and information, are business incubators. In the Sacramento region for example,
McClellan Technology Incubator (MTI) is a non-profit organization established as part of an economic
stimulus plan to assist emerging businesses in the technology sector with an emphasis on job creation for
the region. Its mission is to accelerate the formation, growth and success of sustainable technology-based
businesses in the Sacramento region, by providing an extensive list of services to its member companies:
business development, venture feedback, execu-
tive roundtable, technology commercialization
The regional infrastructure refers to the underlying foundation forum, advisory and coaching programs, intro-
of physical and information resources required for individual ductions to MTI advisors, entrepreneur coaching,
progress reviews, IT services, business studies,
and business activities to occur. The physical infrastructure
and PR. MTI is currently in the process of raising
includes transportation systems (roads, highways, airports,
money to finance the refurbishing of 24,000
railroads), land, and utilities (water, power). The information square feet of wet lab space. The combination of
infrastructure refers to systems that allow people to specialized space, mentoring and funding from
communicate with one another by telephone, computer, the incubator, and top scientific and engineering
and other information transfer devices. talent from UC Davis increases the chances of
successful formation of new ventures in the
Sacramento region.
Regional Infrastructure
A well-developed regional infrastructure forms the foundation for individual and collective quality of
life and is a critical enabling factor for the economic development of a region. The Sacramento Valley must
be competitive with other regions in California and the US from many perspectives, including infrastruc-
ture, in order to keep existing Life Sciences companies and to attract additional ones. More states than ever
are gambling millions of dollars on a bet that biotechnology can be their next job engine, which makes for
a tight competition. In California, the Sacramento Valley competes but also collaborates with the Bay Area
in attracting and keeping Life Sciences companies. Compared with the Bay Area, which is undeniably a
leader in global Life Sciences, the Sacramento Valley offers more affordable commercial and residential real
estate and seismic stability.
The Sacramento region has the advantage of proximity to large markets. The entire state of California
is within one day’s driving distance. Situated at the hub of several north/south and east/west highways,
along with a deep-water port, an international airport, and transcontinental rail lines, the area enjoys con-
siderable location advantages.
The following sections describe the status of the existing physical and information infrastructure, along
with the concerns expressed by industry, academia, and government representatives present at the
Sacramento Region Life Sciences Working Summit in September 2003. It includes their proposed rec-
ommendations as well as tabulated results from a survey sent to all participants of the Summit.
Transportation and information infrastructure support the movement of people, goods, and information
through the region, and are critical to the flow of human capital, intellectual capital, and products. Along
with transportation, the concern for land and utilities has to do with the availability of space for business-
es and housing for the region’s workforce.
Because many Life Sciences companies require specialized facilities, the development of the necessary
regional infrastructure poses more challenges than in the case of other industries. Issues of growth must
be addressed before they become overwhelming. To ensure that future infrastructure planning takes into
account the development of the Life Sciences cluster in the Sacramento Valley, the specific requirements
of the industry need to be communicated to the decision-makers. However, in order to get the attention
of government, the region’s Life Sciences community ought to make a compelling case regarding the eco-
nomic development potential of this industry.
Transportation
Long-term economic growth depends on having adequate transportation systems that enable the efficient
and reliable movement of people and goods throughout the region. While it is true that the transportation
infrastructure requirements apply to the Sacramento Valley generally, not just to the Life Sciences cluster,
this industry should communicate their needs to the appropriate authorities, such as the Sacramento Area
Council of Governments (SACOG), to ensure that they are considered in future planning. SACOG coor-
dinates transportation planning and funding for the Sacramento region.

The region’s current transportation infrastructure includes: local streets and highways, bridges, airports,
transit routes (Capitol Corridor Rail, Bus Transit Surface Area, Light Rail), one commercial shipping port,
and regional bicycle and pedestrian trails. Low density suburban patterns mean people travel mostly by
automobile: 50% of trips possess single passengers, 43% drive with two or more occupants, and only 1%
of trips are by transit, with transit use reach-
ing 20% in downtown Sacramento during
commute hours.22 “The lack of convenient public transport between UC Davis and
A majority (69%) of Summit survey McClellan Park has been raised to me as an obstacle for UC
respondents agreed that the overall quality of Davis faculty members and graduates considering launching
transportation is very good relative to other startup companies. To overcome this obstacle, and until improve-
regions. By comparison, 58% of Bay Area ments are implemented, we are exploring a number of creative
respondents expressed concern that the qual-
options, including a collaboration with SMUD on car sharing
ity of transportation is one of the five most
scheme using electric vehicles.”
important future threats to their businesses.23
However, if the transportation infrastructure - Chris Gill, Executive Director, McClellan Technology Incubator.
currently constitutes an advantage for

Sacramento compared with the Bay Area, it will take a sustained effort to keep it so. According to SACOG,
population in the Sacramento region (El Dorado, Placer, Yolo, Yuba, Sacramento, and Sutter counties) is
expected to grow by almost 50%, from 1.89 million in 2000 to 2.8 million in 2025, and with that a 54%
increase in travel is forecasted, unless land development proceeds differently than it has in the past. Traffic
congestion is already considered a big problem by 56% of the respondents to a survey given by the Public
Policy Institute of California and Great Valley Center.24 The distribution of the expected growth is the most
important issue for transportation.
The Summit participants noted that at this time, the existing ground transportation system is inadequate
to support the growth contemplated for the Life Sciences cluster, both within the region and along the Bay
Area-Sacramento corridor.
RECOMMENDATIONS
• Alternative means of transportation for the area’s workforce must be investigated, with emphasis
on improving public transportation, which would relieve traffic congestion.
• Land use decisions should be made in such a way as to take advantage of the existing transporta-
tion system and other infrastructure. For example, manufacturing companies could locate along
the Bay Area-Sacramento corridor, where housing for their workforce would be affordable, in
order to minimize the additional strain placed on the existing transportation infrastructure.
Land
The availability of land for building commercial and residential facilities is one of the infrastructure pil-
lars on which the development of the Life Sciences cluster in the Sacramento Valley rests.

Companies have different needs for specialized facilities, depending on company type and the stage of
their development cycle. Medical device, instrumentation, and biotech companies that approach commer-
cialization need affordable manufacturing capabilities and significant infrastructure support, such as reliable
water and appropriate waste water treatment facilities, while pharmaceutical and biotech start-ups want
affordable wet lab space.
When deciding where to build manufacturing plants, many Life Sciences companies value proximity to
their R&D facilities. They also tend to gather in clusters, in order to take advantage of the infrastructure
that is already in place. Knowing this, specific locations may be targeted for development, to provide incen-
tives for companies to build manufacturing facilities in these areas. Such a strategy would direct industry
growth in such a way as to make it less reliant on the regional transport infrastructure and its limitations
(e.g., infill development).
Southport Business Park of West Sacramento may become a good example of such a target site. Located
near the intersections of Interstate 80 (coast to coast transportation) and Interstate 5 (border to border
transportation), across from the port of Sacramento, Southport Business Park is one of the largest master-
planned business parks in the country, and offers space for various uses, from office and residential to
warehouse and manufacturing. Companies locating within this zone are offered various incentives, such
as sales and use tax credit, net operating loss carryovers, manufacturer’s investment tax credit, and other
advantages. Over 1.5 million square feet are either completed or under construction, from the total of 10
million square feet planned.25
The cost of real estate is one of the greatest advantages that the Sacramento region offers compared to
the neighboring Bay Area. Specifically, the average industrial land for a 10 acre site costs $1-$ per square
foot in the Southport/Sacramento area, versus $40-$50 per square foot in San Jose/Bay Area.26 For R&D,
the lease rates are $0.60-$1.00 per square foot in Sacramento area, compared with $4-$5 per square foot in
the Bay Area.
Currently, developers do not have incentives to build Life Science-focused facilities. The necessary
amenities are highly specialized and expensive to build. Moreover, Life Sciences companies are well-
known for the extended length of time it takes until they become profitable, and as such they represent
high risk investments. To facilitate the development of commercial space for start-up and young Life
Sciences companies, the Bay Area Life Sciences Strategic Action Plan27 proposes the creation of public-pri-
vate partnerships that could help spread the development risk between government and the private sector.
Other means of reducing the risks of development are the introduction of tenant security enhancements
or developer tax credits. Similar incentives could increase the likelihood that landlords would accept short-
term leases or offer smaller parcels of space to early-stage companies.
The availability of affordable housing for its workforce is another requirement for ensuring the growth
and development of the Life Sciences cluster. Housing affordability for employees was considered impor-
tant or very important by 78% of the Summit survey respondents. When compared to California’s other
major metropolitan areas, the prices of new homes in the Sacramento region are still considered very
affordable. However, robust population growth and Bay Area transplants add substantial demand for
housing, which leads to price increases. For example, the number of single-family homes sold increased
an average of 26%, and the median price increased 15% on average in the Sacramento Valley during the
year ended in September 2003.28 According to California Association of Realtors, the median price for a
single-family home in Sacramento was $ 257,990 in October 2003, compared to $ 566,870 in San
Francisco Bay.29 SACTO and individual cities’ economic development departments should increase the
industry awareness of Sacramento region’s lower real estate costs within industry circles, in order to
leverage this great advantage.
RECOMMENDATIONS
• Representatives of the Life Sciences business community should meet with legislators to identify
and target geographic zones for growth, based on companies’ needs and stage of their life cycle
(R&D, clinical development, manufacturing, commercialization). The local and state governments,
in collaboration with industry, can then create a set of uniform procedures and standards that
facilitate planning, zoning, and permitting in these areas, leading to an effective commercial infra-
structure for both established and startup companies. The creation of an electronic index of
commercial real estate would further aid these investment attraction efforts.

• The Life Sciences community should also support initiatives that encourage smart growth plan-
ning, possibly through the intermediation of a trade organization that would communicate its
interests to the appropriate entities. Smart growth invests time and resources in restoring already-
built environments in central cities and older suburbs, optimizing the mix of housing, commercial,
and retail space. It also preserves open space and many other environmental amenities. Planning
for smart growth and infill development can and should leverage existing resources. For example,
manufacturing facilities should be built where affordable housing is available, or in areas where the
necessary infrastructure already exists.
• To avoid the NIMBY (“Not in My Backyard”) syndrome, the Life Sciences industry and legislators
should continuously educate the public and ensure community support.
Utilities
The utility infrastructure includes power plants; sewage treatment facilities; and electrical power, natu-
ral gas, and water distribution systems. The utility distribution companies in the Sacramento Valley are
Pacific Gas & Electric (PG&E), Roseville Electric, Sierra Pacific Power, and Sacramento Municipal Utility
District (SMUD). Their services support the economic growth of the region.

At this time, the electricity markets appear relatively stable. According to the California Energy
Commission, Californians pay, on average, the fifth highest rates in the nation, which is one of the factors
that contributes to a high cost of doing business in this state, including the Sacramento Valley. Under aver-
age conditions, California’s electricity generation system has adequate supplies to meet demand for at least
the next six years.30 The state is taking steps to reduce the electricity demand by implementing new effi-
ciency standards and programs, dynamic pricing, and aggressively developing renewable energy resources.
56% of the Summit survey respondents identified reliable power availability as an important or very
important infrastructure element for their companies over the next 5-7 years.
In the Sacramento area, the Department of Utilities provides water for drinking, household use, fire
suppression, landscaping, commercial and industrial use. 85% of this water comes from the Sacramento
and American rivers, and the remaining 15% is well water.
Sewage water from this region is currently routed to the Sacramento Regional County Treatment Plant
where it receives primary and secondary treatment before it is discharged to the Sacramento River. In
Solano County, Vacaville operates the Easterly Wastewater Treatment Plant.
RECOMMENDATIONS
• The Life Sciences industry requires stable, affordable, and reliable electricity, water, and waste-
water disposal. The industry also needs acceptable solutions for the disposal of radioactive waste.
A leadership group representing the Life Sciences businesses should advocate these needs to the
appropriate authorities.
• Electricity is very important to Life Sciences companies, especially large biotech manufacturers,
who can record losses in the millions of dollars during a blackout. While big companies take steps
to protect themselves by investing in backup generators, small companies cannot afford to do so.
Ideally, the Life Sciences zones should be protected from blackouts. Financial incentives should be
provided for alternative energy generation.
• Industry representatives should develop a matrix that details what utilities are important for vari-
ous companies, depending upon the stage of their life cycle. Zones for Life Sciences companies’
development should be identified around existing resources.
Information Infrastructure
Well-developed communication networks are a prerequisite for a knowledge-based industry like Life
Sciences. They make possible employee telecommuting but also the integration of Information
Technology into Life Sciences sub-industries. The information infrastructure includes installed fiber optic
cables, network operating centers, and wireless networks. The fiber and copper plants, switches, and
equipment together enable regional access to high-speed connectivity for businesses.

According to Nielsen//NetRatings, broadband access at home increased 59% country-wide during
2002, while dial-up access declined 10%, even as narrowband users still comprise the bulk of the US
online population.31
The Sacramento Valley is well served by telephone, cable and Internet access. In 2002, Sacramento
ranked 12th among metropolitan regions for the number of people with high-speed Internet connections,
jumping 117% from the year before.32
As with consumers, businesses are steadily signing up for high-speed access and implementing broad-
band business solutions. Many businesses are using broadband to improve business processes or achieve
efficiencies. The predominant access systems for business users are optical-fiber synchronous optical net-
work (SONET) and synchronous digital hierarchy (SDH) systems.33
Broadband networks represent both critical requirements and enormous opportunities for Life Sciences
and health care. High-speed access enables scientists to work with bioinformatics databases that contain
terabytes of data and analyze genetic sequences for much lower costs than it would have been possible
before these applications were available online.
RECOMMENDATIONS
• An area-wide plan is necessary for providing ubiquitous broadband access – simple, reliable, and
easily accessible.
• A sitemap such as GIS (Geographic Information Systems) would be useful for deciding who gets
priority, based on the different needs of the various industry sectors (clinical experiments vs.
manufacturing operations, etc). A GIS combines layers of information about a place to give you a

better understanding of that place. What layers of information you combine depends on your pur-
pose. GIS allows improved management of available resources and better decision making. An
example of how GIS was used in other applications is the Sacramento Regional GIS Cooperative’s
Street Network Database, which has enormous potential to coordinate local planning efforts and
improve local public safety response times.34
• The Life Sciences community should facilitate discussions of providers, users and government
through its representatives, to determine availability, need, cost, and provide incentives to enhance
service. The GIS tool can be shared to map customer needs.
HUMAN CAPITAL
By Tod Stoltz 3
INTRODUCTION
Currently, the three major Life Sciences industry clusters in California (The Bay Area, San Diego, and
Los Angeles) identify workforce development as the second or third largest hurdle to commercialization
and economic success.36 As the Sacramento region shifts from an agricultural and government-based econ-
omy, one of the core elements of a
Life Sciences, focused economic plan
must be development of the requisite The only impediment to continued growth of the industry in California
human capital. is the lack of a sufficient pool of Life Sciences students. This long-
Life Sciences companies have a term need requires a long-term strategy. To assure sufficient talent in
close relationship with academia. the decades ahead more students must have sufficient science
Academic institutions provide not education to ready them for graduate school. Business, school
only important discoveries to the districts, and colleges and universities should be encouraged to
industry, but also the human capital collaborate in establishing and supporting science education
with the skills required during the “pipelines” that provide mentoring, tutoring, and coaching in science
different stages of a Life Sciences and math from the elementary grades through community college.35
company’s development. See Exhibit
13. In addition, the entrepreneurial - Jerome Seliger, Professor Health Sciences.
capacity necessary to turn new ideas CSU Northridge. For the California Research Bureau
into companies is a critical ingredient
to any regional cluster’s human capital.
A superior talent pool across each of these stages of development would give the region a significant
competitive advantage over other regions and states. Currently the region is extremely strong at develop-
ing workers for the first stage: Research, and for the fifth stage: Manufacturing. These strengths fit well
with the current needs of the Life Sciences industry in the region, which consists of mostly young, R&D-
stage companies, and a growing number of manufacturing facilities for large bay area companies.
Exhibit 13: Phases of Development in Life Sciences Companies
CHAPTER 3: HUMAN CAPITAL 23

Meanwhile the other Life Sciences clusters in the state: San Diego, Los Angeles and the Bay Area, are
much more mature and have many companies that span all stages of development.
It is essential that the institutions involved in workforce development pay close attention to statewide
trends in the industry because it will reflect the challenges and strengths of the other clusters. As those
clusters mature, and the young, research-intensive companies move their discoveries through the pipeline
of clinical development to regulatory approval, their workforce needs are transitioning from R&D to reg-
ulatory approval and manufacturing.37 “Statewide, the most critical short term and long term industry
workforce needs exist in the applied sector (pertaining to those skill sets associated with the transition of
companies from the discovery, basic research mode into applied research, development, Food and Drug
Administration (FDA) approval, commercialization, and manufacturing.” 38
The Sacramento region is comparatively immature, and is more likely to need employees with skills rel-
evant for earlier-stage companies. Fifty percent of respondents surveyed in the region said their firms were
trying to fill R&D positions (see Exhibit 14 below):
There are approximately 100 Life Sciences companies, and over 5,000 people employed at those
companies throughout the region. While these numbers are small in comparison to the numbers of
companies and employees in the three major, Life Sciences clusters in California, the wide diversity of
the companies in the region is encouraging.
Exhibit 14: Survey Responses to Current Hires Desired Sacramento is home to companies specializ-
ing in pharmaceutical biotech, agricultural
biotech, medical devices, and diagnostics. In
addition, the region is home to the manufac-
turing facilities of several Bay Area companies.
This diversity should be encouraged, as it will
provide a more robust engine of regional eco-
nomic development than a highly specialized
cluster will.
Depending upon the vigor of the other
factors affecting growth of companies in this
Source: Sacramento Life Sciences Action Plan Team Analysis region (capital, technology, and infrastruc-
ture) the growth of these companies in the
next 5-10 years has the potential to place a dramatic demand on the regional workforce. Any efforts under-
taken now to improve the capacity of the region to develop the necessary human capital will make a
significant impact on the region’s ability to develop successful Life Sciences companies.
There are several means of developing human capital:
• K-12 schools
• Universities and Community Colleges
• Recruitment & Retention
Each plays different roles in the process. Their contributions are analyzed below, challenges they cur-
rently face are identified, and some recommendations that came from the September Life Sciences
Working Summit and subsequent interviews with industry officials are discussed.
EDUCATION: K-12
Introduction
Few workers enter the Life Sciences industry workforce directly from the primary education system.
However, primary schools play a critical role in Life Sciences workforce development by exposing primary
school students to the industry, and the opportunities it offers; and by providing students with the funda-
mental tools in math, science, and writing required in nearly every career in the Life Sciences.

Many K-12 students are unaware of careers in the Life Sciences industry. Participants in the Working
Summit expressed concern that most students – particularly young students (k-8), were not aware of the
wide variety of career options available to them in the Life Sciences industry. There are several reasons for
this problem, and some are discussed below. One is that science education is not a priority in the cur-
riculum of many k-8 schools. Thus younger students are now aware of the possibilities. One impact of
this problem is that very few students who enter community colleges directly from high school seek Life
Sciences degrees. Instead, they pursue AS degrees in other programs that are more widely known: nurs-
ing, electronics, information systems, etc.
Students from ethnically and culturally diverse backgrounds do not relate to the stereotypic image of sci-
entists (white, male). A diverse set of viewpoints is critical for the development of any industry reliant on
innovation. As new ideas are disseminated through an industry, people with diverse backgrounds may see
new applications of those ideas, or they may know of ways to improve those ideas in such a way as to make
them commercially applicable. The generally held stereotype of scientists as white males is a subtle deter-
rent to minority students.
In many California schools, math and science test scores rank below the national average. This is a par-
ticular concern to the Life Sciences industry, which relies heavily upon workers well versed in math and
science at all levels of employment.
Science education is not a priority in the curriculum of many K-8 schools. For example, the STAR
(Standardized Testing and Reporting) program, instituted by the state of California in 1997 only requires
that students be tested in the Sciences beginning in grade 9. This sends a strong message to schools that
science education is not valuable until students reach high school.
RECOMMENDATIONS
Encourage career paths in science and mathematics in K-12 students. The problem of building student
interest in science has been identified and addressed before. Dr. Judith Ramaley in the section of educa-
tion and human resources at the National Science Foundation (NSF) states that, “It has to start around
the 4-5th grade. You must go into the valley of the shadow, where pupils turn off to science and math
unless they’ve experienced: good classroom material, chances to explore the topic and teachers who love
the subject.” 39
Improve resources for K-12 teacher training. A key component of reaching students is well-trained
teachers, with the resources necessary to provide powerful educational programs to their students. Science

is a subject that is best learned in a hands-on environment, where students can learn and explore in ways
that are impossible when the subject is heard through a lecture or read in a text. Primary school teachers
must have the ability to acquire the resources necessary to teach science in a fully integrated fashion.
Make better use of education research and modern teaching techniques. While it is clearly beyond the
capacity of this region to reform the state or national educational system, it is nonetheless a critically
important issue that needs to be communicated to local, state and federal governments. As knowledge
about how people learn is discovered, it must be incorporated into the educational programs – particular-
ly for younger students.
Locally, there are successful examples of this strategy at the high school level, rather than the younger
grades identified by Ramaley. Since 1999, Ann Moriarty at Davis Senior High School has developed a cur-
riculum in the Life Sciences that has been effective in improving student awareness of biotechnology
careers. Her program is focused on the “applied
Life Sciences” (DNA and protein electrophoresis,
CBST scientists, teachers, after-school program and PCR, gene splicing, bioinformatics tools, etc.), and
community based program staff, and college faculty are requires students to take internships at companies
developing a set of thematically linked science curricu- or university research labs. Industry and academic
la. In addition to featuring general science, biology, speakers also come into classes to talk about career
physics, and engineering, the curricula will promote opportunities in the Life Sciences.
scientific inquiry and concept development among Dr. Judith Kjelstrom, acting director of the
children and youth. Each unit will support the biotechnology program at UC Davis, serves on the
California Department of Education Science Framework advisory committee. From the university’s point
and will be appropriate for classroom or after-school of view, the high school biotech class “is like a
programs. The educational materials will feature dream come true,” Kjelstrom said. “They’re bring-
ing curriculum like molecular biology to the high
hands-on, inquiry-based science activities.43
school, so UC doesn’t have to start at square one.
It’s how we can get well-trained freshmen that
don’t have to start with remedial work. Their experience at the university level will be enhanced — by
the time they are juniors or seniors (in college) they will be at the point of being on a research team…
We want to educate our students in this area, and not have to ship all those brilliant minds to companies
in the Bay Area or San Diego.” 40 There are examples of government programs that successfully stimulate
interest in the study of science and increase the total students pursuing studies in science, such as the
national science fair. 41 42
The Center for Biophotonics, Science and Technology (CBST), which is described in more detail in the
University and Community College Section, has also developed an ambitious program for outreach into
the K-12 system that should be leveraged with other efforts going on in the region, and other grant pro-
grams available to primary school institutions.
Private industry can and should participate in the development of programs to spur the interest of pri-
mary school students. Examples of successful privately run programs include the U.S. First Robotic
Competition, “FIRST designs accessible, innovative programs to build self-confidence, knowledge and life
skills while motivating young people to pursue opportunities in science, technology and engineering.” 44
This program annually engages more than 10,000 high school students across the country in design com-
petitions in collaboration with industrial sponsors. St. Francis high school in Sacramento sent an all-girls
team to the regional finals in the FIRST competition in 2002.45
Improving educational techniques is an issue that has been explored many times. In a report that looked
at the science and engineering workforce needs for the entire county, The National Academy of Science
recently recommended that the educational system
should “make use of cognition research to better
inform pedagogy at all educational levels. Today’s An ongoing problem the industry faces, particularly the
classrooms look much as they did in 1900. Knowledge small and medium-sized companies, is lack of ability
of how students learn and use information has largely to attract needed, highly skilled, intellectual talent.
been ignored. The federal government has never Although California’s public and private universities
invested a large amount of money in education graduate more Masters and Doctoral degree holders in
research or in connecting that research to education the Life Sciences and related disciplines than any other
practice.” 46 There are examples of successful efforts state each year, demand in many communities exceeds
to link technology and industry in a cross-discipline
supply.48
fashion that can be emulated, such as those at NSF’s
Engineering Research Centers.47 Improving teacher - Stephen Dahms, Executive Director, CSUPERB.
compensation, so that schools can compete with San Diego State University.
industry for skilled workers is another recommen-
dation that the NAS report recommended.
EDUCATION: UNIVERSITIES AND COMMUNITY COLLEGES
Introduction
The minimum point of entry for most Life Sciences job opportunities is at least a four-year college edu-
cation. In biotechnology, the workforce is estimated to be 19% Ph.D., 17% M.Sc., and 50% B.Sc. The
remaining 14% are composed of vocational education and community college graduates.49 Clearly,
institutions of higher learning play the primary role in developing the current and future Life Sciences
workforce. Improvements in the sector, therefore, offer the greatest opportunity for direct impact on
the development of a regional Life Sciences cluster. In the Sacramento region, the primary sources of
higher education in the Life Sciences are UC Davis, CSU Sacramento, American River College, Solano
Community College, Sierra College, Sacramento City College, Cosumnes River College, and a few oth-
ers. Relative to other regional clusters, this is a small number of programs/institutions.50 However, some
of these institutions are national leaders in their respective fields of workforce training, and provide a great
resource for the region to use as a springboard for further development.

REGIONAL HIGHLIGHTS IN POST-SECONDARY LIFE SCIENCES EDUCATION
Community College Level:
Solano Community College has a nationally recognized biotechnology training program for technicians
in the biotechnology industry. It specializes in training the manufacturing component of the industry; this
makes it one of the five community colleges in the United States with this specialty. It is a model for other
colleges in the process of developing a biotechnology program. In the last four years, the College has pur-
chased over $400,000 in new equipment. With the addition of donated used equipment from Genentech
and others, the College has assembled one of the best equipped teaching laboratories of any college or
university in North America.
University Level:
UCDavis has developed several nationally recognized programs. The Designated Emphasis in
Biotechnology (DEB) is an inter-graduate group program that allows Ph.D. students from a variety of pro-
grams to receive and be credited for training in the area of biotechnology. The DEB provides a nurturing
interactive environment to promote integration of multiple disciplinary approaches to the conduct of
research and to promote learning in biotechnology. The program recently was awarded an NIH training
grant award to support fellowships for students in the program.
The Advanced Degree Program (ADP) is an industry-university partnership program that allows
industry researchers the opportunity to earn a Ph.D. while continuing to work at their companies. Many
corporations have become serial users of this program.
The Center for Biophotonics, Science and Technology (CBST) is an example of collaboration between
different academic and research institutions to improve student opportunities in the Life Sciences.
Biophotonics is the science of using light to understand the inner workings of cells and tissues in living
organisms. Applications of biophotonics range from using light to image or selectively treat tumors, to
sequencing DNA and identifying single biomolecules within cells. CBST is supported by a $40 million
dollar grant from the NSF.51
CSU, Sacramento, has developed MBIG—Molecular Biology Interdisciplinary Group—an NSF
funded program that supports faculty and students from diverse disciplines with a common interest in
molecular biology.

Government and Academia must work hard to continually keep pace with the changes in the industry.
The general consensus at the Working Summit was that the universities and colleges do a good job of pro-
viding human capital to the industry. However, a common theme that surfaced was the need to keep up
with the rapid changes in the industry.
• Industry skill and knowledge requirements for new hires are changing rapidly as advancements are
made in the Life Sciences industry. Universities and Colleges must be able to learn about and
adapt to these changes. Many participants in the Working Summit identified a communication gap
between industry and academia as a problem in their recruitment efforts of recent graduates.
There is a need for standardized skill sets and vocabulary, created by industry to assist educators.
• Training facilities that match the technology and practices of industry are scarce. As the industry
develops new methods to produce it’s materials, training programs must keep pace. For example,
many new biotech drugs are monoclonal antibodies that must be produced in mammalian cell
culture systems, rather than the “traditional” bacterial and fungal cell culture systems that most
colleges and universities are equipped to train students on.
• Community college faculties need continual training in these rapidly changing fields. As the
industry changes, educators must have resources available to them that let them keep abreast of
these new tools and techniques.
Exhibit 15:
Awarded Doctorates in the Biosciences from Top Universities
UC Davis is a world leader in Life Sciences

discovery research, which is an essential
component for any regional Life Sciences
cluster. See the Insert on several of UC
Davis’ programs. Discovery research
requires well-trained investigators, which
UC Davis is also a national leader in pro-
ducing (see Exhibit 15).
UC Davis is clearly bucking the statewide

problem identified by Dahms: “Competition
among companies is affected by a 10-year low
in undergraduate and graduate enrollments in
the natural sciences (statewide), forcing
dependence upon foreign workers.”53 In
addition, UC Davis excels at training under-
graduates in the biological sciences. For Exhibit 16: Survey Responses to Supply of Graduates
example, the Biotechnology major in the
College of Agricultural and Environmental
Sciences is the fastest growing major at UC
Davis.54 The survey conducted after the
Working Summit also shows that most com-
panies in the region do not find it difficult to
find basic researchers to fit their needs (see
Exhibit 16).
However, basic and even applied
researchers are just part of the human capital
necessary in a regional cluster. As outlined in
the other California regional strategic plans,

and as the three major Life Sciences clusters are experiencing, the primary growth in the workforce of a
maturing company occurs in the operation, development, quality, clinical, regulatory, manufacturing,
finance business development, marketing, and sales. “Statewide, as the companies formed in the ’90s are
starting to mature, there is a clear need for workers trained in regulatory affairs, clinical affairs and quali-
ty control.”55 Yet, only UCSD has developed an advanced degree program to meet this demand. Their
masters program in regulatory affairs is one of only five similar programs in the US.
UC Davis’ has two exceptional programs to train students. First, the Advanced Degree Program
(ADP) for Corporate Employees is an innovative program that allows industry researchers to earn a Ph.D.
while continuing to work.57 This program will further increase the number of Ph.D.s the campus gradu-
ates, and it will offer a tool for retraining employees in current skills, but possibly the most important
impact is that it creates invaluable links between
academia and industry, allowing the free flow of
As a fourth year student in the Advanced Degree Program, I information between the two and giving academia
often feel like a conduit for the flow of ideas between Berlex first-hand knowledge of industry needs and trends.
Biosciences (my supporting company) and UC Davis. My Secondly, the Designated Emphasis in
involvement has initiated a series of collaborations between Biotechnology (DEB) Program also provides train-
Berlex Biosciences and UC Davis that had not existed ing in biotechnology to graduate students from a
variety of programs. The mission is to prepare
before. A symbiotic relationship has developed in the pur-
well-educated students to approach problems with
suit of excellent science as Berlex Biosciences searches for
creativity and flexibility. The program will provide
novel therapeutic drugs and UC Davis contributes novel
tools for the students to be leaders, visionaries,
findings to the scientific community at large.56
entrepreneurs, researchers and teachers in the
broad area of biomolecular technology. One pro-
- R. Fitch, PhD Student, UC Davis.
gram in the DEB illustrates the kinds of academic-
industry links that are necessary in the Life
Sciences: MIC 292: An Introduction to
Biotechnology at the Industrial Level. This course is taught at UC Davis by scientists from Novozymes
in Davis. The course is intended to give students an opportunity to hear first hand about commercializa-
tion of Life Sciences innovations.
UC Davis is also home to The Center for Biophotonics, Science and Technology (CBST), which is
housed at the UC Davis Medical Center. Many exciting technologies developed at LLNL are finding new
applications in medicine through the efforts of this program. Part of CBST’s mission is also outreach into
the K-12 educational system, which was discussed earlier.
CSU, Sacramento, has developed MBIG (Molecular Biology Interdisciplinary Group) under the lead-
ership of Suzanne Lindgren. MBIG is an NSF funded program that supports faculty and students who
are currently involved in molecular biology and biochemical research at CSUS. Currently MBIG is estab-
lishing a facility that enables faculty and students to share resources and knowledge while providing a
modern molecular laboratory for both research and instruction. By encouraging the interaction between a
diverse range of scientists, MBIG seeks to maximize the use of resources, create a cooperative environment
for the production of high quality scientific research, and establish a space for students to master a variety
of contemporary molecular biological techniques.58
In addition to the four-year (or more) programs at UC Davis and CSU Sacramento, American River
College (ARC) offers biotechnology training in the form of certificate and AS degree programs. ARC’s
program began in 1999, and is more focused on general laboratory training of its students, and more
recently has specialized in bioinformatics. The curriculum at ARC is industry driven and was designed
around an in-depth skills survey of local industry initially conducted in late 1998, and repeated in 2002.59
The curriculum focuses on applied skills and provides a great deal of hands-on lab time for the students.
The college offers specialized short courses in bioinformatics and ethics in biotechnology and has recent-
ly begun offering online courses. Enrollment in this program has been limited by the slow growth of the
Life Sciences industry in the region. ARC is also the home to the North Valley & Mountain Biotechnology
Center (NV & MBC), which is one of the six regional centers of the Biotechnology Initiative of the
California Community College’s Chancellor’s Office.
The Applied Biological Technologies Initiative of the California Community College Chancellor’s
Office Economics and Workforce Development Program (the Biotech Initiative) has six centers organized
in geographical regions that serve the educational needs of the biotechnology workforce in California,
emphasizing hands-on learning. The goals of the Centers are accomplished by employee needs assess-
ments, connections with the biotechnology industry, instructor training and faculty development, model
curriculum development, and creating partnerships among economic development groups, four-year col-
leges, government and the community colleges.60
With strong support from Genentech, Dr. Jim Dekloe has developed a model program at Solano
College, located in Fairfield, 60 miles West of Sacramento, that offers an AS degree in biotechnology and
a certificate program specifically focused on biomanufacturing. Some Sacramento area students attend this
program in order to pursue jobs in the Vacaville biomanufacturing cluster (Chiron, Genentech, Alza),
about 40 miles West of Sacramento. In this respect, Solano College has a significant impact on the
Sacramento regional workforce. See Insert about the program. The teaching facilities used in this pro-
gram provide students unique opportunities to train on equipment used in industry. Additional training
facilities similar to SCCs, but accessible to students throughout the region would prove to be a valuable
training tool in the region. Recently, state funding has been secured for training facilities in both San
Diego and Hayward. The Sacramento region should pursue similar funding. An additional model for
SCC to consider would be the Workforce Investment Act-supported pilot project between Genentech and
Skyline College to retrain hundreds of dislocated workers for biotech manufacturing positions. To date,
that program has an 80+% placement rate, and both organizations are seeking to expand the program using
WIA funding.61
Resources must also be made available to allow primary school and community college educators to
remain up-to-date with current practices in the industry. UC Davis is one of three recipients in the state
of the NIH’s “Train the Trainers” grants. It is also the co-home, along with ARC, of an NSF
Bioinformatics grant for community college teachers. Finally, the UC Davis Biotechnology Program has
offered NSF-funded summer short courses in molecular biology and more recently bioinformatics for
over 10 years. Many of the biotechnology technician programs at California Community Colleges were an
outgrowth of these programs.

RECOMMENDATIONS
• Provide additional support for the regional training programs at SCC, ARC and UC Davis.
Many of the programs expressed difficulty in entering into long-term arrangements with other
institutions because of uncertain funding for their programs. While these programs can – and do –
seek additional funding for their efforts, a consistent level of state funding would greatly aid their
outreach efforts.
• Develop regional Life Sciences training facilities.
• Continue to develop innovative programs like the UC Davis ADP, and DEB; or the CSU
Sacramento MBIG. Other programs that could be useful include certificate and/or degree pro-
grams in regulatory affairs and/or quality control. Due to the lag time between developing a new
program and trained students entering the workforce (which can be as long as ten years, depend-
ing on the training program), it is critical that academic institutions not only keep current with
industry needs but also they must try to anticipate needs. It is clear from the development of the
other clusters, that this region will face a bottleneck in the clinical development and regulatory
approval of products.
• Industry needs to provide more internship opportunities for graduate students, undergraduates,
and high school students. One key method of insuring that academics can keep pace with current
trends in the industry is for industry to offer students at all levels opportunities to work in their
own labs and clinics.
• Increase, involvement of industrial scientists as adjunct faculty for cutting-edge, technically
demanding courses as another way to improve university-industry collaboration by allowing scien-
tists to come into the classroom and teach students.
RECRUITMENT AND RETENTION
Introduction
Recruiting refers to the hiring of skilled workers from other regions in the state, other states, or other
countries. Respondents to the survey indicated that the vast majority are trying to fill R&D positions,
which is indicative of the youthfulness of the region’s Life Sciences community. Respondents also indi-
cated that R&D positions are not difficult to fill (Exhibit 16).
However, as companies mature, they will require employees with skills in areas that are not currently
being developed by local institutions. Recruitment will be a major factor in filling those needs. In addi-
tion, recruitment of entrepreneurs and promising young companies to the region would dramatically
improve the region’s entrepreneurial and social capital. (See Chapter 6 for a detailed discussion of social
capital.) “The whole industry in California would benefit from an in-state and out-of-state campaign to
recruit Life Sciences graduates.62
Retention refers to keeping existing human capital in the region, so that as people – and companies—
develop new skills they ply those skills to the benefit of the local economy rather than moving to another
region. It is important that the region do a good job of keeping people informed of what the region has to
offer, not only from a quality-of-life perspective (see the previous section on recruitment) but also from a
career development perspective. This is another instance when the visibility of the existing Life Sciences
industry in a region becomes important. Life Sciences companies that believe they have access locally to
the resources they need (both human and otherwise) to move their products through the development
cycle from research to sales and distribution will feel more comfortable locating—and staying—in the
region.
Retraining displaced workers is another means of improving retention of the existing workforce.
California’s Employment Training Panel (ETP) sets aside money (approximately $50 million) each year to
assist companies in incumbent worker training. The state is particularly supportive of high growth indus-
tries like the Life Sciences.

Need more visibility for Sacramento Life Science/Medical Device cluster. Throughout the state and
country, the Sacramento region is viewed as a second tier Life Sciences cluster, which discourages compa-
nies and executives from locating in the region. As national and statewide awareness of the Sacramento
region as a Life Sciences cluster grows, the region will benefit. Currently, the key employees necessary for
startups locate in the nearby Bay Area where they feel more resources are available to them locally.
Challenges recruiters face when recruiting into Sacramento are:63
Candidates want to stay close to the action, so they don’t want to leave the bay area. With the large
number of companies in the bay area and all the acquisitions and strategic partnerships most executives
want to be close the networking action.
Salaries in the Sacramento region are about 10-20% lower in comparison to the bay and the time com-
mitment is the same or greater once you factor in commute time into the bay area.
Cash considerations, companies are unwilling or unable to relocate qualified candidates. Additionally,
there are unrealistic expectations: candidates moving into Sacramento are often making a quality of life
move which means they are looking to slow down.
A common vocabulary, identifiable skill sets, job descriptions and industry awareness/knowledge will
facilitate training efforts by all stake holders. Advances in technology have changed the employment land-
scape dramatically in the Life Sciences. Out of the Life Sciences industry, new careers have been spawned
that were unheard of just a few years ago, and as the industry continues to innovate jobs are becoming
more specialized. It is critically important that the skill sets necessary to excel in these new careers be well
defined and generally communicated.

RECOMMENDATIONS
• Market the concept that the Sacramento region is a good place to work and live. There are several
factors that make the Sacramento region a desirable place to live. Its proximity to the Bay Area,
Lake Tahoe, and the Napa Valley; lower cost of living relative to other regions; and excellent edu-
cational institutions make it a desirable location to live, work, and raise a family.
• Facilitate communication among stakeholders by bringing people together through a Sacramento
workforce development “Working Group” that includes representatives of the Workforce
Investment Board (WIB), SACTO, SARTA, UC Davis Biotechnology Program, ARC, SCC, etc.
An organization representative of the entire region, such as SARTA, should take the initiative in col-
lecting useful information used by local chambers of commerce to synthesize that information into a
regional marketing program.
In addition, efforts by local government or other agencies to increase the visibility of existing Life
Sciences companies in the region would benefit the region in two ways: first, existing companies would
be more aware of the resources available to them locally, and entrepreneurs would be encouraged to set up
companies in the region.
To address the common terminology problem identified at the summit and by several interviewees,
the California Employment Development Department should continue to fund the North Valley &
Mountain Biotechnology Center to lead the effort in conducting a regional Life Sciences company census.
The census should be charged with identifying, categorizing, and communicating the different types
of jobs and skills required by the Life Sciences companies in the region. The Central Coast
Biotechnology Center (CCBC) workforce census conducted in 1998 provides an excellent model that
should be revisited every five years to ensure that there is a minimal amount of communication
between academia and industry.64
It is important to recognize that human capital is a constantly changing segment of a cluster’s develop-
ment. A Workforce Development Working Group, comprised of members from academia, government,
and industry, could be the central point of communication for all stakeholders in the process. Furthermore,
such a group could provide an information conduit into the companies about the resources available to
them from the local, state and federal government. This group could also be charged with implementing
many of the recommendations discussed in this plan. For example, the periodic employment survey to be
conducted by the NV&MBC could be supplemented as necessary with definitions provided by the work-
ing group.
“A Workforce Development Working Group consisting of representatives from area universities, com-
munity colleges, industry, and local and state government would be a useful body and could develop
recommendations and strategic plans to address the Life Sciences workforce training needs in the region,
collaborating with invested organizations and parties and working across organizational boundaries.”65
INTELLECTUAL CAPITAL
By Sungene Ryang 4
INTRODUCTION
There are several attributes that characterize a region’s ability to successfully develop and promote tech-
nology and innovation in the marketplace. Regions where intellectual capital flourished and ideas were
successfully commercialized were characterized by implementation in the following three areas.
• Research and Innovative Capacity

• Technology Transfer
• Technology Commercialization and Capitalization
It is the successful deployment and interaction between these three attributes that underlies the success
of intellectual capital creation and commercialization of technology in leading Life Sciences regions.
Intellectual property creation, new company formation, Life Sciences graduates, and the amount of
state/federal funding and grants can most effectively measure intellectual capital productivity.66 In this sec-
tion, details of these three key attributes will be introduced. A discussion of the current status and needs
of the Sacramento Valley will then be detailed, followed by recommendations to improve the region’s
standing in regards to these attributes.
Research and Innovative Capacity

Research and innovative capacity remain at the heart of successful research and development efforts.
Leading Life Sciences technology transfer centers and regions are usually concentrated around major
research universities, laboratories, and major research institutions. Often research universities and
research institutions form “the backbone of successful technology clusters, performing both basic and
commercial research (see Exhibit 17).”67

In the Sacramento Valley, UC Davis sits as one of the state’s and nation’s leaders in the research of
biotechnology, agricultural sciences, and medicine, and is a growing leader in the UC system for success-
ful R&D and technology transfer. At UC Davis, Life Sciences research activity remains high.
Recent activities include the nearly completed construction of the newly established Genome Center on
campus. The center will recruit new faculty positions in genomics, proteomics, and bioinformatics.
Another newly established center, the Center for Biophotonics, Science and Technology (CBST), received
CHAPTER 4: INTELLECTUAL CAPITAL 35

Exhibit 17:
Major Sources of Intellectual Property in the Sacramento Region72
a $40 million grant from the NSF and reflects continued collaborations between UC Davis and Lawrence
Livermore National Labs (LLNL). CBST brings together roughly 100 researchers including physical sci-
entists, life scientists, physicians and engineers. In addition to UC Davis and the Lawrence Livermore
National Laboratory, center members include UC Berkeley, UC San Francisco, Lawrence Berkeley
National Laboratory, Stanford University, Alabama A&M University, University of Texas at San Antonio,
Hampton University, and Fisk University.
These initiatives generally reflect the grow-

“Our drug delivery work uses ultrasound technology to ing trend in cross disciplinary, collaborative
manipulate and deliver drugs to a specific location. research. As an example, the relatively young
Maximizing the delivery of drugs is a difficult problem but promising field of biomedical engineering,
solved by bringing together concepts in acoustics, physics, a very broad discipline that spans biology and
modern biology and biochemistry. Complex issues such as engineering demonstrates this. The recently
these require a team and the ability to integrate across established biomedical engineering department
these different areas. It requires partners to take it into the at UC Davis headed by Dr. Katherine Ferrara,
clinic. We need approved ultrasound systems as well as recently raised over $47 million in matched
drug delivery vehicles and testing for efficacy. funds by securing a leadership development
Biomedical engineering provides the opportunity award from a large foundation. Dr. Ferrara
to solve this combination of challenges.” believes that the funds will allow her depart-
ment to create one of the best imaging facilities
- Dr. Katherine Ferrara,
Chair, Department of Biomedical Engineering, UC Davis in the nation, as well as developing other areas
that include molecular therapeutics and sys-
tems biology. In fact, one of the machines has
already been commercialized and marketed. The department has many collaborations with industry and
is beginning to consider startup opportunities. As a discipline, biomedical engineering takes a systems
approach to problems where biology, chemistry, physics and engineering converge. This systems focus is
really unique to biomedical engineering and its discoveries are becoming an important part of a new
biotech industry.
Other universities in the region with more limited research capacities include CSU Sacramento, CSU
Chico and UC Merced. LLNL represents one of the largest federal research institutions in the US.
Currently, however, there is a growing but limited collaboration between the region and LLNL via CBST.
Collaborations with Lawrence Berkeley National Laboratory are just beginning to be established as well.
This limited collaboration between research institutions points to a greater problem for the Sacramento
region. Without complementary or competitive research organizations working with UC Davis or with
other major research groups, the region’s ability to develop and create marketable intellectual property and
capacity is stifled.
Furthermore, the lack of private research institutions in the region also inhibits commercialization
efforts. Private research institutions and established Life Sciences industry companies follow “the clearest
process for transferring technology to the marketplace” as this goals serves as “the explicit mission of these
organizations.”68 Unlike private sector organizations with a strong commercial focus, federal and uni-
versity based research institutions often do not prioritize technology transfer and the licensing and
commercialization of intellectual property (IP). This leads to a situation where potentially valuable
technologies and IP do not make their way into commercial applications, never venturing past the lab-
oratories where they were invented.
RECOMMENDATIONS
• Increase the number of leading research institutes in the region to both complement and compete
with UC Davis. Without competition, innovative research can be stifled and commercialization
efforts can become bogged down by excessive bureaucracy and one sidedness.
• Increased technology transfer activity will increase royalties and revenues to research organizations,
which can set aside a percentage of royalties to bolster and promote entrepreneurial pursuits and
industry partnerships with increased intellectual property. State and federal tax benefits, and
incentives to offset heavy Life Sciences R&D and development costs for entrepreneurs, corpora-
tions, and venture capitalists (VCs) will further motivate the industry and bolster the region’s
economy. An effective incentive program will create a virtuous cycle of cooperation and commer-
cialization between researchers and industry players.
Technology Transfer
Technology transfer remains the crucial element in taking cutting-edge research and successfully
launching it into the marketplace. Technology transfer is the process of utilizing innovation, research, or
technology for a purpose that produces commercial benefits or product/process improvement.69 The suc-
cessful transfer of intellectual and human capital between organizations is of critical importance in the free
flow of ideas between research institutions and the marketplace. Consistent access to information and
resources, and communication between researchers and industry is vital to the success of transforming
technology transfer into a viable business catalyst.

There has been considerable recent interest in taking the research done at the university and commer-
cializing these technologies. In the past few years, most UC campuses have set up their own technology
transfer offices in conjunction with the central University of California Office of Technology Transfer.
The campus-based centers are approaching or have approached maturity in structuring and managing IP
deals, although the IP that they market is generally at the research stage. Licensees are sought to further
develop the technology. UC Davis has held the No. 2 position in the UC system the past two years,
behind UC San Francisco, for income from royalties and fees with income for 2002 at $16.5 million, up
from $9.6 million in 2001.70
Exhibit 18: Key Steps in the Technology Transfer Process
Source: Lawrence Berkeley National Laboratory
Key Steps in the Technology Transfer Process

There are a number of steps that are essential in successful technology transfer process (see Exhibit 18).
The key steps (see Exhibit 18) are comprised of:
Discovery and Innovation through Research.
The discovery or innovation of a process, technology, or technique in the lab or classroom initiates
the tech transfer process. The discovery must then be recorded and disclosed to the technology trans-
fer center (TTC).
Obtaining Intellectual Property Rights
A patent or copyright application is then filed by the TTC to which the technology has been discovered
or disclosed on behalf of the discoverer.
Marketing of Research and Patents
Once IP has been sought and/or filed for, the TTC begins promotion of the discovery or innovation to
the greater community and business marketplace.
Licensing of Patents
Once an appropriate individual or organization with the necessary financial, manufacturing, and mar-
keting capabilities has been identified, a licensing agreement between the TTC and the organization is
negotiated.71
With these key steps in place, technology transfer offices can help innovators, scientists and researchers
convert their discoveries into commercial applications that can benefit the greater community. These
benefits can be seen through improved medical processes, new drugs and treatments, and advanced tech-
nologies that improve our quality of life. The results benefit not only the original discoverer, but also the
local partners who are involved in the commercialization of the innovation and the regions that support
the process.
While each of these steps is being addressed by different organizations in Sacramento Valley, there has
not been a centralization of these activities under one umbrella organization. The UC Davis Technology
Transfer Center (UCD TTC) actively addresses the first of these two steps, but in instances possesses lim-
ited resources to continually satisfy the marketing and licensing requirements to fulfill the technology
transfer process. Other external organizations are hesitant to approach the University due to perceptions
of bureaucracy within the tech transfer process at the state level and in their relationships with UCD TTC
and other research institutions in the area. Inaccessibility to research and support mechanisms has also
been deemed as problematic to continued success within the tech transfer process in the region.
RECOMMENDATIONS
• Establish clear methodology for technology transfer. This methodology should support university
or institutional academic goals in harmony with the technology transfer process. This is a key step
for the technology transfer process to reach its potential.
• An individual or organization must facilitate increased communication, cooperation and access to
resources between technology transfer and commercialization players. An organization such as
SARTA, UC Davis CONNECT, or the California Business, Transportation and Housing Agency
must take the lead and serve as a broker in bringing together various parties through networking
events and information sharing.
• Private and public sector working groups should be established to improve cooperation between
business, industry and public sector organizations (such as universities and federal research institu-
tions). Improved commercialization practices, controls, and incentives would spark increased
cooperation and interest between the two sectors.
• A thorough re-evaluation of the key steps of the technology transfer process must be undertaken
by researchers and technology transfer offices. A reward system that emphasizes the number of
patents or licenses issued should be reconsidered, with a greater focus on the marketing of viable
research and innovation. By simply rewarding the number of patents or licenses issued, the real
rewards for a strong technology transfer and commercialization system will go unrealized.
• Currently, patent applications and other methods of obtaining intellectual property rights precede
marketing evaluations of research. Resources could be better used to fund initial market research
and analysis before a technology or research is earmarked for patenting. This would save funding
on patents for research that inevitably may not ever be able to be commercialized and would also
provide a kick-start to the marketing and commercialization process for research that was found to
be marketable and commercially viable in the pre-patent marketing stage (see Exhibit 19)
• By placing emphasis on technology commercialization as a top priority, implementing initial mar-
ket research and analysis before the patent process would help to involve a number of key outside
players who would be instrumental in the commercialization of the technology and/or research,
minimizing the perceptions of excessive bureaucracy and the lack of awareness surrounding the
entire tech transfer process.

Exhibit 19: Costs and Outcomes in Technology Transfer
Technology Commercialization
Technology commercialization is the process of identifying industries and organizations that are capable
of taking IP and bringing this research or technology to market. It is the essential ingredient required to
validate a discovery or innovation, and it leverages the technology transfer process through licensing and
the creation of new processes and/or products to achieve commercial interest and acceptance. Technology
commercialization requires effective cooperation across a number of different industries and expertise,
bringing together researchers, entrepreneurs, capital and financing sources, and commercial corporations.
Successful cooperation between these parties can produce extraordinary benefits for these groups and the
regions that support this activity.

In the Sacramento region, the number of capital sources to promote and support the region’s Life
Sciences technology commercialization is growing as CalPERS with its Biotech Fund and other funds
have targeted the region in an effort to promote growth within the Life Sciences industry. However, well
established networks within the venture capitalist and financing networks are limited despite recent inter-
est from VC’s in the area. Additionally, a number of organizations promoting entrepreneurial growth and
angel investment have increased their visibility. Groups such as the Sacramento Angels, Office of Research
which includes both the Technology Transfer Center and UCD CONNECT, and the Graduate School of
Management (GSM) at UC Davis, are involved in new business and entrepreneurial events. The
Sacramento Valley is also represented by a number of leading industry corporations with stable manufac-
turing bases such as Genentech and Chiron based in Vacaville.
With the basic elements to successful commercialization efforts beginning to fall into place, coordina-
tion between the various players and increased communication and networking activities are necessary.
More frequent and effective interaction between technology transfer offices, businesses, and other key
partners such as entrepreneur groups and capital-funding sources is deemed necessary. The lack of com-
munication and access to key resources and networks underscores most of the obstacles to spurring a
growth in more successful commercialization efforts in the region. Unlike the Bay Area where a number
of trade organizations and industry associations promote numerous networking opportunities, the
Sacramento Valley is not well represented in this regard. Organizations such as SARTA, UC Davis CON-
NECT, the Office of the Vice Chancellor for Research, and the California Business, Transportation and
Housing Agency are well positioned to promote more cooperative and focused networking opportunities
and events, and to increase awareness and cooperation among key players. With various goals, these
organizations represent the interest of their core members, while not addressing the larger goal of serving
the entire Sacramento Valley.
RECOMMENDATIONS
• A central organization can coordinate the efforts of the various groups in the region to make tech-
nology commercialization a focus for all players.
• Internal structures and policies of tech transfer offices and networking groups must reflect a focus
on maximizing marketing opportunities for viable research and innovation.
• A focused recruitment agenda to bring in staff experienced in technology transfer and commercial
know-how and increased market based training will help to promote a better understanding of
commercialization techniques.
• Tech transfer offices and institutions must proactively market new research in earlier stages of
the technology transfer process to help find agents who can move the technology to the next
step towards commercialization. This feedback may foster more commercially viable research
and innovation.
CONCLUSION
Successful technology transfer brings substantial value to a region. Research universities and institu-
tions benefit from significant financial revenues, and local business partners and licensing companies reap
the rewards of higher profit margins as costly R&D efforts are minimized through successful technology
transfer and partnerships with research institutions devoted solely to research. The benefits to the
region’s economy is clear, as the Bay Area Life Sciences cluster contributes approximately $12 billion to
the regional economy, making up 3.6% of the area’s gross metropolitan product (GMP).73

FINANCIAL CAPITAL
By Paul Yu-Yang
5
INTRODUCTION
Financial capital is the money needed by an entrepreneur to start a company. For the Life Sciences
entrepreneur, in addition to employee, administrative, and facilities cost, this money is needed to secure
patents, licenses, and specialized “wet lab” equipment and facilities. There are recognized stages for any
startup (see Exhibit 20):
Exhibit 20: Company Development and Financing Capital Available
Grants
Finding monetary capital is one of the most challenging aspects of starting a company. Within the Life
Sciences, public monies are available in the form of grants from government agencies through the Small
Business Innovation Research/Small Business Technology Transfer Programs (SBIR/STTR) as shown in
Exhibit 21. Ten government agencies are required by the SBIR program to reserve 3% of their R&D budg-
et for awarding to small businesses. For STTR, five government agencies are required to reserve a portion
of their funds for this program. SBIR funds are available to for-profit businesses that are American-owned
and have less than 500 employees. The principal researcher must be employed by the company. STTR
funding is similar but also includes non-profits of any size as long as they are located in the US and fit one
of the three definitions: nonprofit college or university, nonprofit research organization, or federally fund-
ed research center.
CHAPTER FIVE: FINANCIAL CAPITAL 43

Exhibit 21: Summary of SBIR/STTR Information74
Federal funding organizations designate their own topics and solicit proposals. These grants are avail-
able every year and follow three phases for technology development. The first phase is a proof of concept
phase and awards up to $100K to prove that a technology shows promise for commercialization. Second
phase awards go towards further development of Phase I. The third phase is technology commercializa-
tion and is not funded by SBIR. Total SBIR/STTR regional funding from 1991 to 2000 is depicted in
Exhibit 22.
Exhibit 22: Life Sciences Grants for the Sacramento Region 1990-2000
Other grant type programs are available and include UC Discovery Grants that range from $50,000 to
over $3 million. These grants are 1-to-1 matching funds for direct costs between an industry sponsor and
the UC System/State of California that encourage collaborations. The program was started in 1996. For
UC Davis researchers, the amount of grant monies obtained has peaked this year at over $2.5 million (see
Exhibit 23).
Exhibit 23: UC Discovery Grant Awards 2000-2003 for UC Davis

Angel Investors
Another source of seed capital can come from angel investors. This source of capital has become a good
alternative for obtaining early stage funds. In years past, venture capital filled the need for early stage fund-
ing. In recent years, venture capital has concentrated more on managing billion dollar funds with a lower
risk tolerance. Lower risk positions VC for later stage companies with products near or on the market.
Angel investors are typically successful entrepreneurs who have accumulated financial wealth through
their own startup efforts. They are motivated by a
Life Sciences companies have more complicated combination of not wanting to leave the excitement of
startups, giving back to the entrepreneurial communi-
development cycles and can take much longer to
ty, and to continue prospecting in high risk, high
see a return than software companies for exam-
return investments.
ple. This creates a reluctance to want to invest.
The Sacramento Angels are an organization of high
With regards to sectors within the Life Sciences
wealth individuals who fit this profile. The Angels typi-
industry, medical devices are usually more tangi-
cally do deals ranging from $300,000 to $1 million in
ble and therefore more easily understood by
series A or B offerings. They have strengths in investing
Angel investors than biotech deals which often
in telecommunication, software, Internet related, and
require knowledge of deeper scientific principles.
medical devices. The Angels are now focused on
So in developing areas where the number of
recruiting new members to increase their expertise in
sophisticated investors is rather limited, it is Life Sciences and biotechnology disciplines. They are
easier for medical device clusters to get traction. also sponsoring a $5000 student scholarship in con-
- Jim Kitchel, Chairman, Sacramento Angels junction with the Center for Biophotonics, Science
and Technology.
Exhibit 24: VC Regional Investment for 2002-2003Q3
Evolving today are great centers of
innovation coming out of the medical centers,
our universities and the research institutions in
the area. From that innovation, coupled with
the numbers of the management professionals
Venture Capital and serial entrepreneurs living in our region,
Until recently, venture capital investments there is a positive impact on the ability to
in the region have been limited to funds com- privatize companies. We now have exception-
ing from outside the region. There are few al examples of medical device, agbio, biotech
regional VC’s and even fewer VC’s with Life and diagnostics companies with quality teams
Sciences investment portfolios. Roger Akers of people who have come together to develop
of Akers Capital, LLC, is experienced in remarkable products.
investing in high-tech companies but sees an
- Roger Akers,
opportunity in the Life Sciences area.
Founder and Managing Partner, Akers Capital, LLC
Since the beginning of 2002 (Exhibit 24),
VC investments in the area have picked up in
the Life Sciences area with medical devices and
biotech ventures being in the top four for
investment capital secured:
Still, the amount of funding together with
flow of ideas is not strong enough to establish There is tremendous potential in the
a sustained deal flow that investors need to Sacramento region, especially in the
establish an investment community. Scott University of California system at Davis.
Lenet of DFJ Frontier, an affiliate of Draper, The university should be supported and
Fisher, Jurvetson, sees the opportunity. Scott nurtured—we see it as a source of the next
established his office in Sacramento to specif- generation of entrepreneurs and great com-
ically look at the investments in the central panies. It takes collaboration between the
valley. Life Sciences technology is a strong university’s scientists and the business
interest. community. The initial steps taken to begin
this process have been very effective, and
now the effort needs to be accelerated with
further cooperation and by creating a specific
mechanism for investors to become aware of
the opportunities that exist.
- Scott Lenet,
Founder and Managing Director, DFJ Frontier.

RECOMMENDATIONS
• Publicize existing successful companies. The region has noteworthy past and current success
stories in the spectrum of the Life Sciences: Calgene, Lipomics, AgraQuest, and Sagres Discovery,
among others. Self- promotion will reinforce the view that entrepreneurial success in the region
does happen. For example, a strong “mini-cluster” of cardiovascular medical device companies
exists in the region and traces its origins back to the early ’70s.75 Though long established, this
specialized segment of the medical device industry is not well known.
• Increase contacts between entrepreneurs and the appropriate funding sources. Events and situa-
tions that promote contact and communication between sources of financial capital and startups
that seek funds do happen in the region. Golden Capital Network, Company X, UC Davis
CONNECT, and the Office of the Vice Chancellor for Research promote such events. Life
Sciences focused events need to increase in particular.
• Work for Government incentives. Instruct the Business, Transportation and Housing Agency, in
conjunction with the Franchise Tax Board, to examine the potential economic impact of Angel
Investor Tax Credits, such as those under consideration in Maryland, Iowa, Ohio and Oklahoma.
SOCIAL CAPITAL
By Paul Yu-Yang 6
INTRODUCTION
This simplified short narrative is the story of how innovations go from idea to industry, and how com-
munities form around technology. This particular description is simple but as it describes what must
happen in the innovation life cycle, it is inarguably accurate. It is because of the social component of
startups that social capital is important.
Social capital is about making the human, intellectual, and financial capital work together. As
Hargadon’s description alludes, the development of successful new companies is a very social process. It
involves not only the technological foundation but the human foundation as well. This foundation is
composed of entrepreneurs, investors, managers, employees, etc. Because of this, the workings and
lifecycle of a startup are complex, and success is hard to predict. A general statistic that corroborates
this interpretation is that only one in ten startups will succeed. Social capital is a fourth dimension that
in effect leverages the three capital forces in a way that synergizes them. Together, these forces act
together to support, maintain, and propel the creation and development of successful startups.
Furthermore, the social capital of Silicon Valley is
cited as the major reason for its resilience in inno-
Consider the life cycle: An innovation emerges when one
vation as compared to regions that are technically
or a few people recognize the potential in an idea or an
well-adapted but that do not have Silicon Valley’s
capacity to continually innovate. object for uses beyond what’s already been done. They
“Network” theory from sociology has been devel- share this vision with a few others—a colleague down the
oped to conceptualize the importance of the way social hall or a buddy over in software. Those others collective-
structures, both formal and informal, have been key to ly contribute their own ideas and their own skills, and by
sustained regional innovation. The advantage of hav-
77 doing so push the idea along and encourage each other
ing more, rather than less, social capital is that it can to push even further. They pitch the idea—maybe to a
accelerate the successful formation of companies. The manager or potential investors, who add yet more
social capital needed for regional innovation includes resources, and to other interested colleagues, potential
the complex network of entrepreneurs, managers, suppliers, or retailers. Over time, a community begins to
angels, VC’s, and researchers who move a discovery or take shape which is connected around the emerging tech-
innovation forward through the stages of the company. nology. The efforts of this growing community accelerate
In the early stages of a cluster’s growth, this social net- the evolution of the new idea and their diverse perspec-
work focuses around the research and development tives push it in new directions.76
institutions.
- Andrew Hargadon, Professor, Graduate School of Management,
UC Davis, from How Breakthroughs Happen
CHAPTER SIX: SOCIAL CAPITAL 49

In later stages, the locus of influence moves to new ventures and the investment community support-
ing them. The physical manifestation of social capital is the network that is left standing after a robust
technology is fully developed into viable regional industry base. In the Bay Area, it is the family tree of
companies that started with Fairchild in the Silicon Valley and extended to the main companies left today.
Or, in biotech, it is the company tree that started with Genentech, Chiron, and Cetus, and grew into the
strong biotech industry base in South San Francisco and Emeryville.
Building Social Networks

Mary Walshok, former director of UC San Diego CONNECT and a witness to San Diego’s regional
innovation success, credits San Diego’s success in part to the role of catalytic social networks that foster
and accelerate new company growth. These types of organizations can help build social capital in general
by bringing technology, entrepreneurs, and investors together. The kinds of institutions can range from
incubators to organizations that showcase entrepreneurs at special conferences.
Entrepreneurial Leadership
Leadership at all levels can facilitate the formation of social capital that in turn leads to successful start-
ups. The examples of leaders from Chapter 1 ranged from leaders of successful startups, which served as
a wellspring for yet even more companies, and institutional leaders. Founders of successful Life Sciences
startups serve as leaders for others to follow suit. Crucial personnel for Life Sciences startups come for
both university and industry. Two roles that are crucial in social capital formation are the university
researcher and the serial entrepreneur.
The University Researcher

University researchers play various important roles in
technology commercialization. With startups, depending
Significant faculty involvement is really going to
on the sector—biotech, medical device, diagnostic, etc.—
depend on the campus culture. Some faculty are
university researchers are typically involved in a range of
concerned about the impact of faculty startups on the
roles from scientific collaborators to members of the advi-
quality of teaching. Others consider the effect on
sory board or founding executive team. They can occupy a
tenure; it is not clear whether involvement will be central role in the kinds of social networks that facilitate
viewed as a positive or negative. Conflicts of interest startups (see Exhibit 25). As such, developing the social
need to be identified and clarified for faculty, capital of researchers is important.
investors, and even students who will benefit by way The culture of the research institution can play a
of more projects and employment. Fortunately, we significant role in supporting or not supporting faculty in
are moving in this direction. The Provost and Vice this role. As an example, the UC Davis Medical Center has
Chancellor of Research are examining guidelines to been focused on building up entrepreneurial culture in its
create the kind of culture and balance found at our faculty. A few years ago, the UCD Cancer Center was able
peer universities in the Bay Area. to channel resources into recruiting talented researchers.
Because of the high quality research conducted there by fac-
- Dr. Kit S. Lam, MD/PhD, Chief of Division of
Hematology/Oncology, UC Davis Cancer Center. ulty and staff, the Center recently attained the designation
as a National Cancer Institute (NCI) site. In addition, the
recruitment efforts brought in entrepreneur-professors like
Dr. Kit S. Lam, MD/PhD. Dr. Lam is Professor of Medicine
and Chief of the Division of Hematology and Oncology, serves on the Board of UCD CONNECT, and
was a scientific co-founder of Selectide, a biotech drug discovery company now owned by Aventis
Pharmaceuticals.
Exhibit 25: The Social Network of the University Researcher for the Biotechnology Industry78
Developing an entrepreneurial faculty culture will serve to create the kind of business leaders who may
go on to start or help start successful companies. Important to a sustainable Life Sciences cluster are
companies that serve as wellsprings and those that are base hits. The founders of wellspring biotech
companies such as Genentech, Amgen, Chiron, and Hybritech were university professors. These are
homerun companies. The culture of these companies is such that employees go on to start their own
companies (see Exhibit 26). While there are obvious benefits of a homerun company, base-hit biotech-
nology companies are equally important and share a similar dependence on the research professor.
In other sectors such as medical devices and diagnostics, university researchers may also play the
founding role in a startup but industry tends to play a larger role. In the medical device and diagnostic
sectors, university researchers are generally utilized as consultants or to further certain research. Roles
in furthering research can take the shape of new product development, product testing, or performing
developmental clinical trials.
The Serial Entrepreneur

The serial entrepreneur is another key concentrator of social capital. This person is the startup veteran
who has started a few successful Life Sciences companies. Because of the social capital amassed through
the startup process, this type of person has the critical resources to start, develop, and accelerate the growth
of new companies as well as facilitate the process for others. The serial entrepreneur serves as a pivotal
role in the sustainability of a Life Sciences cluster (see Insert: “Putting the Pieces Together.”)

The successful regions mentioned in Chapter 1 that formed a sustainable Life Sciences cluster went
through a series of steps that eventually cycled through the loops of regional capital. A critical mass of
startups may lead to a successful base-hit company. A critical mass of base-hit companies can lead to a crit-
ical mass of serial entrepreneurs. Finally, a critical mass of serial entrepreneurs will lead to Life Sciences
focused funds that will provide direct and local capital to more startups. At anyone of these steps, a home-
run company is possible but more likely at the later steps. Unseen in this scenario is the social capital that
is amassed during each step. Without the underlying social capital, the cycle will not progress as easily (see
Exhibit 27).
Exhibit 26: Companies Derived from Genentech and Cetus/Chiron Personnel
Exhibit 27: Social Capital Accumulation Cycles Around the Serial Entrepreneur
Institutional Leadership
Some observers like Richard Dorf highlight institutional leadership as a crucial factor in building the
capacity of a region’s innovation. Dorf, a Professor of Electrical and Computer Engineering and Professor
of the Graduate School of Management, has had occasion to think about this causality as an author of
books on Engineering, Technology Management, Sustainability, and Entrepreneurship. He believes “the
strong leadership of Stanford’s Provost Fred Terman and venture capitalist Arthur Rock enabled the devel-
opment of Silicon Valley.” And “the emergence of similar leadership is necessary for the development of
a Life Sciences cluster in the Sacramento region.”
Indeed, Fred Terman as Dean of the College of Engineering and Provost of Stanford University helped
lay the groundwork for Silicon Valley.80 He was a social capital conduit and matched key people together
and helped start companies. Terman developed and mentored talent such as David Packard and Russ
Varian who later went on to found HP and Varian. He also promoted the building of the Stanford
Industrial Park that housed notable Silicon Valley companies from the 1950s such as HP, Lockheed, Varian,
Watkins-Johnson, and Shockley Transistor Labs.
Another example of the importance of regional leadership comes from San Diego. Former UC
President and UCSD Chancellor Richard Atkinson created a significant part of the San Diego infrastruc-
ture that even to this day facilitates the growth of new companies. After extensive consultation with the
local public and private sector communities, UCSD CONNECT was created as a means to link the nec-
essary forms of capital together to accelerate the new company formation process. Since its inception in
1985, it has assisted more than 800 technology companies.
Current Status
The Sacramento Valley is at the early stages of social capital formation in the Life Sciences industry.
Organizations do exist in the region that will help facilitate this growth and development. Jon Gregory,
President of the Golden Capital Network, has been connecting entrepreneurs with regional investors and
professional services since 1999. He believes that we have not yet reached a critical mass to form a sus-

tainable cluster. He recognizes the need to build external relationships outside the Sacramento region to
push the industry into a developed cluster.
The Sacramento Valley has organizations that help make these connections for most types of startups
including Life Sciences startups (see Exhibit 28). These organizations help the region build its social
capital. However, Life Sciences startups have their own needs and issues and may require specialized
organizations.
Exhibit 28: Social Capital Enabling Organizations
More can be done to accelerate the development of Life Sciences startups in particular. Incubation space
exists at McClellan, but renovation into wet labs is needed. Incubation spaces are ideal for bringing entre-
preneurs together in close proximity. Proximity is important to start the development of a network and
culture of entrepreneurship.
UC Davis has recently picked up efforts in bringing
About a year and a half ago, we started entrepreneurship to campus both from within and from
encouraging our research community towards the outside. Progress is being made in the form of incu-
the applications-end of research. At UC Davis, bation space close to campus for university spinouts. The
Regents approved the Long Range Development Plans
we are emphasizing the need for bringing our
for a University Research Park at the edge of campus near
research expertise and results more directly to
Interstate 80. The Office of Research has increased its
bear on solving society’s problems. As a land
visibility in promoting university research and technolo-
grant university we have the mission of helping
gy. It invited venture capitalists to campus and gave tours
society by using the research generated here.
of research labs. The Office of UC Davis CONNECT
UC Davis has a tremendous presence in the
held a day-long event to introduce regional and Bay Area
Sacramento region: we are the largest employer
investors to scientists and the innovative and applied
in the area; we are extremely rich in
research being done at the campus. The event included
knowledge generation potential; and we have
lab tours and a networking reception. To further improve
the opportunity to be leaders in catalyzing its progress, it held its first meeting with an External
increased economic development in this region. Advisory Board consisting of industry leaders from both
- Barry M. Klein, PhD, this area and outside the state.
Vice Chancellor for Research, UC Davis
Putting the Pieces Together:
Sacramento Valley’s Cardiovascular Medical Device Industry
The recent successes of JOMED and A-Med Systems can be traced back to an injection of
federal funds that Aerojet General received from the government over thirty years ago.
JOMED was recently acquired by Volcano Therapeutics, a Laguna Beach based medical
device company. Volcano decided to relocate their headquarters to Rancho Cordova after
assessing the region’s pool of talent and favorable research and business climate. The pur-
chase was backed by Johnson and Johnson, venture capital firm Domaine Associates, and
Medtronics.
A-Med was founded in 1997 by Walid Aboul-Hosn. The West Sacramento company has suc-
cessfully raised over $60 million and stands at the brink of the cardiovascular assist market
worth over one billion dollars. “The Life Sciences focus seems to always be in biotech, but
the medical device industry is also regionally pretty dominant,” said Mr. Aboul-Hosn. Walid
was interviewed in order to gain insight into the success of the cardiovascular medical device
industry. His comments are summarized below.
Human and Social Capital:

Decades ago, Aerojet General tried to develop an artificial heart. In the late seventies they
spun out their efforts into Nimbus, Inc. During its span, Nimbus raised in excess of $20 mil-
lion from the NIH. In the mid-eighties, Johnson and Johnson was involved in funding
Nimbus Medical Inc., which later bought out Nimbus Medical. In turn, they have been
acquired by Bay Area-based Thoratec.
Nimbus was one of the leading companies - an engine of innovation - in this technology.
Nimbus’s legacy is the base of engineers and scientists who emerged and stayed here. In
fact, this base of human capital is what lured a German company interested in ventricular
assist technology to Sacramento.
Sacramento State was an important part of the human capital equation as well. The
Biomedical Engineering Program was well connected with Aerojet and Nimbus since the early
beginnings. It graduated many including myself who went on to become part of a founda-
tion involved in the region’s success.
Intellectual Capital:
Ventricular assist devices have been around for years starting with Aerojet’s medical device
endeavors, but only recently have these devices grown in acceptance. The application for
these devices represents one of the largest medical markets with no treatment. Heart failure
is one of the most expensive segments affecting government sponsored healthcare. There is
no treatment other than drugs, so from a device standpoint, clinical trials savings would be
huge – billions of dollars.
Presently, cardiovascular companies are an informal group of five main companies, and there
is quite a bit of employee exchange at these companies.

Financial Capital:
I chose this area to start A-Med because of the specialized expertise located here. The Bay
Area venture capitalists involved were at first reluctant but agreed to try it for six months.
That was in 1997…
Not having local VC is a factor. Back in 1998, Sand Hill Road venture capital community in
the Bay Area did not know what was going on in Sacramento. Since then, there have been
some VC’s who have settled in El Dorado Hills. Many VCs are retiring here—some are well-
known, successful Bay Area transplants.
Money for seed and early stage funding is just starting to emerge in the region but not the
type for advanced investments in the medical device arena. We need bigger funding oppor-
tunities in this area. However, Sand Hill Road is not too far away.
The Sacramento region’s Life Sciences endeavors can be successful despite the local funding
gap. Bay Area money is readily available if you can convince them that we have great start-
up contenders up here. They will invest outside the Bay Area. In fact, they have several
investments that are a couple of hundred miles from their firms. It is not absolutely critical
that we don’t have a Sand Hill road here.
RECOMMENDATIONS
• Provide more networking and education for local entrepreneurs.
Scientists at the university need resources to support the commercialization of their research.
Successful entrepreneurs could provide guidance to
new entrepreneurs. Other early stage business con-
There is a critical need to have organizations that con-
sulting resources could also be made accessible.
nect us to the resources external to the Sacramento
• Focus on people, not just technology.
market. UC Davis is opening up and beginning to
The region needs to recruit more industry entrepre-
provide a venue to bring investors onto campus. The
neurs and faculty to the region. A strong research
other piece is the creation of an entrepreneurial culture
foundation at UC Davis and good quality of life make
to build the research into a venture. UC Davis CON-
this region prime for attracting talent to the area. The
NECT, the Office of Research at UC Davis, which Sacramento Valley is not known for being a hotbed in
includes the Technology Transfer Center, will enhance the Life Sciences arena. Attracting more entrepre-
this process. Once ideas are flushed out, then organi- neurs to the region will add to a developing critical
zations such as the Golden Capital Network can mass. Local universities could work with industry to
provide a platform to further enhance the investment identify any overlapping technology needs that would
readiness of the companies and provide access to a benefit both research and industry. Industry could
key network of resources and investors both within our offer additional incentives to attract faculty to the
region as well as neighboring regions. region such as consulting opportunities. Quality of
life can also be a strong factor in attracting experi-
- Jon Gregory, President, Golden Capital Networks
enced entrepreneurs from more inclement geographical conditions. Recruiting from places like
Seattle, and Minnesota have been successful for certain local medical device recruiters.
• Increase deal flow to local and outside investors.

Both “in-reach” and outreach aspects of deal flow should be considered. In-reach needs to be
done at UC Davis to educate researchers about the opportunities in entrepreneurship. A steady
supply of promising technologies with large potential markets needs to flow from research to
startups. There is a strong perception that Bay Area universities have hundreds of technologies
coming through their technology transfer offices every year.
Together with in-reach, outreach to local investors and Life Sciences focused funds from outside the
region needs to happen in tandem. Facilitating both aspects of deal flow should be a well-defined,
publicized process and a database for technology transfer be made available to university researchers
and industry licensees.
• Form a Life Sciences specific industrial organization.

This organization will lead the Sacramento Life Sciences Cluster concept forward. At the “view
from 30,000 feet” level, this organization could enact a comprehensive plan that would bring
together the various recommendations of this plan. Additionally:
It will also help establish metrics so that the region can measure its success in some manner.
It should be funded by the economic community development efforts and local industry. The
best examples of groups such as this included government, state, or affiliated entities but were not
led by these organizations.
• Leverage existing local clusters.

The region’s success outside the Life Sciences arena was mentioned earlier. Guided by coopera-
tion between clusters and perhaps technology brokering, the Life Sciences cluster can be bolstered
and accelerated with the support of these other clusters. Experienced management and some types
of workers may be able to be transferred between industries. Investors from these more tradition-
al areas need to be educated about the opportunities that exist in the Life Sciences.

CLUSTERS OF INNOVATION THEORY
appendix
The working team employed the Clusters of Innovation theory as a basis for defining the Sacramento
Life Sciences cluster and for structuring such choices as those relating to prioritizing investments, allocat-
ing resources and planning for growth. In addition, the working team drew on learning derived from the
Monitor Group’s experience in the area of regional competitiveness. It leveraged the knowledge of the
participants on the working team regarding the development and evolution of industry clusters and the
forms of intervention that positively and negatively influence them.
Conventional thinking places clear boundaries between industries and focuses exclusively on an indus-
try’s internal structure and dynamics as the space for competitive advantage. Cluster thinking does not
disregard the relevance of the “inside” of an industry, but broadens the terrain for competitive advantage
to capture cross-industry linkages. The broader cluster approach to Life Sciences recognizes and places
value on the cross-industry interactions among multiple constituencies in the Life Sciences cluster, its
inputs, related industries, buyers and government (Exhibit 29).
The broad perspective enabled by the idea of clusters permits a comprehensive understanding of the
prosperity of a region. At a high level, prosperity depends on a region’s ability to create a business envi-
Exhibit 29: Determinants of a Regional Business Environment
APPENDIX 59
ronment that fosters innovation and productivity (Exhibit 30). Strong, competitive clusters are a critical
component of a good business environment and are the driving force behind regional innovation and ris-
ing productivity. Clusters allow companies to operate more productively in sourcing inputs, accessing
information, technology and needed institutions, coordinating with related companies, and measuring and
motivating improvement. Clusters allow each member to benefit as if it had greater scale or as if it had
joined others without sacrificing autonomy.
Cluster theory implies that the four key determinants of a region’s business environment must be
considered as the region plans for its future success. However, it is important to note that the theory
recognizes the unique nature of each cluster. Thus, the four determinants have differing degrees of rel-
evance depending on the cluster and region in question.
In the Life Sciences cluster, the primary determinant of the regional business environment is factor or
input conditions (Exhibit 29). The quality of specialized inputs and related conditions are particularly
important to the success of the Life Sciences. This action plan focuses on the following three factors as
priorities for the Los Angeles Region: Technology Commercialization, Cost of Doing Business, and
Workforce and Training.
The additional determinants are the Context for Firm Strategy and Rivalry, Demand Conditions, and
Related and Supporting Industries. Context for Firm Strategy and Rivalry refers to the “rules, incentives,
and pressures governing the competition in a region.” The presence of rivals creates healthy competition
between local firms. The quality of Demand Conditions has “a strong influence on the process of creat-
ing and improving products and services.” These Demand Conditions are present to the extent that
sophisticated local customers create an efficient feedback mechanism to catalyze innovation. Related and
Supporting Industries stimulate the efficient communication and flow of ideas within and across clusters
(Exhibit 29).
Exhibit 30: Prosperity Chain
endnotes
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Remarks prepared for the Business Leaders Breakfast Briefing at the Judge Institute of Management Studies,
Cambridge University.
2. Porter, M. (2003, April 30). Introduction, Taking Action for Tomorrow: Bay Area Life Sciences Strategic
Action Plan: 1.
3. DeVol, R. (2000, August 8), Blueprint for a High-Tech Cluster: The Case of the Microsystems Industry in the
Southwest, Santa Monica: Milken Institute.
4. DeVol, Ross C., et al. (1999, July 13). America's high-tech economy: Growth, development, and risks for met-
ropolitan areas. Santa Monica: Milken Institute.
5. Hamilton, J. and L. Himelstein. (1997, August 25). "Fairchild's Offspring," Table. Business Week, Iss. 3541: 82.
Cohen, P. (2003, April 5). Special Report: San Diego biotech: Sun, surf and science. Retrieved from December
12, 2003 from http://www.newscientistjobs.com/site/ns/recnews/ article.jsp?id=recruit66&focus=biotech;
Beal, D. (2003, June 1). San Diego story for biotech believers. Pioneer Press. Walshok, et al. (2002, February).
Building Regional Innovation Capacity: the San Diego Experience. Industry and Higher Education: 27-42.
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from http://www.austinchamber.com/Do_Business/Business_Resources/Reports/AustinHighTechEvolution.doc
7. Saxenian, A. (1998, June 11). A Climate for Entrepreneurship. Retrieved October 27, 2003 from
http://www.dcrp.ced.berkeley.edu/Faculty/Anno/Speeches/
A%20Climate%20for%20Entrepreneurship%20Sweden%2C%201998.htm.
8. Cohen, P.(2003); Beal, D. (2003); Walshok (2002).
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11. Data from UC Davis CONNECT database.
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PriceWaterhouseCoopers' KnowledgeLine issue 3: 2.
13. 53 people visited the survey site. 46 people responded to most questions. For each question, N/A answers
were factored out of the results. Subtracting N/A responses, each question had between 34 to 43 respondents.
14. DeVol, Ross C. et al. (1999, July 13). America's High-Tech Economy: Growth, Development, and Risks for
Metropolitan Areas. Santa Monica: Milken Institute, page 15.
15. Singapore's Biopolis as described in (2003, Nov). Benefits of biotech clusters questioned. Nature
Biotechnology 21(11): 1258.
ENDNOTES 61
16. Collaborative Economics, (1999, October). Innovative Regions: the Importance of Place and Networks in the
Innovative Economy. Pittsburgh: Heinz Endowments.
17. Office of the City Manager. Pro Business Environment. Retrieved January 10, 2004 from http://www.location-
vacaville.com/pro_business.asp.
18. Thomas, S. L. (2002, June 3). Vacaville biotech surge slows for now. East Bay Business Times.
19. Office of the City Manager. Quality Labor Force. Retrieved January 10, 2004 from http://www.locationvacav-
ille.com/skilled_labor.asp.
20. Battelle Memorial Institute (2001). State government initiatives in biotechnology 2001. Technology Partnership
Practice. Prepared for Biotechnology Industry Organization.
21. Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licens-
ing and public policy. Research Policy 15: 285-305.
22. SACOG. A Bold First Step for Mobility in the Sacramento Region. Metropolitan Transportation Plan for 2025.
23. The Monitor Group (2003). Bay Area Life Sciences strategic action plan: Taking action for tomorrow. State of
California.
24. SACOG. A Bold First Step for Mobility in the Sacramento Region. Metropolitan Transportation Plan for 2025.
25. http://www.summitcommercialprop.com/southportlink.htm. Retrieved December 29, 2003.
26. http://www.summitprop.net/southport_business_park.htm. Retrieved December 29, 2003.
27. The Monitor Group (2003). Bay Area Life Sciences strategic action plan: Taking action for tomorrow. State of
California.
28. LePage, A. (2003, October 23). Housing resale market stays hot. Sacramento Bee.
29. Giberson, M. (2003). Median Price of a home in CA increases 17.4 Percent in October 23rd Consecutive
Month of Double Digit Increase, C.A.R. Reports. PR Newswire.
30. California Energy Commission (2003, November). Integrated Energy Policy Report.
31. Nielsen//Net Ratings. (2003, January 15). Broadband access grows 59 percent, while narrowband use declines,
according to Nielsen//Net Ratings. Retrieved December 29, 2003, from www.nielsen-netratings.com
32. Author unknown. (2002, May 23). When it comes to the internet, Sacramentans have a need for speed. The
Sacramento Bee.
33. International Engineering Consortium. Internet Access Tutorial. Retrieved December 29, 2003, from
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34. SACOG. (2003). Regional Priority Projects 2003/2004.
35. Seliger, J. (2003). The biomedicine industry in California: Overview and policy considerations, California
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36. Dahms, A. S. (2003). Possible road maps for workforce development in biocommerce clusters, including insti-
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tions of higher education," Biochemistry and Molecular Biology Education 31(3): 197-202.
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40. Hudson, J. (2002). Studies come alive in labs. The Davis Enterprise.
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ENDNOTES 63
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TAKING

CONNECT organized The Governor’s Sacramento Region

CONNECT organized The Governor’s Sacramento Region

Congratulations to all. We hope to support your efforts at every turn.

Nicole Woolsey Biggart

Walid Aboul-Hosn Katherine Ferrara Barry Klein

Roger Akers David Gruber David R. McGee

By Andrew Hargadon, PhD

The State of the Region

The Life Sciences Strategic Action Plan

Exhibit 1: Life Sciences Cluster Definition

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 1

Patterns in the Emergence of High Technology Clusters

The Development of Clusters

Exhibit 3: Phases of Cluster Development

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 3

Measuring Regional Innovation Capacity

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 5

Exhibit 5: Various Rankings Related to Innovation and Life Science

Source: Sacramento Life Sciences Action Plan Team Analysis

Building the Critical Mass for Cluster Formation

Source: California Technology, Trade and Commerce Agency

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 7

Life Sciences Startups

Exhibit 9: Stages in a Life Sciences Startup

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 9

Exhibit 10: Life Sciences Startup Stages and Differences

Source: Sacramento Life Sciences Action Plan Team Analysis

CHAPTER 1: INTRO—DEVELOPING THE SACRAMENTO REGIONAL LIFE SCIENCES CLUSTER 11

Exhibit 12: Key Aspects in Building Innovation Capacity

Source: Sacramento Life Sciences Action Plan Team Analysis

GENENTECH – A CASE STUDY IN BUSINESS ENVIRONMENT FACTORS

CHAPTER 2: BUSINESS ENVIRONMENT 13

Current status and needs

CHAPTER 2: BUSINESS ENVIRONMENT 15

Current Status and Needs

Current status and needs

CHAPTER 2: BUSINESS ENVIRONMENT 17

Current status and needs

CHAPTER 2: BUSINESS ENVIRONMENT 19

Current status and needs

Current status and needs

CHAPTER 2: BUSINESS ENVIRONMENT 21

Exhibit 13: Phases of Development in Life Sciences Companies

CHAPTER 3: HUMAN CAPITAL 23

Current status and needs

CHAPTER 3: HUMAN CAPITAL 25

EDUCATION: UNIVERSITIES AND COMMUNITY COLLEGES

CHAPTER 3: HUMAN CAPITAL 27

Current Status and Needs

UC Davis is a world leader in Life Sciences

UC Davis is clearly bucking the statewide

Source: Sacramento Life Sciences Action Plan Team Analysis

CHAPTER 3: HUMAN CAPITAL 29

CHAPTER 3: HUMAN CAPITAL 31

RECRUITMENT AND RETENTION

Current Status and Needs

CHAPTER 3: HUMAN CAPITAL 33

• Research and Innovative Capacity

Research and Innovative Capacity

Current Status and Needs

CHAPTER 4: INTELLECTUAL CAPITAL 35

These initiatives generally reflect the grow-