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Sector faces challenges on R&D space, education; cluster includes 40 companiesSOLANO - Solano's life science cluster is healthy and thriving, offering high-wage jobs for the county, according to a recent a report issued by the Solano Economic Development Corp.

Employment in the cluster grew at an annual rate of 35 percent between 2000 and 2006. In contrast, life science companies in the San Francisco Bay Area lost about 3 percent of jobs each year for the same period.

Currently, employment in Solano's life sciences and related industries is 60 percent more highly concentrated than in the state as a whole, the report said.

Earnings have been on the rise, growing from an annual average wage of $60,000 in 2000 to $78,300 in 2006 and jumping 26 percent to $98,800 in 2007.

National Institutes of Health grants to the region are on the rise, too. During the last seven years 13 NIH grants were awarded to Solano companies.

Life sciences companies - pharmaceuticals, testing labs, medical equipment and supplies, high-tech precision instruments and research and development - have been coming into the area since 1985, when pharmaceutical developer Biosource Technologies relocated from Palo Alto to Vacaville, leading the way.

Building incentives persuaded Alza Corp., also a developer of medical systems and pharmaceuticals, to put a manufacturing plant in Vacaville soon afterwards, and other companies followed suit, finding the location along key transportation corridors and between the Davis and Berkeley U.C. campuses was an added draw.

Acrometrix, a laboratory and manufacturer of quality control materials for diagnostic testing, and Gammex, a manufacturer and distributor of products and services for diagnostic imaging and radiation oncology, moved to Benicia in the 1990s.

By 2007, there were 40 life science businesses in the county, including giants like Genentech and Novartis.

While the sector is strong, it does face challenges. One of them is the availability of appropriate R&D and manufacturing space.

Typically, small life science companies require about 2,000 to 10,000 square feet with access to wet labs. Currently there is little wet lab space available in the county, the report found. Also, commercial vacancy rates rose in the fourth quarter of 2008 as the economy shrank, but there was no new construction. Life science companies that want to expand in the near future may be out of luck.

The regional cluster also shares the challenges of others like them in the state, said SEDC President Michael Ammann.

"We recently lost a Genentech operation to Portland, Ore., because of sales tax issues. We should see some relief in 2010 when the single sales tax reform goes into play."

Other state taxes that apply to the developers of drugs and devices that require FDA approval have been brought into line with federal standards, which recognize that the process can take up to 20 years while the developer is not yet generating returns, he said.

"On a national level, the health care debate and the patent length issue will impact our companies, as they will all life science clusters in the U.S.," he said.

Another area of concern noted in the report is that Solano middle and high school students are performing below state levels in the areas of science, technology, engineering and math (STEM).

"I'm meeting with the Solano Education Foundation to talk about how we can change that. We'll be approaching other organizations and the public to find ways to stimulate STEM in our schools," said Mr. Ammann.

Overall, he's optimistic about meeting the challenges documented in the report.

"We have room to expand, stable sources of water, an excellent labor force and a great location for manufacturing. In 10 years, I'd like to see our current 2,300 life science jobs grow to 5,000," he said.