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The Tech Coast -- San Diego: After Cold War, biotech and wireless get hot

By Elizabeth Douglass

March 20, 1998
Web posted at: 10:01 AM EST (1001 GMT)

Navy ships, government contracts and the San Diego Zoo are still important staples in the local economy, but the region's hot industries have a different focus these days: AIDS drugs, wireless telephones and high-tech golf clubs.

It's a big change for a region once so dominated by defense contracts that General Dynamics alone employed nearly a third of the private-sector work force.

As the recession and the Cold War thaw hit the city in the early1990s, thousands of high-wage jobs disappeared and economists worried about San Diego's economic future.

But the region has rebounded strongly with the help of powerful weapons -- the rich research base of UC San Diego and other institutions, the unique clout of the start-up support group Connect and the drawing power of fast-growing Qualcomm.

"San Diego's really remade itself into a very exciting high-tech center," said Julie Meier Wright, president of the San Diego Regional Economic Development Corp. "As recently as the early 1990s, this was a defense economy."

The region's new economic strengths are not overlooked by venture capital firms. More than 90 San Diego-area companies took in $428.5million in venture funds last year, according to a tally by Coopers & Lybrand.

The figure, which represents a 15 percent increase over 1996, ranks the region second in the state for venture deals, well ahead of Orange and Los Angeles counties. (The Bay Area remains the state's king of venture cash.)

More than half the venture funding flowed to the region's huge biotechnology industry, which encompasses an estimated 250 companies.

Many of them are tucked away in the city's Torrey Pines area, west of Interstate 5 and close to the San Diego Supercomputer Center and the research powerhouses of UCSD, the Salk Institute for Biological Studies and the Scripps Research Institute.

Connect, a group affiliated with UCSD, has had a role too. It sponsors venture capital conferences and provides entrepreneurs with links to potential partners, accountants and patent attorneys.

Many tech leaders believe Connect's networking role has fostered the kind of cooperative business environment that ultimately helps companies grow.

For many years, the biotech group's success rate was unimpressive. But within the last year, three locally developed drugs have earned regulatory approval, including the AIDS drug Viracept, which brought profits and skyrocketing sales to Agouron Pharmaceuticals.

"There are dozens more (biotech products) in late-phase clinical trials, so the pipeline is rich in this area," said Wright.

Wireless telecom, once largely fueled by defense contracts, has grown with blistering speed in San Diego. The region has become one of the nation's hot spots for the technology -- employment in that sector has quadrupled to about 25,000 in the span of five years.

Much of the growth has been generated by the twin powers Sony Electronics and Qualcomm, which together added thousands of local jobs while ramping up production of digital wireless phones.

Qualcomm, once criticized as a renegade upstart hawking a suspect technology, now has a work force of more than 10,000 -- it added 3,000in 1997 alone -- and its name on the local football arena, formerly Jack Murphy Stadium. Its technology, a method of transmitting wireless phone signals in digital form, is now widely accepted, and the company has become the driving force behind San Diego's emerging Wireless Valley.

(c) 1998, Los Angeles Times. Distributed by Los Angeles Times Syndicate

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