Op-Ed: Voice of San Diego http://voiceofsandiego.org/2013/06/10/six-possible-stymies-to-innovation-in-san-diego/

After more than two decades in San Diego, I had some thoughts about Kelly Bennett’s June 3 question, “What could stymie the kind of invention and innovation that San Diego strives to be known for?” Here are six possible stymies:

1.  The federal government backs away from funding basic scientific research. Such federal funding led to the development of the internet, GPS and CDMA. The government did not commercialize these ideas, but each transformed our economy. (Notably, in San Diego, our largest private employer is Qualcomm.) Research funded by the National Institutes of Health here in California led to the birth of biotechnology, groundbreaking treatments for cancer and other conditions. In 2011, biomedical industry employees numbered more than 25,000 in San Diego County alone. According to a May 2012 report, “the U.S. life sciences industry supports more than 7 million jobs and contributes $69 billion annually to U.S. gross domestic product.”

It takes years of education for a scientist to get to a lab where he or she can apply for a federal NIH grant to make the discovery that will cure a disease or start a company. This is a bleak picture for an aspiring scientist, who now can move to another country that is investing in science and more likely to fund the research. According to a May 2012 report, Asia’s share of global research and development expenditures increased from 24 percent to 32 percent between 1999 and 2009, while the U.S.’s share fell from 38 percent to 31 percent. According to that same report, China over the next five years promised to invest $300 billion into biotechnology, twice what the U.S. planned to spend.

Unless our country steps up and meets our international competitors with adequate and consistent funding for basic science research, we face the prospect that the next great cure, invention or tech company is created in another country, maybe by someone educated at a San Diego university.

2.  Government regulation gets in the way of innovation. We invent amazing new devices and treatments that offer promise for better and more efficient health care. Then we tax medical device revenues, not incentivizing that same innovation by hurting startups that are not yet profitable, creating uncertainty for manufacturers, investors and patients, and making it difficult to attract venture capital that is already scarce.

We are failing to recognize that medical innovation can lower health care costs over time. Qualcomm, Dr. Eric Topol and other San Diegans are leading the effort in digital health, using today’s wireless technologies to improve population health through remote monitoring, care-coordination, diagnosis and treatment. The risk here is that health care providers, patients and the state and federal government don’t support – or even notice – the opportunities for better and cheaper care that these innovations promise.

3.  Private investment capital dries up.  After basic science leads to a discovery or invention, the private sector takes over commercialization. That requires private capital, availability of which is somewhat tenuous. For example, the risks in developing a drug are huge. Most efforts to create a drug don’t result in an approval, and it takes a long time and a lot of money to navigate through and endure the approval process. It can cost around $1.5 billion to develop a drug. And there is now pressure to lessen the amount of time an inventor’s patent is protected, further reducing the amount of recovery available to the inventor and the investor. Recently, the availability of private capital has been a challenge, especially in life sciences.

4.  Government immigration policy continues to keep talent off shore. In San Diego and across the country, there is a need for more workers who are skilled in science, technology, engineering and math.  While we work to educate our own children in science, technology, engineering and math, we must expand H-1B visas and green cards for highly skilled workers to make sure that research facilities and technology companies have the workforce they need to move forward. It’s important that the U.S. House of Representatives support an immigration reform bill that sets aside H-1B visas for undocumented immigrants with science, technology, engineering and math degrees from U.S. universities. It makes no sense to educate tomorrow’s innovators in U.S. universities, only to send them back home when they graduate. I support the Staple Act, which would effectively attach residency to an advanced degree in science or technology. Once these future innovators are here, let’s keep them and their economic potential on shore. I’m pushing for Congress to address this issue this year.

5.  Permitting facilities is just too hard. San Diego continues to be a leader in the advanced research and development of biofuels. With the conclusion of the EDGE Initiative, a state-funded, industry-led program to train and educate workers in the biofuels industry, San Diego and California face additional obstacles in developing our leading biofuels industry. Recognition by local, state and federal regulators that policies streamlining the permitting process and allowing for San Diego’s biofuels companies to grow in our region will be critical for the creation of jobs at all levels.

6.  Our quality of life no longer helps us competes for talent. We know that San Diego is an innovation center – in telecom, software, life sciences, cyber security and cleantech – because we have talented innovators here. Urban economists have shown that to attract and retain talent, place matters. The “young and restless” educated cohort demands a high quality of life. A clean environment. Vibrant arts and culture. Good housing and transportation. Fun, walkable and livable neighborhoods. And our weather isn’t bad. San Diego has a lot to offer, but we need to continue to work to maintain and enhance our attractiveness to appeal to a talented work force.

I thank the Voice of San Diego and Kelly Bennett for calling attention to this issue. I hope VOSD will be a forum for entrepreneurs and innovators to discuss our challenges in innovation and what we can all do together to secure San Diego’s future leadership.