Survey of Biomedical Industry:  CEOs Finds Lack of Investment and Regulatory
Environment Threaten Future Growth and Innovation

Access to capital, a burdensome and uncertain regulatory environment and lack of
innovation and productivity in research and development are the biggest threats
to the biomedical industry's growth over the next five years, according to
biomedical company CEOs surveyed by CHI-California Healthcare Institute, BayBio
and PwC US. The CEO Survey found:

Nearly three quarters (74 percent) of biomedical industry CEOs surveyed said their
 companies have had to delay a research or development project in the past year.
Lack of funding was the top reason for project delays cited by private company
CEOs, and accounted for more than one-third (40 percent) of delays by all public
and private companies in the survey.

Eight in 10 CEOs surveyed agreed or strongly agreed that the current FDA
regulatory approval process has slowed the growth of their organization.

Findings of the CEO Survey reflect issues being discussed throughout the
biomedical industry by executives gathering in California this week, and
provide an early glimpse into the 2012 California Biomedical Industry Report,
due in February. The report, published annually by CHI, BayBio and PwC, provides
a snapshot of the biomedical industry in California, the largest biomedical
cluster in the world and the source of the greatest number of products in
clinical development.

"As the center of biomedical innovation in the U.S., California's biomedical
industry is a national treasure," said Gail Maderis, president and CEO of
BayBio. "But the pace of R&D productivity and its global leadership position
hang on the availability of capital to fund future innovation and a regulatory
framework that is based on consistency and innovative technologies."

Biomedical Access to Capital

The CEO Survey found that biomedical companies in California have been
resourceful over the past year in seeking diverse funding sources, divided
almost evenly among government grants, angel investors, venture capital and
licensing agreements and partnerships.

"Biomedical companies have long relied on government grants and venture capital
to finance innovation, but funding sources are shifting and companies will need
to adapt to a new reality," said Tracy Lefteroff, national life sciences partner,
PwC US. "While venture capitalists and angel investors will continue to be an
important source of funding, it has become increasingly difficult for biomedical
companies to gain access to them. Alternative sources of funding are emerging,
which highlight shifting opportunities and dynamics in life sciences innovation."

The CEO Survey found:

Forty-four percent of biomedical CEOs surveyed said they will look to licensing
agreements and corporate partnerships as a source of finance in the next 12
months, double the number of CEOs who last year said their companies are using
this avenue for finance.

Corporate venture funding, the investment of corporate funds into external
endeavors, is expected to become a much more crucial source of funding to the
industry, with 30 percent of CEOs surveyed saying they will tap corporate venture
capital as a finance source in the next 12 months, versus only 10 percent who did
so in the past 12 months.

Though still only a small contributor to the finance equation, disease
foundations/non-governmental organizations are growing as a funding source for
11 percent of CEOs who plan to use these funds in the next 12 months, versus
only 4 percent who did last year.

Access to capital is seen by CEOs as the most influential state policy issue to
keep biomedical research, innovation and investment in California. Nearly three-
quarters (72 percent) of CEOs said that access to capital is extremely important,
followed by (in order of importance) tax incentives for innovation (60 percent),
corporate taxation (51 percent), workforce preparedness (47 percent) and
duplicative regulation among various state and federal agencies (37 percent).

Regulatory Environment will Determine R&D Productivity

According to CEOs surveyed, FDA and regulation are the key issues affecting
research and development. Eighty-one percent of CEOs also said that coverage
and reimbursement issues are extremely important to the industry's ability to
advance biomedical research, innovation and investment in California.

In addition, 80 percent of CEOs surveyed do not believe that U.S. FDA has the
best regulatory approval process in the world, and three-quarters believe that
within five years, another country could conceivably recreate the ecosystem that
has made the U.S. the leading biomedical region in the world.

"Sound public policy and managerial and operational improvements at FDA, along
with responsible congressional oversight, will encourage biomedical innovation
and, ultimately, job growth here in California," said David L. Gollaher, Ph.D.,
president and CEO of the California Healthcare Institute. "Working collaboratively
 with other stakeholders, Congress, FDA and the biomedical industry can maintain
the high standards of safety and effectiveness that address patients' need, while
improving our ability to attract investment and grow in 2012 and beyond."

BayBio is Northern California's life science association, supporting the regional
bioscience community through advocacy, enterprise support, and the enhancement of
research collaboration. Its members include organizations engaged in, or
supportive of, research, development and commercialization of life science
technologies. Online at www.baybio.org