The 2025 California Life Sciences Sector Report was prepared by TEConomy Partners in collaboration with California Life Sciences (CLS). The report is built on a foundation of national best practices for industry analysis, including standardized industry definitions, harmonized employment and wage data, and input-output economic modeling. Data reflect the most recent full-year or quarterly figures available as of early 2024.
Key objectives:
- Accurately estimate the scale and impact of the life sciences industry across California and four key regions
- Ensure consistency with national and state-level benchmarking standards
- Reflect nuances of regional specialization and emerging sectors
TEConomy defines the life sciences industry using a set of 6-digit North American Industry Classification System (NAICS) codes, grouped into five subsectors:
1. Biopharma (R&D and Manufacturing)
Includes pharmaceutical manufacturing and biotechnology R&D (NAICS 541714). This category captures both commercial pharmaceutical production and the extensive pre-commercial activity driven by early-stage biotechs.
- NAICS Codes: 325411, 325412, 325413, 325414, 541714
2. Other R&D, Testing, and Medical Laboratories
Encompasses academic labs, contract research organizations (CROs), diagnostic testing firms, and nanotechnology research.
- NAICS Codes: 541380*, 541713*, 541715*, 621511
3. Medical Devices and Equipment
Covers design and production of diagnostic equipment, surgical tools, imaging systems, and dental supplies.
- NAICS Codes: 334510, 334516, 334517, 339112, 339113, 339114
4. Bioscience-Related Distribution
Includes wholesale and logistics activity tied to pharmaceuticals, laboratory products, and medical supplies.
- NAICS Codes: 423450*, 424210*, 424910*
5. Agricultural Feedstock and Industrial Biosciences
Captures bio-based chemicals, renewable fuels, and agricultural biotech products.
- NAICS Codes: 311221, 311224, 325193, 325311, 325312, 325314, 325315, 325320
Note: NAICS codes marked with an asterisk () include only the share of activity directly related to life sciences.*
To ensure a consistent and reliable analysis, the following primary data sources were used:
Employment and Wages
- Source: Bureau of Labor Statistics (BLS), Quarterly Census of Employment and Wages (QCEW)
- Supplement: Lightcast Datarun 2025.1
- Notes: Lightcast modeling fills data suppressed for confidentiality using sources like County Business Patterns, IRS filings, and industry relationships. Establishment-level data is aggregated to the county and region level.
NIH Funding
- Source: NIH RePORTER Database
- Scope: FY2024 grant awards to California-based institutions
- Use: Top institutions were ranked by total funding received; data reflect extramural awards only.
Venture Capital Investment
- Source: PitchBook database
- Scope: 2024 VC deals in sectors including biopharma, medtech, diagnostics, and digital health
- Use: VC totals by region and by subsector help identify commercialization trends and startup activity
Academic Research Spending
- Source: National Science Foundation (NSF), Higher Education Research & Development (HERD) Survey
- Use: Academic R&D spending modeled separately from industry output for each region
TEConomy used IMPLAN, a widely used input-output modeling system, to assess the full economic footprint of life sciences activity.
Modeling Approach
- Direct Impact: Jobs, wages, and output within the NAICS-defined life sciences sector
- Indirect Impact: Activity at suppliers of goods and services (e.g., lab equipment manufacturers, logistics providers)
- Induced Impact: Economic activity generated when life sciences workers spend wages in the local economy
Model Inputs
- Regional job and wage data (QCEW)
- HERD academic research expenditures
- Sector-specific IMPLAN multipliers for each county/region
Outputs Modeled
- Total employment (direct + indirect + induced)
- Labor income (wages and benefits)
- Gross regional product (value added)
- State and local tax revenue
- Total economic output (sales or value of goods and services)
Separate IMPLAN models were created for each region and for the state overall. Academic and industry impacts were modeled independently and then combined for total impact estimates.
- Firm Size: Establishment counts reflect physical locations, not headquarters. Company size distribution is estimated from Lightcast and County Business Patterns.
- Startup Activity: Many pre-commercial biotechs appear under R&D codes rather than pharmaceutical manufacturing, particularly in the Bay Area.
- Overlapping Sectors: Some NAICS codes include non-life sciences activity; TEConomy applies industry filters and analyst review to isolate relevant records.
- Multipliers: Regional variations in IMPLAN multipliers reflect differences in local supply chains and economic structures.
TEConomy Partners is a national leader in innovation-based economic research and strategy. The firm works with states, regions, and associations to analyze technology-driven industries and guide economic development initiatives. TEConomy has authored more than 50 state-level and national reports on the life sciences sector in collaboration with BIO and other partners.
For more information, visit: www.teconomypartners.com