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Sun, surf and science IN 1950, the San Francisco Bay Area and Boston could boast some of the most prestigious biomedical research labs in the US. Then there was San Diego - home to the US Navy's Pacific fleet, picturesque homes and plenty of sunshine. It was an odd combination of military town and vacation backwater, with an oceanography institute and an excellent zoo.

The city's trinity of academic centres for biomedical science - the University of California at San Diego (UCSD), The Scripps Research Institute and the Salk Institute - wouldn't be completed until the mid-1960s. No one could have guessed that this city would one day be a Mecca for a new industry based on biological research.

"San Diego wasn't on most people's map. It was the cul-de-sac of California," says Mary Walshok, dean of the university extension programme at UCSD. "But San Diego today is like Hollywood. If you want to make movies, you come to Hollywood. If you want to do biotech, you come to San Diego."

Most experts rank San Diego third in the US for biotech centres, behind the Bay Area and Boston. More than 400 companies are crowded into this area, divided evenly between biotechs developing therapeutics, and those focusing on diagnostic tools, medical devices and related industries. A study by the Brookings Institute, a think tank based in Washington DC, ranked San Diego third in the US for attracting biomed venture capital, fourth for biotech start-ups (after the big two and Raleigh/Durham in North Carolina) and fourth for firms with 100 or more employees (after the top two and New York).

Indeed, the question San Diego raises isn't why it lags behind the leaders, but how it even managed to show in the same race. More than its larger rivals, San Diego's success at developing what is sometimes called its "Biotech Beach" is the story of how academia, local business and political interests came together to foster a biotech industry that showed promise but hadn't taken off. And as an underdog on the rise, it is serving as a model for other cities and countries hoping to become competitors for the emerging global biotech industry.

The city and its neighbours now host an impressive list of bioscience companies. Agouron Pharmaceuticals (now owned by Pfizer) developed Viracept, a top selling protease inhibitor to treat AIDS. Isis Pharmaceuticals created Vitravene, a RNA-based drug for viral eye infections. But the true local hero is Idec Pharmaceuticals. Together with the Bay Area's Genentech, Idec developed Rituxan, an antibody-based drug to combat non-Hodgkins lymphoma. It is now a billion-dollar-a-year earner for the two companies. And as a huge vote of confidence in the San Diego area, Idec is planning to open a full-scale manufacturing facility in nearby Oceanside.

The academic powerhouses of San Diego may have had a late start, but they were players at the very start of the biotech industry. In 1976, while professors at Stanford and the University of California, San Francisco, in the Bay Area were launching Genentech with new gene splicing technology, two professors further south were about to take advantage of another breakthrough: monoclonal antibodies. Ivor Royston and Howard Birndorf at UCSD realised the potential of this technology for researchers and patients alike. In 1978, they formed a company called Hybritech, which had great success developing antibodies as diagnostics. "We were in biotech when people didn't really know what it meant," says Tina Nova, one of the early researchers at the company and now CEO of Genoptix, a company that uses lasers to characterise and sort human cells.

But when it came to raising capital to fuel this new industry, the city was at a distinct disadvantage. Boston and the Bay Area have been financial centres since the days of the 19th-century gold rush. Both were home to top-notch business schools, as well as bankers, lawyers, accountants and venture capitalists who were in sync with the entrepreneurial spirit, having cut their teeth on start-ups based on high-tech. Blessed with a perfect combination of capital and clever researchers, innovative ideas had the intellectual and financial fuel to ignite and spread. But the flame was harder to light in San Diego, a navy town with a business infrastructure historically based on defence contracts and the sale of vacation properties. The lack of local financial acumen proved a major damper for growth.

When the San Diego biotech and high-tech scene did take off, it could not have done so at a better time. In the 1980s, with the cold war waning, military spending was down. General Dynamics, a major defence contractor in the area, was threatening to leave town and take tens of thousands of jobs with it. And the emerging electronics industry was facing fierce competition from Japan.

While researchers at the University of California schools in the Bay Area were strong participants in the biotech explosion around them, until recently the schools themselves did little to promote the industry's growth. Walshok led UCSD to a much more active role by creating UCSD Connect and recruiting local businessman Bill Otterson to be its first director.