Driving to the office today, I heard a talk by Bob Franks, president of the Healthcare Institute of New Jersey, on the local radio station 101.5FM. Although New Jersey spent $7 billion on R&D in 2008, said Franks, the state stands a chance of losing its stance as the pharma capital of the US—and really of the world—in the coming years. Not only are China, Singapore, and Ireland taking R&D as well as manufacturing dollars out of the state, but New Jersey-based pharmaceutical and biotechnology companies also face stiff competition close to home.

Massachusetts, said Franks, is becoming a top competitor because of the way it’s leveraging its private–academic sector relationships. Many New Jersey universities and colleges, including Rutgers, have been reluctant to listen to the private sector to find out what types of courses and skills need to be taught to prepare next generations of scientists for today’s life-science jobs, according to Franks. Massachusetts, however, he says, is capitalizing on this by pushing university–private sector partnerships. The success of pharma is innovation, said Franks, and without more support for education in this high-tech, innovative industry, New Jersey’s position as the globe’s pharmaceutical headquarters could easily fall.

Another obstacle facing the pharma sector in this state is New Jersey’s flailing economy. Even though the recession is affecting the entire country, this state (along with New York and California) is far worse off than many others in the US when it comes to budget deficits. Facing a potential budget deficit of $6 to $10 billion in 2010, Franks said many companies may not feel comfortable with the future of this state’s economic environment.  Because R&D requires many years of commitment—10-15 years in most cases—companies are becoming less eager to stake their roots—or to stay—in New Jersey. The cost of living here doesn’t help matters. For the biotechnology industry, this potential loss of firms and jobs is critical.

To remain on top, New Jersey needs to pay serious attention to its pharma sector—the largest of the state—and to make sure the sector has the economic and academic support it needs. The Roche-Genentech merger will base its biotech R&D operations in Nutley, NJ, and that will help, says Franks,  but more must happen to make sure the state’s pharma industry isn’t lost.