New Jersey is known to many as a pharmaceutical mecca on the international stage with several leading pharmaceutical majors headquartered and/or with operations in the state. So to say that lawmakers need to create an economic climate conducive to foster growth is an understatement.
On Jan. 4, 2012, the HealthCare Institute of New Jersey (HINJ) published a press release which evaluated the results of the 2011 biopharmaceutical and medical technology economic impact survey, a study (conducted by Deloitte) which concluded that the life-sciences industry continued to make up a key sector of New Jersey’s overall economy.
Although the responses of five fewer companies—24 in the 2010 survey compared to 19 the following year—generated less meaningful findings for the most recent survey, HINJ President and CEO Dean J. Paranicas pointed to the strong continued growth in New Jersey’s bio/pharmaceutical sector. “Although we had 20% fewer companies participating in this year’s survey, those that did supply data demonstrate that the life-sciences industry continues to be a major economic driver in New Jersey,” said Paranicas. “However, New Jersey continues to face stiff competition from around the world and within the US for our industry’s investment. If anything, this data reinforces the need for our leaders in Trenton and Washington to continue to pursue policies that create a more competitive and attractive business climate here, and we look forward to continuing to work with them to achieve this objective.”
The study also cited (factoring in the decrease in participation) a total economic impact from reporting HINJ member companies of $24.2 billion in calendar year 2010, as compared to $29.3 billion in calendar year 2009.
Paranicas went on to laud the recent actions taken by Governor [Chris] Christie and the state legislature to make New Jersey more competitive and attractive for life-sciences investment. They include an aggressive and competitive business recruitment and retention program, adopting the single sales factor as the basis for calculating New Jersey’s corporate business income tax, and enhancing the Business Employment Incentive Program (BEIP) to promote greater private sector collaboration with New Jersey’s universities and colleges.
However, every rose has its thorn. The study pointed out that the number of full-time employees decreased from 55,366 in 2009 to 51,619 in 2010, and capital spending dwindled from $1.5 billion to $0.9 billion during that same span of time. The Whitehouse Station, New Jersey-based Merck & Co. announced the elimination of approximately 13,000 jobs following the second quarter of 2011 as part of a cost-cutting initiative. This continues a workforce-reduction trend for Merck in recent years. According to a July 30, 2011, article from The Wall Street Journal, “[Merck] will have eliminated about 30% of the work force it had at the end of 2009, in the wake of its $41.1-billion acquisition of Schering-Plough.”
This reflects the long-growing trend among the industry’s financially dominant companies. Expansion in the form of mergers and acquisitions (M&A), without a focused emphasis on R&D to maintain and add to a workable pipeline, will enable access to only a finite amount of prosperity constructed on a delicate foundation of borrowed time. Paranicas pointed out that global R&D spending increased by $6.1 billion—one of the factors that has contributed to the continued success of New Jersey’s biopharmaceutical sector, despite some overexpansive M&A miscalculations, and the consequences as a result.