By Lauren Wanko
It’s been called the crown jewel of the New Jersey economy — the bio-pharmaceutical and medical technology industries generated over $26 billion in economic impact for the Garden State in 2012.
“We call this the medicine chest of the world. This is New Jersey’ s premier industry,” said HealthCare Institute of New Jersey President and CEO Dean Paranicas. “In fact, we have the largest concentration of companies of it’s type in the world.”
The HealthCare Institute of New Jersey study, which included data from 19 HINJ member companies, indicates a nearly 10 percent increase in economic activity from 2010.
“We’re very pleased with it because it demonstrates the resilience of our companies in terms of managing through difficult economic times and working to benefit from the improving economy,” Paranicas said.
Still, New Jersey faces intense competition in the industry — nationwide and globally.
“We’re being challenged by other states. At one time, we were totally dominant but now we have to worry about California, we have to worry about Cambridge, Mass. and those are places that have enormous concentrations of life science, higher education facilities, units and the like and that’s becoming increasingly important to the pharmaceutical industry in their own research, so that’s where New Jersey is lacking,” said Bloustein School Dean James Hughes.
More than 121,000 people were employed in New Jersey’s bio-pharmaceutical life sciences cluster — which includes the pharmaceuticals, biotech R&D and medical devices industries — in 2011. Still employment in the overall cluster dropped 7.9 percent since 2006. The pharmaceuticals sector saw the biggest decrease — down 17.5 percent.
“Some of the research is shifting away from chemical based pharma to bio based pharma and that’s not New Jersey’s core competence, but I think the other factor, which may be more important, this is the after effect of all the mergers and acquisitions that took place and so we’ve had a number of rejiggering so to speak of pharmaceutical companies,” Hughes said. “Whenever that happens there is reduction in employment, reduction in the real estate footprint.”
Last month Merck announced plans to close both its Whitehouse Station building and its Summit campus, moving operations to existing facilities in Kenilworth. It’s unclear how many jobs will be lost.
“I think you need to be mindful when you talk about departures, you have to also talk about the fact there’s an ebb and flow. Some companies have in fact relocated some operations elsewhere, but most importantly there’s been an investment in New Jersey indicated by the significant rise we’ve had here,” Paranicus said.
Paranicus insists New Jersey’s higher education restructuring will help advance innovation within the industry.
Paranicus says in order for New Jersey to remain competitive on in the bio-pharma and medical technology industries, progress needs to continue on improving the tax structure, streamlining the regulatory environment and higher education.