Why New Jersey Should Be Your New Home For Pharma & Bio

By Ed Miseta, Chief Editor, Clinical Leader

By Ed Miseta, editor, Outsourced Pharma
 

Debbie Hart, president and CEO, BioNJ	Kim Guadagno, Lt Governor, New Jersey

In 1998 New Jersey had 80 biotechnology firms. Today there are over 350. The state is also home to 23 large pharmaceutical firms including Sanofi, Bristol-Myers Squibb, Merck, Johnson & Johnson, and Novartis, as well as numerous medical device companies. If you look at the life science industry as a whole, the U.S. Department of Labor lists more than 1,000 firms located in the state. While many states would be happy with those numbers, many in New Jersey, from the governor’s office on down, will tell you they want more. At the 2013 Bio International Conference, New Jersey representatives made it clear they will continue to do their best to solidify the state’s role as the largest pharmaceutical hub in the nation and third in biotechnology.

“In our state we have been growing the life sciences, particularly the biotech sector, from every possible angle,” says Debbie Hart, president and CEO of BioNJ. “Most of our growth has come from attracting companies from other states and countries. But, at the same time, our biotech firms, pharmaceutical firms, and academic institutions have been spinning out new companies as well. We have a strategic plan in place to attract these firms, and we believe this surge shows no signs of slowing down.”

 

Education Plays A Large Role

The state certainly has the numbers to back up its claim, but from the perspective of the firms, why choose New Jersey? Hart points to several factors. She believes the state has everything that a company involved in this industry would need, including the presence of Big Pharma. “In New Jersey, companies can do business with, and collaborate with, Big Pharma as well as the talented workforce that lives here,” says Hart. “In addition to a supportive state government, we have tremendous academic institutions here as well as across the river in Manhattan and in the lower New York/Philadelphia area. We have Wall Street right across the river, the NIH and the FDA are just a train ride away, and we are in a time zone where you can do business with both California and the U.K. in the same business day.”

As far as the academic institutions, Hart notes Rutgers University is currently merging with the University of Medicine and Dentistry of NJ. Each were strong partners to the pharma industry on their own, but will become an even stronger asset once combined. In Camden, two medical schools are starting up as a result of the merger. The state is also home to Princeton University, the New Jersey Institute of Technology, Stevens Institute of Technology, and many county colleges that all support the bio/pharma cluster. Hart proudly boasts that her state has more scientists per square mile than anywhere else in the world, a statistic she notes has been fact checked and verified by the New Jersey Star-Ledger.
 

State Leadership Drives Growth

One of the biggest factors driving pharma growth in the state is the support of elected state representatives, starting with Governor Chris Christie. “The government of this state has always been very supportive of this industry,” says Lt. Governor Kim Guadagno. “When you have our entire administration being as supportive as it is, that translates into numerous incentive programs that support the industry and its growth.”

When considering a state in which to build or relocate, taxes are likely a concern for many businesses. New Jersey is certainly not one of the lower-taxed states in the country. However, Guadagno and Hart were quick to point out that New Jersey does have numerous incentive programs to help companies overcome their financial concerns. “New Jersey allows biotech and other technology companies to sell their NOLs (net operating losses) for cash,” says Hart. “If a biotech firm is losing millions of dollars a year trying to create a drug, they can apply to have access to a $60 million pool of cash. If they are approved, they can sell their losses to a company like PSE&G (a NJ utility) for around 90 cents on the dollar. It can cost a company 10 to 15 years, and on average $1.2 billion dollars, to bring a drug to market. This program will help them survive until their drugs make it to market. Other grants and incentives we have in place will also make that decision easier for many firms.”

 

Pulling Together To Achieve A Common Goal

It is not a small job to get several agencies to work together toward a common goal, but New Jersey seems to have made it happen. The state’s Partnership For Action is actually composed of four separate groups. First is the Business Action Center, which falls under the Lt. Governor. Its job is to be responsive to the needs of businesses and help them to maintain their presence in New Jersey. Second is the New Jersey Economic Development Authority. That group, also a government organization, is charged with delivering economic assistance to companies that are either in the state   or considering moving there.

Choose New Jersey, on the other hand, is a private partnership. President and CEO Tracye McDaniel’s job is to identify companies which might be interested in relocating to the state, or convince companies that they should be considering the move. Her group then works with the Lt. Governor’s office, as well as the Business Action Center and the NJ Economic Development Authority to put a financial incentive package together. The fourth group is the Secretary of Higher Education to help facilitate collaboration between life science companies and the state’s system of higher education.

“The Council on Innovation was recently announced by the Lt. Governor and will work closely with the other groups,” says Hart. “In this economic climate, we believe you need a strategic approach to be successful.”

 

Retention Is A Major Concern

At the BIO show, Guadagno was walking the show floor accompanied by representatives of the Business Action Center, BioNJ and Choose New Jersey. “We made a list of New Jersey firms from the show roster and mapped out a route for our representatives to visit many of them. The Lt. Governor made it clear that the State of New Jersey we wants them in New Jersey and is willing to address any concerns they might have. We believe these efforts have been paying off. When Bayer was thinking about moving, we were able to get them to stay. They are now moving their U.S. headquarters here as well.”

Retaining large firms and the jobs they provide is important, but you may forgive some people if they question the cost of these efforts. A recent article titled Sweet Land Of Subsidy (The Economist, April 27, 2013) provided a list of the largest subsidies provided to companies to keep them from moving. Three of the top eight (Prudential Insurance, Panasonic North America, and Goya foods) were in New Jersey, and had a combined subsidy of over $430 million. Retention is clearly not an inexpensive endeavor. 

Hart is optimistic when looking towards the future. She places her state third amongst states with a biotech cluster behind just California and Massachusetts. California obviously has a much greater land mass, while the city of Boston has significant academic institutions that contribute to its biotech hub. In competing with these other states, New Jersey hopes its diversity will be a deciding factor for many firms. “New Jersey is one of the most diverse states in the country,” adds Hart. “In this state, any person from another country will find a community of interest for them. We have Portuguese in the north, Indian communities located throughout the state, and pockets of almost every other nationality. Every country in the world is represented here at some level.”