Survey: NJ Pharm Sector Slows
Survey: NJ pharm sector slows [The Record, Hackensack, N.J.]
From Record (Hackensack, NJ) (January 5, 2012)
Jan. 05--A trade association that represents New Jersey's drug companies reported Wednesday that its annual survey showed "a slowing of economic activity" among organization members.
A summary of the annual survey released by the New Brunswick-based Healthcare Institute of New Jersey, which is based on how its members did in 2010, said they reported fewer employees, less capital investment, diminished charitable donations and a smaller economic impact than the previous year.
Still, the institute added, the report shows that "life sciences continue to play a leading role in driving New Jersey's economy."
"This remains a very strong industry," said Dean J. Paranicas, the institute's president and CEO.
The institute compiles the report annually based on a survey of its members. One reason for the decline in economic impact is that the data is based on 19 companies, instead of 24 surveyed in 2009, the institute said.
It was unclear what impact that reduction would have on the figures, because the institute declined to say which companies did not participate this year, or how big they are.
The institute released the summary, but not the full report, amid concerns by economists and industry analysts over the shrinking of New Jersey's once-mighty drug industry.
Among the reasons cited for the decline are the consolidation and merger of drug companies, job cuts, and their search for lower-cost areas of the U.S. and the world in which to site business facilities. The report, which was compiled by Deloitte LLP, said institute members had a total impact of $24.2 billion in 2010, about 17 percent less than the 2009 figure of $29.3 billion.
However, the institute said that data from 16 companies that participated in both surveys showed that their economic impact dipped only slightly from 2009 to 2010, and their charitable donations increased by 8.1 percent.
"I think the real story here is the fact that this continues to be a very significant number," Paranicas said of the 2010 figure.
He noted that some major drug companies had committed to stay, and expand, in New Jersey, and others were moving in.
Among them are Danish pharmaceutical company Novo Nordisk, which is spending $215 million to build its U.S. headquarters in the old Merrill Lynch facility in Plainsboro. Bayer, in a plan that includes closing its Wayne facility, is consolidating 2,500 employees from New Jersey and New York in Whippany.
Lt. Gov. Kim Guadagno rejected the suggestion that the report shows the state's drug industry is weakening, and blamed the declining economic statistics in the report on "problems with the data set."
She said she expects drug companies to increasingly move into the state, or expand here, as a result of changes in the state tax code kicking in this year, designed to help businesses -- in particular, one that allows companies to get a tax credit for up to 100 percent of their R&D investment, up from 50 percent.
Guadagno said the state's attractiveness can be seen in decisions by Ipsen North America, to move offices from California to Basking Ridge, and by Allergan, to expand a 20-person office in Bedminster into an R&D facility with more than 400 people at a cost of $12 million.
"Those are big stories ... It tells people that New Jersey is still the medicine chest," Guadagno said, and called the industry a "sweet spot" for the state.
"We had some losses, but many more gains," she said.
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Posted: January 2012