The report, based on federal and state data, credit agency analyses, an assessment by McKinsey and Co., and other sources, notes that while New Jersey has the eighth-largest state economy in the nation and ranks among the top 10 innovation hubs worldwide, the growth of the biopharma industry here has not kept pace with the U.S. rate overall.
BioNJ found that despite the Garden State’s highly educated workforce, concentration of colleges, and strong pharmaceutical base, it has had a harder time attracting new companies, especially start-up firms. Between 2012 and 2015, California recorded 10 times the numbers of startups as New Jersey, and Massachusetts logged four times as many. (In 2016, the state’s Economic Development Authority approved a record 251 applications for $96 million in private investment through a tax-credit program it runs.)
High cost of doing businessWhile the high cost of doing business here and regulatory complications present challenges for new and established companies, the white paper suggests the state could do more to assist the industry through a combination of direct investment, tax-policy changes, and coordinated planning and promotion. There is also a need for more public-private partnerships to support these efforts and university-based incubators, research efforts, and training programs, it said.
“Several sources of funding are critical for creating and growing companies, including public, venture capital, and academic. New Jersey lags peer states on all three,” wrote BioNJ, which represents some 400 biotech firms, in the white paper, officially titled “The New Jersey Biopharma Industry: A Prescription for Growth.”
Roughly 1,000 pharmaceutical and biotech companies make their home in the Garden State, and many of the world’s largest firms have a presence here; at least 1,000 drugs are now under development in New Jersey. Together, these industries contribute more than $100 billion to the state’s economy, employ some 65,000 people directly and more than 300,000 indirectly, according to the report.
"New Jersey has long been a critical economic engine for the United States, and the biopharmaceutical industry has been an important source of the state's growth for generations," said BioNJ president and CEO Debbie Hart. "However, the performance of the biopharma industry overall indicates New Jersey could be doing even better."
Options to improve sectorThe white paper identifies a number of options to improve the sector, based in part on what has worked in other states and in Israel, a country Hart said has several similarities with New Jersey, and has seen great biotech growth. The suggestions include expanding government support for the industry, easing certain regulations, promoting life-science “superhubs” and state investment in the industry, and expanding targeted education and training programs with private and university partnerships.
“Developing an environment for growth is crucial for improving New Jersey's economic health, and the state's biopharma industry should be central to that strategy,” Hart added. When it comes to promoting the state’s work in this area, “Who better to tell that story than our new governor,” she said.
In a webinar presentation of the report, Hart highlighted several top goals, including creating more biotech-focused business incubators, like projects announced recently by Princeton University and Seton Hall University. (New Jersey currently has four incubators, compared to 23 in California and 25 in Massachusetts.)
Hart also called for better strategies to retain existing companies and attract new ones, and more collaboration between academia and industry. In 2016 New Jersey institutions received $240 million from the National Institutes of Health, the major funding source for academic and public-sector research, while major academic hubs in New York City and Philadelphia collected $2.5 billion in grants that year.
“It’s one of those areas where we quite frankly have not been as strong as some of the leaders,” she said.
Concerns about New Jersey’s research funding have also prompted leaders at RWJBarnabas Health, one of the state’s largest systems, to invest heavily in a partnership with Rutgers University. The healthcare network has invested tens of millions of dollars in a partnership designed to attract new research dollars and talent, strengthen the biotech workforce and improve clinical care.
The BioNJ report also stresses the need for state leaders to work with industry captains, like Johnson and Johnson or Merck, among others, to create a mechanism to seed and support new companies, strengthen those in the pipeline, and lay the groundwork for a stronger future. Hart said some new money may be required and other funds could be diverted for this use, but much could be accomplished through a coordinated strategy.
"New Jersey's life sciences industry has made great strides in recent years," said Assemblyman Andrew Zwicker (D-Somerset) who heads science education at Princeton’s plasma lab. "We have an opportunity to leverage this success and transform New Jersey into a biopharma hub that will be the envy of other states. BioNJ's white paper,” he continued, “offers us a road map to attracting and growing the companies that are revolutionizing medicine and technology."