When Forbes recently released its report on America’s 25 Fastest-Growing High Tech Companies, it came as little surprise that four of the top ten companies on the list are based in California. While the Golden State has long been associated with the high tech industry, one state at the opposite corner of the country could be catching up …
Three of the companies on Forbes’ top-ten list – Cognizant Technology Solutions (Teaneck); Celgene Corporation (Summit); and Lifecell Corporation (Branchburg) are located in New Jersey, a state that has seen a huge increase in the biotechnology industry over the past decade.
According to Debbie Hart, president of BioNJ, an advocacy organization for New Jersey’s biotechnology industry, the number of biotech companies in the state has grown from around 80 companies in 1998 to more than 235 companies in 2006.
“The state has seen dramatic growth in the biotech industry in a relatively short period of time,” she says, “and that growth has become stronger and steadier in recent years.”
BioNJ (formerly the Biotechnology Council of New Jersey) was founded in 1994 as an advocacy organization for biotech companies in the state. It remains focused “on the growth and prosperity of New Jersey’s rapidly expanding biotechnology cluster.”
The word “cluster” reflects one of the reasons for the dramatic growth in the industry. Biotech companies tend to bunch together and set up shop where other biotech companies – and complementary businesses – are established.
The strength in the state’s pharmaceutical industry has undoubtedly boosted its biotech business as well.
But New Jersey has become a “mecca” for recruitment in the biotech industry for many other reasons. Lifecell Corporation, one of the companies on Forbes list, moved its headquarters from Texas to New Jersey about eight to ten years ago because of the state’s large talent pool and its many capital incentive programs.
According to the New Jersey Business Portal, run by the Office of Economic Growth, the state offers many financing options and economic incentives designed to encourage businesses to relocate, or establish their home in New Jersey, including the Edison Innovation Fund.
The Edison Innovation Fund was specifically designed by the New Jersey Economic Development Authority “to help create, sustain and grow high tech businesses that will lead to high-paying job opportunities for New Jersey residents.”
BioNJ’s Debbie Hart says that the state’s strong research presence, due in large part to its four university research centers, has also provided support for its biotech industry. Rutgers, Princeton, New Jersey Institute of Technology, and the University of Medicine and Dentistry of New Jersey are all well-respected research hubs that generate not only innovative scientific developments and talented scientists, but also, in some cases, spin off new companies as a result of their lab work.
Enzon, for example, a biopharmaceutical company that specializes in oncology and hematology, was founded in the 1980s by two Rutgers University graduate students. The company reported net income of $87.5 million for the third quarter of 2007 – compared to $2.2 million for the same quarter one year earlier. While these third quarter results were impacted by the sale of an interest in future royalties from one specific product, the trend is undeniably positive.
Billions of dollars in venture capital funds, proximity to Wall Street – just across the Hudson River – and “great geography,” including many cultural opportunities and a desirable quality of life have also contributed to the expansion of New Jersey’s biotech activity.
Industry’s Economic Impact Estimated at $1.7 Billion
The economic impact of New Jersey’s growing biotechnology industry is estimated at over $1.7 billion to state residents, according to a June 2007 report entitled New Jersey Biotechnology … A Robust State of Health.
The report, issued by BioNJ and Deloitte & Touche USA, says that the industry itself employed more than 10,000 workers in 2006, reflecting a 28 percent increase since 2003. But the “multiplier effect” of this growth has led to an additional 9,300 jobs in supporting industries, and another 7,600 jobs attributed to higher worker spending.
Other highlighs of the report:
- State and local taxes paid by the industry’s resident workers are estimated at $80 million (excluding corporate taxes);
- The average base salary for New Jersey residents employed in in the biotech industry was close to $87,000;
- Employees in the biotech industry receive “generous benefits” – as high as $40,000 per year;
- Total compensation as a result of the direct impact of biotech companies was estimated at $711 million in 2006;
- That figure jumps to $1.7 billion when indirect impact from industry demand and worker spending are factored into the equation.
Special thanks to Debbie Hart, BioNJ President, and Bill O’Donnell, Director of Communications for BioNJ, for their contributions to this article.