New Jersey is Competitive in Biotech, But Falls Behind Boston and Bay Area
July 30, 2015
By Alex Keown, BioSpace.com Breaking News Staff
Over the last few weeks, we asked our readers a number of questions about the Garden State’s attractiveness as a site for corporate headquarters or research facilities. New Jersey, the BioSpace community said, will continue to maintain a strong position as a hub of biotech and pharmaceutical business. An overwhelming majority of respondents, 63.43 percent, believe New Jersey will continue to attract biotech and life science companies.
New Jersey is seeing a surge in activity for biotech due to facility expansions, acquisitions, and research institution mergers, as well as an increase in companies moving or beginning operations in the Garden State. The state is also known as a hub for new drug approvals. So far this year, 16 of the 27 new products approved by the FDA came from companies with a significant footprint in New Jersey. In 2014, 40 percent of drugs approved by the FDA came from companies that also have a strong footprint in the state.
New Jersey is currently home to more than 3,000 businesses in the pharma, medtech and life sciences industries. That number is likely to increase over the next few years, according to Debbie Hart, president and chief executive officer of BioNJ, a trade group for research-based life sciences companies.
“We have a robust pharma ecosystem here in New Jersey and it’s only going to become more robust,” Hart said this morning.
The growth of the biotech and pharmaceutical industries has several drivers in New Jersey, including a lower cost of living (in comparison to other pharma hubs), strong research from area colleges and universities, a legacy big pharma footprint and a supportive state government, Hart stated.
Geography also plays an important role as well. The concentrated areas for the industry, including Camden, Princeton and South Brunswick, are short trips away from Wall Street and the U.S. Food and Drug Administration in New York City, as well as a two-hour train ride to Washington, D.C. The time zone also makes it easy to conduct business with agencies in California as well as the United Kingdom on the same day, Hart said.
Hart said several companies, such as Pozen and Celgene have recently taken action to secure a footprint in New Jersey. Celgene was the mystery buyer of Merck & Co. ’s former 1 million-square-foot R&D site in Summit, N.J.
Doing business in New Jersey is popular due to the Garden State’s operating tax credit, which allows companies to sell their net operating losses to the New Jersey Treasury.
One of the state’s most recognizable biotechs, Celgene, used the program until it became profitable, which was key to it staying in the state, local officials told BioSpace.
It’s no secret that businesses prefer favorable tax rates, which is one reason some companies have sought to move their corporate headquarters overseas. Ian Read, Pfizer’s chief executive officer, said the U.S Tax Code is putting all American companies at a disadvantage. He said the U.S. federal corporate tax rate of 35 percent with an average of 4.1 percent added by states, hinders American companies from having a competitive advantage over foreign companies.
Nearly three-quarters of respondents, 74 percent, predicted that other states will begin offering similar tax advantages to biotech and pharma companies in hopes of attracting businesses.
Although tax rate is favorable, 64 percent of our readers said New Jersey is unlikely to become as competitive a place as Boston or the Bay Area of Northern California.
One of the reasons for the greater Boston area becoming such a major hub in the biotech and pharmaceutical industries is the plethora of research universities in the area. Boston also has one of the highest educated workforces in the nation. Not only are smaller companies calling the Boston area home, but many larger and established pharmaceutical companies, such as Pfizer , GlaxoSmithKline , Takeda Pharmaceuticals , Sanofi , Biogen and Novartis AG have presences in the city. The close proximity of so many pharmaceutical and university laboratories provides researchers and scientists easy access to clinical studies and building partnerships between companies.
“It is much easier to have collaborative relationships when you can visit each other’s labs and have face to face meetings easily,” Ann Taylor, Novartis Global Head of the Program Office, told BioSpace last summer.
The Kendall Square area in Cambrdidge, Mass. has become one of the hottest square mile pieces of real estate in the biotech industry. The Boston Business Journal reported the bulk of the Kendall Square properties are “100 percent leased.” Boston Properties controls nearly 3 million square feet of space in Kendall Square. The Kendall Square properties lease for about $70 per square foot, which is not inexpensive. But, the proximity to the research and development talent in the area is a bonus that must be factored into the bottom line.
More than half of the respondents, 54 percent, said Boston remains the top spot for the biotech industry. The Bay Area came in second at 24 percent and New Jersey followed at 11 percent. San Diego received 8 percent support as the top attractor, followed by the state of Texas at 2 percent and New York at 1 percent.
The data of BioSpace’s online poll was compiled from 607 respondents. Of the respondents, the bulk, 90 percent, were from the United States. Of the U.S. respondents, 25 percent were from New Jersey, with California and New York coming in at 18 percent and 13 percent respectively.
International respondents came from all over the world, including Germany, France, the United Kingdom, Singapore, India, Japan, Pakistan, Portugal and more. Each of the international respondents made up less than one percent of poll takers.