A new white paper from BioNJ recaps what many in the state already know: New Jersey’s biopharmaceutical sector has languished and lost out to other states — namely California and Massachusetts — despite generous economic development incentives.
The paper, released Thursday, said the losses are not just the physical departure of plants and headquarters, but also a decrease in employment and fewer federal funding and grant awards.
The paper recommends strategies that could help boost the sector, including the state government paying more attention to incentivizing growth, tweaking regulations to make it easier to build, creating a more central hub for the sector and encouraging more partnerships with academic institutions in the state.
Despite the findings, BioNJ CEO and President Debbie Hart said in a conference call about the white paper that she remains bullish on New Jersey as a pharma hub.
Hart believes New Jersey can do better to build its brand, especially with Gov.-elect Phil Murphy.
“As I watch our governor-elect and his energy and his enthusiasm, and what seems to be a very positive outlook on life and New Jersey, I would suggest that our new governor, as an ambassador, as our chief marketing officer — who better to tell the story than our governor-elect?” she said. “We at BioNJ would get behind him and support him in any way.”
The white paper, which was commissioned in the fourth quarter of 2017 and compiled through a collaboration with McKinsey & Co., looks at the way New Jersey ranks alongside peer biopharma states California, Massachusetts, Maryland, North Carolina and Pennsylvania.
New Jersey, once considered the medicine chest of the world, still accounts for almost 30 percent of FDA approvals — a significant percentage, since it’s a global market, Hart said. And the sector remains a significant employer, has benefited from tax credits, and contributes to just under 4 percent of the state gross domestic product.
The state, however, is facing fierce competition from its peers.
The white paper is critical of the state’s incentive programs, which have been geared toward retention of companies rather than growth, but Hart said BioNJ still supports their existence.
Hart would like to see a greater focus on the industry. And she specifically lent support for Choose New Jersey, saying both entities have worked closely to ensure support of the biopharma industry.
“We do support a public-private partnership, and it has proven effective,” she said. “We do leave it to the governor to put his own stamp on the program.
“But the message I would leave with is that we … think it makes sense. It brings more tools to the arsenal and helps the cause all the way around.”
And there are steps the government can take without burdening the state budget, such as increasing the tax credit for angel investors from 10 percent to 25 percent, Hart said. But there will be other strategies that require reallocation of existing money or new money altogether.
Another recommendation includes creating a supercluster of biopharma in the northern and central parts of the state.
“We often hear New Jersey doesn’t have a city center such as what exists in Cambridge (Massachusetts) and other places,” Hart said. “We took a look at places like Israel and what they are able to do. Israel is geographically about the same size as New Jersey and, in the last 10 to 15 years, their focused efforts have really built a robust industry and we believe that we can mimic here in New Jersey some of their strategies.”
The goal should be to attract more global headquarters or regain a strong base, Hart said.
“Let’s create a strategy that attracts companies like Google, like Microsoft and Apple and Facebook, and others that are getting into the life sciences, as well as additional facilities of the companies that are already here and their sister companies around the world,” she said.
But there should be a focus on new energy, too.
The number of startups produced by the state also is a significant problem for New Jersey overall, as highlighted by Murphy during his campaign, but it is especially apparent in the life sciences sector.
California had nearly 10 times the startup activity in New Jersey from 2012-2015, with more than 800 startups. In that time, Massachusetts had 430. New Jersey had only 89.
The white paper highlights high labor costs, property costs and utility costs, a stringent regulatory environment, and a high cost of living as areas where New Jersey ranks poorly. The latter is one that Massachusetts and California also rank poorly in.
But New Jersey does excel in some areas, including an educated work force, competitive economic development incentives and access to venture capital funding.
Hart also touted recent news of new incubators and innovation hubs in the state such as:
- The Rutgers University-University of Medicine and Dentistry of New Jersey merger, which has resulted in a culture and systems that encourage entrepreneurship and company creation at Rutgers;
- New Jersey Institute of Technology’s Innovation Institute, which is making headway in biomanufacturing;
- Rowan University’s incubator and investment fund;
- The announcement of the Seton Hall-Hackensack Meridian School of Medicine, which intends to host startups and clinical trials;
- The Institute for Life Sciences Entrepreneurship, which is supporting startups;
- Princeton University’s soon to be opened BioLabs-managed incubator.
With the recent creation of the Biotechnology Task Force, Hart believes the recommendations of the white paper can be put into action.
“We all hear the stories of how difficult it can be to build a building or get a zoning permit in New Jersey, and think about the minor tweaks we can make in the regulatory environment that could make a major impact in different towns and across the state,” Hart said.
The white paper concludes with a call to action from the government, echoing Hart’s comments.
“If New Jersey commits to creating an environment that helps companies thrive and that attracts new startups and funding, its upside is considerable. The recommendations herein could bring jobs and more businesses that could help energize our state economy and reestablish New Jersey as the medicine chest of the world.”