2005 Economic Impact of HINJ Members Totals A Record $27 Billion
Bridgewater, NJ, June 19, 2006 — Reversing a two-year trend, New Jersey’s pharmaceutical and medical technology industry reported strong economic activity and an economic impact of $27 billion on the state’s economy in 2005, according to a study released today in the State House by the HealthCare Institute of New Jersey (HINJ), the industry’s trade association.
The 2006 Economic Survey, entitled, “Strong Medicine: New Jersey and the Pharmaceutical and Medical Technology Industry,” was commissioned by HINJ and conducted by Deloitte. It surveyed 25 HINJ member companies on a variety of key economic indicators.
“New Jersey’s pharmaceutical and medical technology industry appears to be recovering from the impacts of major global realignments. The industry reported increases in virtually every sector in 2005 and continues to be the major driver of the state’s economy.
Robust investments in R&D, capital construction, vendor services and philanthropic endeavors are all responsible for the industry’s total economic impact of $27 billion — an all-time high. These data are encouraging signs that the industry is optimistic about the future economic opportunities in the state,” said Bob Franks, president of HINJ.
The solidity of industry jobs is another key indicator this year. For the first time in two years, HINJ members did not report job losses. In previous years, employment reductions due to merger and acquisition activity, downsizing, or other factors accounted for significant job losses in the state. For example, the industry was able to stabilize employment figures this year and actually reported a slight increase (60,556 from 60,274) in employment as the industry steadied itself after consolidation and cutbacks.
In addition, the industry contributed greatly to the development of other employment in the state, creating approximately 101,500 “spin-off” jobs. Through the purchase of goods and services, capital construction projects, and other industry activity, the state benefited by the creation of these additional jobs. In total, HINJ member companies provided 162,093 jobs: 60,556 from direct employment and another 101,537 through spin-off employment. For each HINJ member job, an additional 1.7 jobs were created in the state’s economy.
Notably, HINJ members invested $7.5 billion in R&D activity. That is a significant increase of 17 percent over 2004 and nearly double what the industry spent in 2003. Almost half of HINJ member employees work in areas devoted to R&D, clinical development or the production of medicines and devices.
Currently, there are 961 products in development and 78 NDAs submitted by pharmaceutical companies. In addition, there are 3,690 clinical trials currently planned or underway — more than double that of 2003. Medical technology companies submitted 55 medical devices for 510k approval; 131 PMAs were submitted for approval. This is double the number of new devices on file with the FDA over last year.
“The pharmaceutical and medical technology industry plays a significant role in New Jersey’s economy,” said Commerce Secretary Virginia Bauer. “This economic impact study shows how the industry is continuing to thrive in the Garden State through robust investments in research and development, capital construction, vendor services, and philanthropic endeavors. We look forward to working in partnership with the industry to assure its future growth and continued prosperity.”
Other findings of the Deloitte report include:
Quality of the Workforce — For the first time in the survey’s history, women now outnumber men in the industry’s workforce. More than half (51%) of the HINJ member workforce is comprised of women. Also, almost half (46 percent) of HINJ member employment is devoted to the discovery and production of life-saving medicines and medical devices.
Compensation — The competitive wages and benefits of the industry reflect the high-skill and education levels of its employees. The average base salary of industry employees is $93,948, up 7% from 2004. Average benefits paid are $26,293, increasing 6% from last year. Salaries and benefits of health industry employees rank second only to security and commodity brokers in annual compensation.
Philanthropy and Charitable Contributions — Total charitable contributions worldwide totaled over $4.4 billion, a $1.1 billion increase over last year’s giving of $3.5 billion. The increase is due largely to the industry’s involvement with humanitarian and disaster relief efforts, specifically the Asian Tsunami and the Gulf Coast hurricanes. New Jersey organizations and causes also greatly benefited from the industry, receiving $152 million in charitable contributions. More than half (51 percent) of the industry’s donations went to the arts, education, and health-related causes.
Capital Projects — HINJ member companies spent $2.2 billion on capital projects in 2005, up from $1.3 billion in 2004. Almost half of these capital projects (48 percent) accounted for new construction.
Vendor-Related Spending — HINJ member companies accounted for $22 billion in U.S. sales activity. $4 billion was spent here in New Jersey, which resulted in an additional estimated $3.1 billion in sales created from the presence of the industry.
This is the tenth annual study commissioned by HINJ to assess the impact of the industry on New Jersey’s economy. HINJ first commissioned Coopers & Lybrand to conduct an economic impact study in 1997 and has commissioned annual updates since then with PWC, IBM Business Consulting, and Deloitte. Data is collected from HINJ’s 25 members and the study employs a variety of widely accepted economic multiplier formulas from sources such as the New Jersey Council of Economic Advisors, NJ IMPLAN, and others.
Founded in 1997, the HealthCare Institute of New Jersey serves as a unified voice for the state’s research-based pharmaceutical and medical technology industry. Deloitte, one of the nation’s leading professional services firms, provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 80 U.S. cities.