NJ’s Pharmaceutical & Medical Technology Industry Continues to Drive State’s Economy
Industry created 156,000 jobs – 63,000 direct + 93, 000 spin-off jobs
Average base salary is $85, 423
Payroll Impacts of $6 billion
Charitable Contributions totaled $155 million
$213.1 M in sales tax and income tax impacts on NJ
Hillside, NJ, April 27, 2004 — New Jersey’s pharmaceutical and medical technology industry continues to be an economic powerhouse contributing $23.8 billion to the state’s economy in 2003, according to a study released today by the HealthCare Institute of New Jersey (HINJ), the industry’s trade association. The study commissioned by HINJ and conducted by Deloitte, surveyed 22 HINJ member companies on a variety of key economic indicators.
“As in previous years, the 2004 study illustrates the vitality our industry adds to New Jersey and the prime environment the state provides for HINJ member companies,” said HINJ President Bob Franks. “The importance of the industry is demonstrated not just by the direct employment we provide, but also by the impact on other sectors of the state’s economy. This year’s Deloitte study categorically proves that.”
For the first time since its inception, the study incorporated several new investigational areas to more fully account for how HINJ member companies are anchored to the state’s economy. This year, the study took a closer look at the industry’s tax impacts on NJ, the state’s business environment, and the types and quality of spin-off activity created.
“New Jersey is home to more pharmaceutical companies than any state in the nation, along with numerous medical technology companies, so this industry plays a critical role in creating a thriving economy in this state,” said Edward J. Ludwig, Chairman, President and Chief Executive Officer of BD. “Our industry is an economic powerhouse in New Jersey, and we look forward to working in partnership with state leaders to formulate strategies to retain, nurture and grow this vital industry here.”
The study this year, conducted by Deloitte with Economic Development Research Group, estimated the total state income and sales taxes paid by HINJ member employees and calculated the impacts on the New Jersey State Budget. The total impact was estimated to be $213.1 million, providing between 3 percent and 66 percent of various departmental budgets.
Similarly, HINJ members rated New Jersey overwhelmingly a “good,” “very good,” or “excellent” place to do business.
“The McGreevey administration is committed to nurturing the growth and strengthening the foundation of New Jersey’s pharmaceutical and medical technology industry,” said New Jersey State Treasurer John McCormac, who attended the announcement event. “As demonstrated through our re-tooled business incentive program, innovation zones, expanded technology tax credits and other programs, this administration is working hard to grow good jobs and help this key industry prosper.”
Other findings of the Deloitte report include:
Employment — HINJ member companies remain a significant employer in the state directly responsible for 63, 000 jobs in the pharmaceutical and medical technology industry, almost level with last year (2003 figured include the spin-off of Medco from Merck). In addition, the industry produced an additional 93, 000 spin-off jobs, resulting in a total employment impact of 156, 000 New Jersey jobs.
Quality of the Workforce — The study also revealed that almost half (46 percent) of HINJ member employment is devoted to the discovery and production of life-saving medicines and medical devices. Equally noteworthy, the study concluded that almost half of the state’s pharmaceutical and medical technology workforce was comprised of women.
Compensation — Reflecting their high-skill and education levels, employees who work in the industry receive competitive wages and benefits. Members reported that the average total compensation in 2003 (including wages and benefits) averaged $96, 639 in 2003, up 6 percent from 2002. The average salary for HINJ member employees was $85, 423 in 2003, up 5 percent from 2002.
Spin-off Activity — In 2003, HINJ member companies demonstrated that they are an economic engine that not only creates significant direct employment, but also indirect employment. The industry was responsible for 93, 000 spin-off jobs in 2003 — over 35, 000 jobs were supported by the purchase of goods and services by HINJ members and another 57, 000 jobs were created by capital projects.
Vendor-Related Spending — Goods and services to HINJ member companies accounted for $22 billion in U.S. sales activity in 2003, a 3.3 percent increase over 2002. $4.3 billion was spent here in New Jersey.
Capital Projects — Although spending on capital projects has eased (HINJ members spent $1.2 billion in 2003 down from $1.4 billion in 2002), the industry still supported the state’s capital construction sector with investments in new facilities, renovations and maintenance. New construction accounted for one-third of HINJ member capital projects.
Research & Development (R&D) — In 2003, HINJ members invested $3.7 billion (an increase of 19.3 percent) in research and development. For pharmaceutical companies, 290 products were in development and 8 NDAs were submitted to the FDA in 2003. There were over 1, 634 clinical trials underway or planned as well. For medical technology companies, 101 510(k) s and 3 PMAs were approved by the FDA in 2003.
Charitable Contributions — HINJ members give generously to charitable causes, making them good corporate citizens in the state. Contributions in 2003 were $155 million for the arts, health-related and social services, community and civic causes, and for educational initiatives. This figure is up significantly from 2002 ($96 million). Product donations accounted for 52.5 percent of charitable contributions.
This is the seventh 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 this year, Deloitte. Data is collected from HINJ’s 22 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.