- $10.3 billion total economic impact on state in 1998, up $1.8 billion from 1997
- ‘Cure Corridor’ supports more than 140,000 jobs statewide
- Capital investment by Institute members totaled $1.2 billion in 1998
- PricewaterhouseCoopers survey documents direct and indirect economic benefits
New Brunswick, NJ, January 26, 2000 — Each New Jersey job in the pharmaceutical and medical technology industry in 1998 supported one-and-a-half additional jobs in the state. According to a recent PricewaterhouseCoopers survey on the economic impact of pharmaceutical and medical technology companies in New Jersey, the industry is responsible for more than 140,000 jobs in the state, with a total overall economic impact of $10.3 billion.
“A concentration of industry leaders in New Jersey’s ‘Cure Corridor’ has resulted in the state’s preeminence in drug discovery and medical technology development,” said William H. Tremayne, president of the 21-member HealthCare Institute of New Jersey, which commissioned the study.
“And because the companies in the cure corridor do so much business with other New Jersey firms, the aggregate support of jobs in the state is far more extensive than our previous surveys indicated,” Tremayne continued. “Pharmaceutical and medical technology companies are providing, directly and indirectly, excellent jobs for New Jersey residents, and the strength of the industry is being felt throughout the state’s economy.”
Member company employment rolls indicated 57,629 full-time jobs in 1998. In addition, directly outsourced services were responsible for another 43,716 jobs in New Jersey firms, for a total direct job estimate of 101,345.
Applying formulas used by the New Jersey Department of Treasury, PricewaterhouseCoopers determined that employment within the industry creates an additional 40,000 jobs in the state across a wide range of industries. In total, the pharmaceutical and medical technology industry supports more than 140,000 jobs in the New Jersey.
This year’s study by PricewaterhouseCoopers, for the first time, measured the outsourced jobs that exist in New Jersey to directly support the activities of the pharmaceutical and medical technology companies of New Jersey.
“One of the more significant trends among member companies over the last few years is the increasing use of external organizations to support all aspects of their businesses. We expect this trend to continue for the foreseeable future, and to increase the number of jobs created through outsourcing,” said Joseph Palo, the partner at PricewaterhouseCoopers who led the study.
Significant investments are being made by the industry in modernizing and constructing new facilities. In 1998, more than $1.2 billion was spent for capital construction, an increase of 41 percent over 1997. This represents more than 5,000 construction jobs in New Jersey.
Other jobs related to construction may be reported under manufacturing and services. HINJ member employment is included in this number. A multiplier of selected industries was derived from the / a model created by the New Jersey Department of Treasury based on pharmaceutical industry employment. This multiplier was applied to total direct and indirect / outsourced jobs as estimated by PwC.
R&D drove capital expenditure in New Jersey in 1998; it is anticipated that this level of capital spending will continue, as the demand for research and development of new pharmaceuticals and medical technology remains high.
Total compensation in 1998, excluding benefits, averaged $80,223 per employee at companies represented by the Institute. The compensation level reflects the high proportion of industry employees with advanced scientific and business degrees, as well as the fact that almost one-fourth of the industry’s employees work in the sophisticated research and development functions.
Institute members and their employees are also active in their communities. The companies contributed more than $73 million to non-profit organizations in New Jersey in 1998 — up from $40 million in 1996 — and they maintained and initiated numerous volunteer efforts in local communities.
Outsourced jobs were spread among many sectors of New Jersey business. More than $500 million went to over 200 marketing firms in New Jersey. PricewaterhouseCoopers estimates that 5,350 jobs exist in these firms to support the industry. Marketing activities include advertising, promotion, training, Internet designers, market research and medical education companies.
Member companies report that 2,400 information technology consultants in New Jersey are employed to help with emerging technology, such as enterprise resource planning (ERP) systems and e-business solutions, in order to maintain a competitive advantage in the changing marketplace.
In 1998, member companies contracted more than $55 million in outsourced research and clinical trials in New Jersey: $15 million to academic research centers and $40 million to clinical research organizations in the state. There are more than 25 contract research organizations in the state, providing 2,000 jobs.
Outsourced manufacturing in New Jersey exceeded $80 million, representing more than 650 jobs, and more than $100 million was spent on printing and packaging with New Jersey firms, representing 2000 jobs.
In addition, contracted sales forces in New Jersey are estimated at 2,400 jobs, and there are more than 1,400 sales representatives working in New Jersey for out-of-state companies that are not members of the Institute.
In the related field of biotechnology, there are 110 firms in New Jersey, not counting the biotechnology divisions of the Institute. These 110 firms employ an estimated 5,700 employees.
PricewaterhouseCoopers identified 29 non-Institute pharmaceutical and healthcare product companies in New Jersey, with 3,900 employees.
“New Jersey companies are demonstrating that medical advances arise from strong, concentrated investment in ongoing research and state-of-the-art facilities,” said Tremayne. “The commitments made by pharmaceutical and medical technology companies in New Jersey are advancing the industry’s role in promoting growth in the state.”
“With 36 percent of global prescription pharmaceutical sales represented by the Institute’s membership in 1998,” Tremayne added, “the evolution of a comprehensive, research-intensive cure corridor here is now working as a magnet for pharmaceutical and medical technology companies throughout the world. New companies — particularly in emerging biotechnology industries — are locating in New Jersey to capitalize on the proximity to this growing cure corridor.”
Highlights of the study follow, concerning employment, research, and other impacts of the industry in New Jersey.
Employment
- The total payroll of Institute members in 1998 stood at $4.3 billion.
- Average base salaries were $65,235; total compensation, including bonuses but excluding benefits, averaged $80,223.
- Plans have been announced by Aventis Pharmaceuticals and Pharmacia & Upjohn to bring another 2,000 pharmaceutical jobs to the state this year and at least 1,100 more over the next few years.
Research & Development
- Member companies registered 2,381 patents in 1998; indicated 819 compounds under development; and sponsored 2,937 clinical studies.
- Member companies paid more than $55 million in 1998 to academic research institutions and contract research organizations in New Jersey.
- New facilities and other construction generated an estimated 5,500 jobs in New Jersey in 1998, reflecting both the broad economic impact of the industry on the state and the commitment to future growth in the state.
Outsourcing Data
- PriceWaterhouseCoopers estimates 5,500 third-party marketing positions are supported by New Jersey’s pharmaceutical and medical technology industry.
- The study indicates 2,000 contract research positions, 680 manufacturing jobs, and 2,500 contracted sales employees serving the industry through outsourcing.
- Construction of industry-related facilities generated 5,500 jobs.
- Healthcare product companies are investing heavily in emerging technology, which has led to the engagement of more than 2,300 information technology consultants.
- In addition, the industry supports 2,000 outside jobs in printing & packaging; 250 in employment-related services; and 600 in professional services, such as consulting, audit and tax.
Tax Revenues & Community Presence
- Institute members paid over $2.9 billion in federal, state, and municipal taxes in 1998.
- Member companies paid more than $2.2 billion to federal and state public health programs in 1998, including rebates for New Jersey Medicaid and the Veterans’ Administration.
- Institute members contributed more than $73 million to charitable organizations in New Jersey — and maintained and initiated numerous volunteer efforts in local communities The Institute and the Annual PwC Survey.
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.
PricewaterhouseCoopers is the world’s leading professional services organization. Drawing on the knowledge and skills of 150,000 people in 150 countries, the firm helps its clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance.
PricewaterhouseCoopers survey is the third annual study commissioned by the Institute to assess the impact of the industry on New Jersey’s economy.