Healthy, Stable Economic Indicators Signal NJ′s Pharmaceutical & Medical Technology Industry Continues to Play a Critical Role in State′s Economy
Industry created 148,768 jobs — 61,971 direct +86,797 spin-off jobs
Average base salary is $97,501 (up 4% from 2005)
Payroll impacts of $7.6 billion (up 8.5% from 2005)
Capital construction spending is $1.9 billion
NJ charitable contributions totaled $264 million (up 74% over 2005)
R&D spending investment of $7.5 billion
$671.4 million in sales and income tax impacts on NJ (up 3.3% from 2005)
Bridgewater, NJ, June 14, 2007 — For the second straight year, New Jersey′s pharmaceutical and medical technology industry reported strong economic activity, with an economic impact of $26.5 billion on the state′s economy in 2006, according to a study released today in the State House by the HealthCare Institute of New Jersey (HINJ), the industry′s trade association.
The 2007 Economic Survey, entitled, “Caring for Our Communities: Enhancing the Quality of Life-Where We Live and Where We Work,” was commissioned by HINJ and conducted by Deloitte. It surveyed 25 HINJ member companies on a variety of key economic indicators.
“The overall economic condition of New Jersey′s pharmaceutical and medical technology industry is very strong. Through employment, our direct payroll, our R&D expenditures, our payments to vendors and from what we have contributed in taxes and philanthropy, the industry is having a profound impact on New Jersey,” said Bob Franks, President of HINJ.
The data elements in this year′s report remain largely consistent with those in previous surveys, highlighting the year-to-year fluctuations in a variety of key industry metrics. The survey includes a new data element: the number of contract employees working at HINJ member companies, further illustrating the impact of the industry on state employment figures.
Of particular note this year, are the philanthropic contributions to New Jersey-based organizations. Contributions of products — as well as monetary donations — to hundreds of New Jersey non-profit groups and charities totaled more than $264 million – up from $152 million the previous year. That′s an increase of 74%. Member companies cite an increased focus on patient drug assistance programs, for example Rx4NJ and the Partnership for Prescription Assistance, as the driving force behind the significant increase in product donations.
Stability of industry jobs is another key indicator this year. For the second year in a row, HINJ members did not report job losses, but reported a slight increase to 61,971 compared to 60,556 in the prior year. These headcount numbers support the fact that the pharmaceutical and medical technology industry continues to be one of the state′s largest employers.
In 2006, a new data element was added to the survey to further illustrate the effect of the industry on state employment numbers. Many HINJHINJ member companies rely on contract employees to perform various services and roles, including highly-specialized services, to support their operations. Based on the most recent available data, it is estimated that HINJ member companies utilize 20,000 contract employees within the industry.
In addition, the industry contributed greatly to the development of other employment in the state, creating approximately 87,000 “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 148,768 jobs: 61,971 from direct employment and another 86,797 through spin-off employment. For each HINJ member company job, an additional 1.4 jobs were created in the state′s economy.
Notably, HINJ member companies invested $7.5 billion in R&D activity, which is consistent with the R&D spending levels of the prior year. Currently, there are more than 800 products in development and 40 New Drug Applications (NDAs) submitted by pharmaceutical companies.
In addition, there are 4,618 clinical trials currently planned or underway – up from 2005. Medical technology companies submitted 100 medical devices for 510k approval; 11 PMAs (new product applications) were submitted for approval.
Other findings of the Deloitte report include:
Payroll — New Jersey′s economy benefited from approximately $7.6 billion aggregate payroll earned by HINJ survey participants for jobs based within the state. State residents hold 80% of the jobs. Total payroll increased over the prior year due to the modest increase in industry employment but also because of annual market wage increase and bonus payouts.
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 $97,501, up approximately 4% over 2005. Total compensation averaged $122,490, increasing 6% from last year. Salaries and benefits of industry employees rank second only to security and commodity brokers in annual compensation.
Spending Impacts — Workers directly employed by the industry are also active consumers, creating spending impacts of $6.1 billion and contributing $1.5 billion of additional income to New Jersey′s economy. Because HINJ member company employees represent geographically and economically diverse communities, spending impacts are benefiting the entire state.
Capital Projects — HINJ member companies spent $1.9 billion on capital projects in 2006, once again topping the Alliance for Action′s Annual Capital Construction Forecast. HINJ member companies led all other sectors of capital construction investment. Almost half of these capital projects (44%) accounted for new construction.
Vendor-Related Spending — HINJ member companies accounted for $21 billion in U.S. sales activity. $3.6 billion was spent in New Jersey, which resulted in an additional estimated $3.0 billion in sales created from the presence of the industry. This accounts for a total state impact of approximately $6.6 billion.
This is the 11th 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 PricewaterhouseCoopers, IBM Business Consulting, and Deloitte.
Data is collected from HINJ′s 25 member companies 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.