New Brunswick, NJ, February 10, 2002 — While some New Jersey companies were laying off workers in 2001, New Jersey’s pharmaceutical and medical technology industry created more than 3,000 jobs during the year. The HealthCare Institute of New Jersey announced these findings and others in conjunction with the release of a study conducted by PricewaterhouseCoopers that measured the economic effects the industry has on New Jersey’s economy.
“New Jersey is home to many of the world’s top pharmaceutical and medical technology companies and I am pleased to report the industry is thriving and growing,” said Bob Franks, President of the Institute. “The reach and influence of the industry extends far beyond New Jersey’s boundaries. Every day the lives of people around the world are extended or improved as a result of the discoveries being made in the laboratories in New Jersey.”
The pharmaceutical and medical technology industry strengthens New Jersey’s economy with an estimated economic impact for 2001 of $13.4 billion.
Economic impact is measured in several areas including wages and salaries, employee and retiree benefits, capital expenditures, charitable donations, payments to third-party vendors, rentals and leases, utilities, state and local taxes, and Medicaid and PAAD rebates. To realize the full economic impact on New Jersey’s economy, the study used multipliers supplied by the New Jersey Council of Economic Advisors. When applying these multipliers, the estimated total economic impact for 2001 is $19.9 billion.
The number of employees at New Jersey companies stood at 66,024 in 2001. The 2000 figure was 62,937. That’s a 5 percent increase from 2000 to 2001 and a 9 percent increase from the 1999 figure of 60,527.
Of the 66,024 employees, one-quarter worked in research and development. The next largest employment sector was corporate administration and sales and marketing with 24 percent each. A total of 16 percent worked in manufacturing and quality control and 11 percent were not identified.
The percentage of workers in each field for 2000 was nearly the same as 2001 with 24 percent in R&D, 25 percent in corporate administration, 22 percent in sales and marketing, 17 percent in manufacturing and quality control and 12 percent not identified.
Employees who work in the industry are well trained and possess a high level of education. These factors are reflected in their wages. PricewaterhouseCoopers found that total compensation (includes wages, salaries, bonuses and overtime but excludes benefits) stood at $85,579 in 2001. That’s a 1.7 percent increase over 2000 total compensation of $84,128. Total compensation for 1999 was $85,525.
To measure the cumulative economic impact of wages and salaries on New Jersey’s economy, a spending multiplier of 1.75 was used. For every dollar paid by member companies to employees, an additional $0.75 in wages for other industries is generated in the state. Using the multiplier, the estimated total impact of wages and salaries on New Jersey’s economy is $11.5 billion for 2001. That’s up from $9.9 billion in 2000.
Growing industries call for increases in capital expenditures. HealthCare Institute members are no exception with significant investments of $2.4 billion in capital expenditures being made in 2001. With capital expenditures of $2.0 billion in 2000, that represents a 17 percent increase. Capital expenditures for 1999 were $1.5 billion. Capital expenditures were allocated for various purposes including administrative/general site development, production/manufacturing, research and development, and safety and environmental.
The cumulative impact of capital expenditures on the state’s economy can be measured using capital spending multipliers to measure the gross production output. The capital spending multiplier for New Jersey is 1.63. In other words, each capital expenditure dollar spent by HINJ members generates an additional $0.63 in output in other state industries. Using this multiplier, the estimated total impact is $3.9 billion for 2001 and $3.3 billion for 2000.
Based on the geographic size of New Jersey, it is significant to note that, in 2000, 41 percent of pharmaceutical sales worldwide were generated by members of the HealthCare Institute of New Jersey. Worldwide pharmaceutical sales were $354 billion in 2000 and $145.6 billion of that total was from HINJ member companies.
Sales for the industry increased 10 percent from 1999 to 2000; sales for member companies increased 14 percent during that same period. In 1999, HINJ companies captured 37 percent of worldwide sales of $343 billion and 35 percent of sales of $307 billion in 1998.
As corporate leaders in the state, the industry gives generously to charitable causes. Donations in 2001 were $92.7 million as compared to $96.1 million in 2000. The effect of the slowing economy and the terrorist attacks will not be fully known until actual charitable contribution numbers are collected.
HINJ members gave to the arts, for health related, social services and community or civic causes, for educational initiatives and several other causes. A considerable portion (53 percent) of charitable contributions came in the form of product donations including devices, samples and indigent drug programs.
The initial HINJ-commissioned study was conducted by PricewaterhouseCoopers in 1997. Since then, updates have been performed each year. HealthCare Institute members are surveyed, and national and worldwide data is included as well. To make the survey more meaningful and current, the survey includes data from 2000 and 2001. Actual data is used for 2000 figures. In establishing 2001 estimates, actual data for the first nine months was combined with estimates for the period October 1 through December 31.
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.
The PricewaterhouseCoopers survey is the fifth annual study commissioned by the Institute to assess the impact of the industry on New Jersey’s economy.
For more information about the Institute or the PricewaterhouseCoopers survey, please contact Rebecca Perkins at 732-342-8442.