BioNJ, a New Jersey biotech trade group, has published a study by Ernst & Young examining the state’s biotechnology growth prospects.
The study found that despite economic obstacles – and who doesn’t face those these days – New Jersey has seen significant expansion and diversification of its biotech sector.
From 300 biotech firms operating in New Jersey as of July 2010, there are more than 340 now. And the sector added 1,400 direct employees within the state in the same period to reach a total of 16,400 today.
“I think it’s a good thing,” said Debbie Hart, president of BioNJ. “It means this industry in New Jersey continued to have a stronghold and continues to be an economic driver, with no real blips on the screen.”
However, not all is sunny in the Garden State.
Venture capital has fallen to a mere 16 percent. For comparison, the figure was 26 percent in 2009.
More than half of biotech companies also stated that as of the end of 2011, they had less than $10 million on hand.
Of course, this is simply another symptom of the widespread economic malaise which has caused investors to pull back from speculative transactions and seek ‘safe’ havens.
A reflection of this is seen in an increasing gap between newer companies and older, more established ones in terms of securing investment interest. Such fundraising problems could prove serious obstacles for startups and other innovators, and indeed, slow innovation itself.
Just 42 percent of BioNJ’s survey respondents stated that New Jersey had enough capital to sustain the industry’s expansion. On the other hand, this doesn’t seem to be the state’s fault, as 73 percent claimed that the state offered a healthy business environment, while an overwhelming 95 percent agreed that the state commands adequate administrative and research personnel.
Jersey’s Technology Business Tax Certificate Program presents a powerful benefit to biotech firms, whose major products are research-heavy and can take a long time to return a profit. The program allows unprofitable businesses to sell their unused net operating loss and R&D credits in exchange for funding.
In general, although almost 90 percent of Jersey’s biotech firms acknowledged ample research and academic resources for advancement, they did underscore the need for a stronger relationship between industrial concerns and the state’s big research institutions like Princeton and Rutgers.