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06/15/2006 - NJ BIOTECHNOLOGY INDUSTRY SEES STRONG GROWTH CONTINUING Number of New Jersey Companies Nearly Doubled in Three Years Increases in Employees, R&D and Revenues; Early Stage Research Funding a Challenge

Bill O'Donnell



Number of New Jersey Companies Nearly Doubled in Three Years

Increases in Employees, R&D and Revenues; Early Stage Research Funding a Challenge

TRENTON (June 15, 2006) ? New Jersey's biotechnology industry continued to experience strong growth from 2002 to 2005, with the number of employees in publicly held companies growing by 19 percent, research and development at publicly held companies increasing 40 percent to $737 million and revenues for both public and private companies exceeding $2 billion, according to a survey released today by the Biotechnology Council of New Jersey (BCNJ) and Ernst & Young. Conducted by Ernst & Young in the spring of 2006, the survey, "New Jersey... A Thriving Biotechnology Cluster," (, also noted that the number of biotechnology companies located in New Jersey nearly doubled to 226 from 2003 to 2006.

While the number of employees in publicly held companies increased by 19.5 percent to 5,824, 86 percent of the public and private companies that responded to the survey said that they expected to hire additional employees ? on average 13 ? over the next year.

The report also notes that financing, particularly for early stage research, remains a challenge for many companies.

"New Jersey's biotechnology industry continues to make significant strides, demonstrating sustained growth," said Kenneth I. Moch, President and Chief Executive Officer of Alteon and Chairman of BCNJ. "Not only is the number of companies operating in New Jersey increasing, it is important to emphasize that the industry and individual companies are maturing and, in many instances, thriving."

The survey follows New Jersey being named in January as one of the world's top five growth markets for biotechnology by FierceBiotech, an internationally recognized e-mail newsletter for the biotechnology industry, and a report issued in April by the Biotechnology Industry Organization (BIO) and Battelle, which found that New Jersey was the only state with specialization in all four measured bioscience subsectors ? drugs and pharmaceuticals, research testing and medical laboratories, medical devices and equipment, and agricultural feedstock and chemicals.

"Today's report demonstrates that New Jersey is making the right investments to cultivate our expanding biotechnology sector," said New Jersey Commerce Secretary Virginia Bauer. "We're providing an attractive environment for these companies to locate, thrive and prosper through an array of programs, capital investments and necessary infrastructure that reflect the state's commitment to encourage growth of this vital industry."

"The growth is coming from all possible avenues: other countries, other states, New Jersey university spinouts, New Jersey biotechnology company spinouts, and pharmaceutical company spinouts," according to Debbie Hart, BCNJ President.

State Government Programs Cited as Key to Growth

A positive environment established by New Jersey State Government is among the reasons companies locate and remain in New Jersey, with respondents specifically identifying programs that allow companies to sell net operating losses (NOLs), business incubators established in Newark, North Brunswick, Camden and Mount Laurel and the Garden State Life Sciences Venture Fund.

The companies also continue to report that they believe there are sufficient managerial and scientific personnel in New Jersey to meet their needs.

"The report confirms that New Jersey continues to be a hotbed for biotechnology due to its scientific and managerial pool, the quality of its public and private universities and research institutions, and proximity to major financial markets," said Hart. "Importantly, the comprehensive array of programs offered by New Jersey State Government continues to play a central role in attracting new companies and nurturing the industry."

Survey Results

The goal of the survey was to identify the strengths of the industry and areas for improvement. Highlights from the study include:

  • Seven percent of respondents reported sales of more than $100 million.

  • The companies with sales of $100 million have been located in New Jersey for over 10 years.

  • A significant number of the companies (45 percent) are five years old or less, however, and the future revenue generating potential of these companies is impressive.

  • The percentage of companies reporting a profit in excess of $10 million increased to 19 percent from 2 percent, while the percentage of companies reporting a loss decreased by 19 percentage points.

  • New Jersey public biotechnology companies have $3.5 billion in total assets, an increase of 21 percent since December 2002.

Broad Research Focus
New Jersey companies continue to have a broad research focus. Oncology remains the single largest therapeutic focus area (33 percent). Other target areas include infectious disease (22 percent) drug delivery (20 percent), and devices (15 percent).

The collapse of the technology bubble in 2000 continues to have an impact on financing, alliances and collaborations, particularly for early stage research as investors continue to look for surer bets and quicker payoffs. In addition, the market for public offerings, although softer for New Jersey in 2005, has generally increased since the previous survey. Still the companies responding to the current survey appear to be slightly better funded than companies that responded to the previous survey, according to the report.

"Overall, the industry is well positioned for the future," said Keith Brownlie, Partner and Area Life Sciences Leader at Ernst & Young. "The industry is poised to continue to discover and develop novel technologies, and we believe pharmaceutical companies, venture capitalists and private investment firms will continue to have an appetite to participate in this innovation."

About BCNJ
The Biotechnology Council of New Jersey was founded in 1994 by New Jersey biotechnology industry CEOs to serve as the voice of and advocate for the biotechnology industry in New Jersey. With more than 150 member companies, BCNJ is singularly focused on the growth and prosperity of New Jersey's rapidly expanding biotechnology cluster. For more information, visit the BCNJ Web site at

About Ernst & Young

Ernst & Young, a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its 107,000 people in 140 countries pursue the highest levels of integrity, quality, and professionalism in providing a range of sophisticated services centered on our core competencies of auditing, accounting, tax, and transactions. Further information about Ernst & Young and its approach to a variety of business issues can be found at Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited does not provide services to clients.

E&Y has a long standing commitment to the life sciences industry serving more than 50 percent of the public life science companies; we are the largest professional services practice serving the industry. Our life sciences practice includes biotech, medical device, generic pharmaceutical, and specialty pharmaceutical companies. Our size and success has allowed us to make enormous investments in research and keep our professionals current on the evolving issues and trends facing the industry today and what is most likely to affect the life sciences industry moving into the future. Industry focus means we recruit, train and reward our professionals within the context of industry specialization. We develop technologies and processes that are guided by industry considerations.

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