Roche will close its New Jersey R&D operations, cutting 1,000 jobs

Posted: June 28, 2012

Two weeks after Gov. Christie was named 2012 Governor of the Year by the Biotechnology Industry Organization, New Jersey learned that one of its biotech employers plans to close a research complex in the state.

Roche, the Switzerland-based parent of biotech giant Genentech, said it would cease operations at its 127-acre research and development complex in Nutley, Essex County, by the end of 2013, cutting 1,000 jobs.

In an effort to "streamline" its R&D efforts, Roche intends to shift the work from North Jersey to Roche facilities in Germany and Switzerland. Shutting Nutley, where Hoffmann-La Roche has had operations for 80 years, effectively would mean an end to East Coast operations for Roche, which had 2011 sales of $47.9 billion.

In the same statement, the company said it intended to establish a "Pharmaceuticals Translational Clinical Research Center" with about 240 jobs on the East Coast — presumably not in Nutley. (Let the state subsidy bidding begin, I guess.)

"In its 80-year-old history, our Nutley site has made significant contributions to Roche's success," said Severin Schwan, the company's chief executive. "We will do everything we can to find socially responsible solutions for the employees affected by these changes."

To a great extent, the pending loss of Roche dents one of New Jersey's few "wins" in the last two years: Keeping Bayer HealthCare, which had been considering a new corporate campus in New York. In October, Bayer said it would move 2,500 employees to a former Alcatel-Lucent campus in Hanover Township, Morris County.

But Roche's retreat is a reminder of how the pharmaceutical industry's multiyear retrenchment has affected New Jersey and Pennsylvania, home to operations of many of the world's biggest drug companies.

At the annual BIO International Convention in Boston last week, the nonprofit research group Battelle released a report on employment in the biosciences. The headline from the report was that the industry added more than 96,000 jobs between 2001 and 2010, while the private sector as a whole lost more than 3 million jobs.

Here's the bad news: Even though New Jersey and Pennsylvania are key centers for biosciences, employment in the sector in each state fell by more than 1,000 from 2001 through 2010. Even tiny Delaware lost more than 1,000 jobs during that same period, according to Battelle's analysis of federal Bureau of Labor Statistics wage and employment data.

The biggest states for biosciences? Tops was Genentech's California, where 228,700 people were employed at 7,468 establishments in the sector in 2010. A distant No. 2 was New Jersey, with more than 91,167 people employed at 2,554 establishments. Pennsylvania was third with 81,796 jobs at 2,240 establishments.

While the Keystone and Garden States continue to have a strong base in a growing industry, the growth is occurring largely without them. California's biosciences sector increased employment 13 percent and establishments (places of work) 18.6 percent from 2001 to 2010. New Jersey's employment shrank 7.5 percent even as the number of establishments grew an encouraging 34.6 percent. In Pennsylvania, employment fell 4.9 percent and establishments 11.1 percent.

Choose New Jersey Inc., a nonprofit that promotes the state as a good place to do business, and BioNJ, a trade association, apparently organized New Jersey's largest delegation in years for the BIO convention, where 16,505 people attended to talk if not shop, certainly genetic glop.

In advance of the Boston meeting, Lt. Gov. Kim Guadagno said she was "eager to share our state's competitive advantages."

I'm sure the Christie administration will make a pitch to host Roche's translational research center. But given recent trends, I'm not sure the Swiss company will choose New Jersey.

Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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