NJ’s Medicine Chest Thins Again as GE Health Unit Heads for MA
Large pharmaceutical companies have been beating a path to Massachusetts over the past few years to get in the thick of the area’s bubbling life sciences cluster. Today, industry conglomerate General Electric (NYSE: GE) is joining the mix, dealing a blow to New Jersey’s life sciences scene in the process.
GE is announcing that it’s moving the headquarters for its life sciences division, GE Healthcare Life Sciences, from Piscataway, NJ, to a new 160,000 square-foot campus in Marlborough, MA (a rendering of the new headquarters is pictured above). GE Healthcare aims to open the facility in spring 2015, and ultimately staff it with more than 500 employees. The firm will make a $21 million investment in its new digs, and could create anywhere from 250 to 300 new jobs in Massachusetts when the facility is up and running, according to GE Healthcare Life Sciences president and CEO Kieran Murphy.
The move makes GE Healthcare the latest big life sciences entity to become firmly entrenched in Massachusetts. Over the past few years, a number of pharmaceutical companies have beefed up their presence in the area, in some cases opening large research facilities and in others establishing small outposts designed to forge partnerships with entrepreneurs and academics. Novartis has concentrated more and more of its research efforts in Cambridge over the years. Pfizer (NYSE: PFE) opened up an R&D hub in Cambridge in June. Johnson & Johnson (NYSE: JNJ) opened its Boston Innovation Center last year.
It’s a bit of a different story for GE Healthcare Life Sciences, however. The GE unit, which manufactures a variety of tools used in imaging, diagnostics, and research and drug discovery and generates around $4 billion in yearly revenue, isn’t moving to the heart of the action in Cambridge’s Kendall Square. Nor is it looking to spy opportunities for venture investments (the corporation’s venture arm, GE Ventures, is based in Menlo Park, CA). Rather, it is adding to a different hub, about 30 miles due west of Cambridge, that already houses some of the largest medical devices and diagnostics firms in the country, like Boston Scientific (NYSE: BSX), Quest Diagnostics (NYSE: DGX), and Hologic (NASDAQ: HOLX).
Indeed, GE Healthcare Life Sciences already has a manufacturing facility in Westborough, MA, with about 200 employees. The lease is up on a facility in Princeton, NJ, near its headquarters, so Murphy says it made sense for the company to move closer to its many customers in Massachusetts, and put the bulk of its operations in one area (Westborough is about 10 miles from Marlborough). Murphy also figures the company will be able to draw some of the life sciences talent already living in the area or a commutable distance away.
“We were trying to put together as many functions under one roof as we possibly could,” he says.
The company is moving into a currently unoccupied space that it’ll refurbish and turn into labs, process development operations, and other space that is meant to complement the Westborough manufacturing operations. It plans to hire lab technicians, biologists, process engineers, customer service reps, doctors, and others to fill the new space.
Still, the announcement, while a boon for Massachusetts, is another blow for New Jersey’s life sciences scene. The Piscataway and Princeton sites, which will be completely shuttered, employ between 400 and 450 people combined (The company will still operate a manufacturing site in South Plainfield with about 40 workers, Murphy says).
Murphy says many of those workers will be offered relocation packages. That doesn’t mean they’ll all move, of course. And though some others will be able to work remotely from New Jersey, there will be job cuts as well.
“Where it makes sense to move people and those that want to move, clearly we’re going to make it as attractive as we possibly can—we want to have continuity in the business,” Murphy says.
GE Healthcare Life Sciences will try to sell the Piscataway facility. And the landlords at its Princeton location are already looking for new tenants, Murphy says.
New Jersey’s life sciences scene has been hit hard in recent years by industry consolidation and a desire by big companies to ditch some of their large campuses for new digs closer to clusters of life science innovation. The Garden State has been a manufacturing and research hub for the pharmaceutical industry for decades—it’s known as “the world’s medicine chest,” and 17 of the world’s top 20 drugmakers and med tech firms have major facilities there, according to BioNJ. Yet New Jersey has seen a few of its healthcare tenants of late either downsize operations in the state or leave altogether for biotech hubs in Massachusetts, California, and even neighboring New York, often after acquisitions.
Roche, for instance, used to operate a sprawling research site in Nutley, NJ, that employed more than 3,000 people. But after Roche acquired San Francisco-based Genentech in 2009, it shifted the focus of its U.S. operations to the West Coast. Roche closed the Nutley campus in 2012, and its only presence in the tri-state area is now a smaller center in New York in the Alexandria Center for Life Science focused on translational science. Pfizer shuttered a major research center in Princeton after its buyout of Wyeth in 2009. Merck hasn’t abandoned New Jersey, but it’s selling its Whitehouse Station, NJ, headquarters to cut costs and has shifted around much of its operations there in the wake of its $41 billion buyout of Schering Plough, also in 2009. While Sanofi’s U.S. headquarters is still in Bridgewater, the French company closed a 1.2 million square foot plant there a few years ago and moved its R&D operations to Boston.
Even given these moves and the latest by GE Healthcare Life Sciences, however, BioNJ president and CEO Debbie Hart counters that there’s been a “general churn of life sciences companies” in all states, not just New Jersey. She adds that taking a “long-term view,” the Garden State’s life sciences scene is much larger now than it has been in the past, and others are moving in, even as GE Healthcare Life Sciences is moving out. Allergan (NYSE: AGN), for example, added a $12 million research facility in Bridgewater in 2012. Just a few months ago, Pernix Therapeutics Holdings (NASDAQ: PTX) announced plans to move from Houston to Morristown, NJ, and Frontage Laboratories expanded its labs in Secaucus.
“While we are disappointed with the GE [Healthcare] Life Sciences move, we also know that the biotechnology industry in New Jersey has grown from 80 companies in 1998 to more than 350 today, and we are confident that this growth will continue,” she says.