BRIDGEWATER, N.J. - When Fred Hassan wanted to prove that Pharmacia could become a globally powerful drug company five years ago, he moved it out of its London headquarters to an office park here in the state he considered "the medicine chest to the world."
That shift of 380 of his employees into a gray one-story building that AT&T; had abandoned to cut costs proved to be just the beginning.
By 2000, Pharmacia had outgrown the space, and it took over a nearby group of buildings that was once occupied by an investment company. This summer, Hassan, Pharmacia's chief executive, also bought a campus in Basking Ridge that had been AT&T;'s headquarters. Not far away, other drug companies have moved into buildings that were once filled with employees of Exxon and IBM.
The expansion is part of a 15-year regional transformation that has provided the Northeast corridor with an important economic cushion during the recent downturn.
With little of the fame that can be claimed by Silicon Valley, the Northeast's urban corridor has quietly built its own economic powerhouse by becoming the nation's health care epicenter. Roughly following the line of Amtrak's Metroliner and stretching from Boston to Bethesda, this medical megalopolis encompasses a vast array of facilities.
It is anchored by urban complexes serving as homes for many of the nation's most influential teaching hospitals. It includes the big suburban campuses of most of the world's major drug companies. It also stretches to clusters of research outfits in the Boston area and around the National Institutes of Health outside Washington.
"This is the center of the nation's health care economy," said Mark Zandi, chief economist of Economy.com, a research firm in West Chester, Pa. "Just as chips do it for the Bay Area and Boeing does it for Seattle, health care drives the economy in this corridor."
The growth has come as other traditional engines of the region have faltered. Even as health care companies in the Northeast's medical megalopolis have added 50,000 jobs, since 2000 all other industries combined have lost 220,000, ending a decade-long boom that had left many taking prosperity for granted.
Almost one out of every 10 jobs in the Northeast corridor today is in health care, more than in any other region of the country. That is up from one out of 14 in 1987, according to Economy.com. In New York City, four of the 10 largest private employers are medical institutions.
Health care's gains have helped to keep unemployment in the region lower than it is in the rest of country. By contrast, during the recession of a decade ago, the Northeast suffered far more than most other areas and took much longer to recover.
The rise of this regional health care complex has also solved part of the Northeast's long quest for an economic engine to replace its disappearing manufacturing sector.
Health care's powerful presence in the Northeast springs from a series of developments, including the growth of drug companies, which have long been located here.
The older age of the population has also created a large need for doctors and home health care workers. Research hospitals are increasingly attracting patients from other parts of the country and from overseas who are eager to get the best treatment money can buy.
Whatever the reasons, economists say the medical industry has now reached a critical mass that makes its regional importance likely to grow even further. Pharmaceutical workers know they can settle in New Jersey and switch jobs in later years without moving. Two-income families in which both spouses have medical careers can live in, say, Columbia, with one commuting to Johns Hopkins in Baltimore while the other works at the NIH in Bethesda.
The economy's recent troubles are also making it easier for health care companies to add employees; hospitals have begun hiring workers for jobs that remained unfilled during the boom. "In the mid- to late '90s, we had a heck of a time trying to attract an adequate number of information-systems specialists and accountants," said Ronald R. Peterson, president of Johns Hopkins Hospital.
Today, the vacancy rate for all jobs other than registered nurses has fallen to 6 percent at the hospital, from 10 percent in 2000. It is 11 percent for the nurses, down from 15 percent two years ago.