After a downturn in sales spurred layoffs around the globe, one of the world's largest generic drugmakers has found some tax relief in perhaps the unlikeliest of places: New Jersey.

Teva Pharmaceuticals, which is working through a restructuring plan, will relocate its U.S. headquarters to Parsippany in exchange for $40 million in tax credits from the state. The deal is a clear win for Teva -- the company can streamline its operations and relocate for a relatively small cost. But for New Jersey, the deal's benefits are less clear-cut.

As Teva gears up for its move from Pennsylvania, New Jersey is trying to understand if these types of deals, through which the state since 2010 has promised to dole out nearly $8 billion to corporations, are spurring economic growth as intended. Efforts to evaluate the effectiveness of the incentive programs through a mandated audit and a Rutgers University study raise questions about their fate in the long run.

The economic development incentive programs are up for reauthorization next year, and Gov. Phil Murphy has not said if or how he might want to change their terms.

Since Murphy took office in January, his administration has backed tax credits for film and television productions and supported the $7 billion incentive deal offered to Amazon if it were to build its new headquarters in New Jersey.

But in his budget address in March, Murphy criticized the Christie administration, which he said "gave away" billions in corporate tax credits, depriving New Jersey of revenue.

"I do not oppose the concept of tax incentives on its face," Murphy said. "But they must be distributed responsibly and as part of a broader package of incentives and investments that the state can make to better the climate for all businesses, not just a few favored actors."

The Teva deal is one the Democrat himself cheered in a tweet earlier this month, saying he was "thrilled" for the company to have chosen New Jersey.

Thrilled that @TevaUSA has chosen New Jersey for its U.S. headquarters.



The Garden State is the place to be for the world’s most competitive life sciences companies.https://t.co/Mg936kVO0J — Governor Phil Murphy (@GovMurphy) July 5, 2018

"Thank God Gov. Murphy has seen the light and the glory of the coming of the lord," former Democratic state Sen. Ray Lesniak said jokingly about the governor's support.

Lesniak is a longtime supporter of tax incentive programs and has proposed and sponsored legislation dating back to Gov. Jon Corzine's administration. The programs, expanded significantly under Gov. Chris Christie, are meant to lure corporations to the state by providing tax credits in exchange for the creation of jobs in New Jersey.

"Gov. Murphy has come to the realization that New Jersey needs tax incentives to create good jobs and to keep jobs here in New Jersey," Lesniak said

Murphy, upon entering office in January, called for an audit of the state's subsidy programs overseen by the Economic Development Authority, which administers the tax incentive measures. The governor's office will use the results of the audit to determine each program's future, said Mahen Gunaratna, a Murphy spokesman.

New Jersey Policy Perspective, a left-leaning think tank, has for years lobbied against massive tax breaks for corporations, arguing that the deals are too targeted and only benefit small pockets of New Jersey.

"The law was supposed to design investment in a few municipalities, and it worked in Camden. It didn't work anywhere else," said Gordon MacInnes, president of New Jersey Policy Perspective. The deals are often too lax and do not do enough to ensure job creation for residents of the Garden State, he said.

During his tenure, Lesniak pushed the Christie administration and the Economic Development Authority to provide more transparency on the deals.

Since then, the agency has published data on its website on the initial applications and the terms of each package as approved by the board.

It does not update its website as the deals roll out, so it's unclear how many jobs each company has created so for or how much it has reaped in tax credits.

"There is a lot that isn't transparency about these incentive packages," said Kasia Tarczynska, a research analyst with Good Jobs First, a national policy resource center in Washington. "It's really tough to tell what the benefit to the state actually is."

A memo reviewed by the Wall Street Journal last month said the state could lose out on $545 million from these grants and tax incentive awards this year and risk stripping the state budget of $1 billion a year in revenue by 2020. Without the tax credits, the state's corporate revenue tax would be 12 percent higher, the Journal reported.

The Teva deal is relatively small in comparison to packages handed out to companies such as Holtec, Prudential and EMR Eastern -- each totaling more than $200 million. All of them are dwarfed by the billions of dollars Amazon could reap if it chooses New Jersey for its second North American headquarters.

This Teva incentive package has raised similar questions as those raised under past deals.

Are the tax incentives worth it? Is there more benefit to the taxpayer with the company in the state receiving the subsidies? Are the new jobs created in these projects really new?

New Jersey might soon know the answers.

In addition to the audit Murphy ordered in January, the Economic Development Authority is conducting its own study of the subsidy deals.

The agency commissioned The Bloustein School of Planning and Public Policy at Rutgers to complete the report, which does not include the Teva deal.It evaluates the total value of the tax incentive awarded to a company while looking at the number of jobs created and how those jobs are helping the state's economy in the long term, said James Hughes, a faculty fellow at Rutgers University's John H. Heldrich Center for Workforce Development.

The study will likely touch on incentive packages that have gone to pharmaceutical companies such as Roch and Pfizer that have since left the state.

Under pressure to restructure in a struggling industry, life sciences companies -- including pharmaceutical, biotechnology and medical device companies -- have transferred operations out of New Jersey to states with cheaper housing and research universities on the cutting edge of drug manufacturing.

Teva, however, is moving into the state, with an official earlier this month saying the New Jersey location will be in "closer proximity to a vibrant business hub and a dynamic life sciences environment."

Based globally out of Israel, Teva is one of the 15 largest pharmaceutical companies worldwide.

Declining drug prices, losing a major patent and the general decline of the pharmaceutical industry sent Teva into a frenzy. In 2017, the company's value was cut in half. In December, the company announced it would cut about 14,000 jobs -- about a quarter of the company's total worldwide workforce.

"Teva continues with a significant restructuring plan to restore its financial security and stabilize its business," a spokeswoman for the company said in an emailed statement. "Reducing the number of sites supports Teva's drive to unify and simplify the organization."

It is unclear what role the current administration played in luring the pharmaceutical giant here.

Incentive deals for Teva, including one regarding a headquarter move, were originally discussed under Christie, according to two sources familiar with the conversations between the pharmaceutical company and the government. Both asked to remain anonymous because they were not permitted to speak publicly about the matter.

Teva already had a presence, though small, in New Jersey before the announcement this month and was in contact with the state as the company struggled to control its financial decline.

The Economic Development Authority had approved a Teva tax credit package in March 2012, according to the agency, but the company withdrew its application. It's unclear why.

"There has been various interaction with Teva over the years concerning different initiatives and projects, dating back to 2009," said Erin Gold, director of marketing and public affairs at the Economic Development Authority. "Based on our files, the conversations with Teva in previous years were not related to an HQ."

After submitting its formal application for tax credits in April, Teva accepted the $40 million incentive package on June 12. Now, it is moving forward with the plan to negotiate a lease for office space in Parsippany but it's unclear when Teva will make its official move.

The company will retain a significant presence in Pennsylvania, with 500 to 600 employees at its research and development facility in West Chester, a spokeswoman for Teva said.

The authority approved tax credits for Teva based on the expectation that the company would retain 242 jobs in New Jersey and create 843 new jobs. It is unclear how many of those jobs will go to New Jersey residents and how many will be filled by workers relocating from Pennsylvania. (There is no legislative requirement for Teva to hire people from New Jersey.)

When asked for specifics, a spokeswoman for the Economic Development Authority said: "Teva would be the best source of information on the breakdown of new hires." Teva did not answer questions about how many of its new hires will be residents of the Garden State.

It's unclear when Teva will begin hiring for its new headquarters, but as the state waits, the Economic Development Authority is gearing up for the release of the study it commissioned from Rutgers. The report is set to come out next week, the agency said.

It study will attempt to analyze how many people each company has hired, employee salaries and how many tax credits it has received from the authority to date, Hughes said. The report, coupled with the state's audit, will help the Murphy administration decide the future of tax incentive programs in New Jersey.

"What we have is one of the most extravagantly generous tax incentive programs in the country," said MacInnes, of New Jersey Police Perspective "But the Murphy administration could look at the reauthorization of the programs and see an opportunity to maintain the good parts from the 2013 law and move away from the parts that don't work."

Erin Banco may be reached at ebanco@njadvancemedia.com. Follow her on Twitter @ErinBanco. Find NJ.com on Facebook.