Pharma-Biotech Industry 2Q07 Forecast: Value of Project Construction Starts Increases 5% to $4.3 Billion

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas). The Pharmaceutical-Biotech Industry currently expects 135 capital and MRO (maintenance) projects carrying a total investment value (TIV) of $4.3 billion to begin construction during the second quarter of 2007. This project activity, which was drawn from a recent analysis of current reported projects contained within Industrial Info Resource’s Pharmaceutical Tracker, demonstrates a slight increase of roughly $200 million in TIV, or five percent, over the second quarter in 2006.

Click on the image at right to view the 2Q07 Pharma-Biotech Industry Project Construction Start Analysis Chart.

A deeper look reveals the number of actual projects increased to 135 for 2007, which represents a nearly 110% increase over 2006, or a gain of 68 projects over last year’s second quarter (2Q) project start total of 65. What did decrease for 2Q 2007 is the average TIV of each project. That figure has dropped to an average of $31.8 million from last year’s average of $64 million per project, a decrease of 52%. The construction start of several extremely large projects in 2006 helped amp up the average TIV. Projects of this caliber more often than not take years of planning and the actual construction start date is a very fluid one, dependant on numerous factors unique to the type of project (i.e. manufacturing or research) and funding sources (i.e. public or private).

A look at three of the top projects driving the high project TIV within the 2Q 2006 time frame clearly demonstrates the diversity of project sourcing as a whole within the industry. Another particular noteworthy element is that the following projects are all primarily focused on research and development rather than manufacturing capacity, foreshadowing a trend discussed in further detail in the 2007 Pharmaceutical-Biotech Industry Forecast. Boehringer-Ingelheim began the multi-phased $500 million expansion of its Ridgefield, Connecticut campus and East Baltimore Development started the $450 million first phase of the ambitious East Baltimore Life Science and Tech Center. Construction also got underway on a $200 million national biocontainment laboratory in Boston.

Continuing the emphasis on building research capacity for 2Q07 project starts, the top three include two research centers and one manufacturing plant. Amgen is expected to begin the massive $350 million, 600,000 square foot expansion of its Helix research campus in Seattle, which will be developed on its Pier 89 site. Columbia University is green-lighting Turner Construction (New York, New York) to start construction on a 14-story $229 million science research facility in New York, New York, designed by Davis Brody Bond (New York, New York). Ben Venue Laboratories (Bedford, Ohio), a subsidiary of German drug maker Boehringer Ingelheim, is the only one of the top three 2Q 07 projects that will add contract manufacturing capacity. The $175 million investment will add a 200,000 square foot building equipped to offer increased lyophilized sterile production capacity.

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