Pharma-Bio Capital Prognosis: Signs of Life with $12 Billion in Active Grassroot Projects

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Pharmaceutical plant closures continue to make headlines across the country, with thousands of jobs imperiled once the doors finally close. The financial and emotional impact on surrounding communities and residents resulting from the loss of a major employer is almost incalculable. Yet, even as companies continue to shed redundant sites and deem others as unnecessary because of age and myriad other factors, there are definite signs of life in the industry. A recent survey taken from Industrial Info's Pharmaceutical Tracker has revealed 132 active grassroot construction projects in North America with an impressive total investment value (TIV) of just over $12 billion.

Click on the image at right to see a breakdown of projects in the top 10 states for Pharma-Biotech Industry grassroot plant construction.

While these projects cover a wide spectrum of investment and size, there are some very definite trends as to what types of facilities are being built. A large number is sourced out of the public sector, be it universities or the federal government. Real estate investment trusts continue to build up their portfolios of properties offering life science space. But as to the nature of what the majority of new sites will be used for, at the top of the chart is research, research and more research. Not to belabor the topic or ignore manufacturing buildup for biologics and vaccines, the industry knows it must keep the pipeline full of drugs that will sell or risk seeing even its often very deep coffers eventually emptied.

The majors are facing the twin-headed dragon of troubles in the form of the loss of patent protection and low-cost generics, a sector whose load is considerably lightened by saving literally hundreds of millions and the years of development big pharma invested in to the drug it is "copycatting". It is why so many patent challenges become bitter and expensive fights. The development, marketing and brand establishment has already been done and with a comparatively minimal investment, the generic firm is allowed to ride off with future profits with its much less pricey version. Thus, it becomes imperative to push for new drugs or even manipulating existing drugs that have been tweaked just enough to allow these companies newfound patent protection -- or profit protection as it is often referred to within the industry.

A look at the projects considered reveals a TIV range from $3 million for a nanoparticle therapeutics laboratory in Kalamazoo, Michigan, all the way up Bristol-Myers Squibb (NYSE:BMY) (New York, New York) and its massive Devens, Massachusetts, biologics plant that could top $1 billion TIV when it is finally completed. The average TIV of all 132 projects is a hefty $91 million.

All of the projects are in various stages of development, with some under construction, and others in the planning and engineering phases. Although many will be built, there are those that will not for a variety of reasons. The largest reason is invariably finances. That is where the local authorities often step in and offer lucrative cash incentives to attract the construction of these new buildings. Others are scaled back, combined with others or totally re-worked so as to be nearly unrecognizable from the original plans.

From a geographical standpoint, perennial industry site favorite, the New England region, is securely on top with seven projects carrying a $2.6 billion TIV. Another major player in the location game is the Mid-Atlantic region, which comes in second with 15 projects and a TIV of $2.3 billion. Drilling down further to the state level, Massachusetts is top dog with five projects worth $2.5 billion. Maryland claims a respectable second place with its seven projects tallying up a $1.1 billion TIV.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.