Pharmaceutical-Bio Industry to Inject $5.6 Billion for Capital and Maintenance Project Starts in 2Q09

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Amid the dark and dreary news of today's headlines, the current capital investment activity from the pharmaceutical-biotech group shines through the gloom like a beacon of hope. While not escaping the maelstrom of financial disorder, the sector is still on board to begin 106 projects in North America during the second quarter of 2009. With a combined total investment value (TIV) of $5.6 billion, the project average translates into a healthy $53 million. The vast majority of the projects are for new research facilities, involved in either drug discovery or the detection and analysis of biological threats.

Click on image at right for a regional breakdown of planned 2Q09 North American Pharmaceutical-Biotech Projects.

What makes these figures all the more remarkable is the fact that they top the numbers from the same period last year, when a total of 105 projects with a combined TIV of $4.8 billion began construction (source: Industrial Info's Pharmaceutical Tracker - Online Database). Most financial pundits place the beginning of the end in October 2008, yet the 2Q09 project activity demonstrates a net increase in project spending of $800 million or an impressive 16% from 2008. Even the average project TIV was less last year, coming in at $46 million per project.

A look behind the numbers reveals that the federal government and the controversial stimulus program will help get the quarter's largest project under way. The $912 million National Synchrotron Light Source II will be built on the Brookhaven National Laboratory Campus in Upton, New York. HDR Engineering (Alexandria, Virginia) and Torcon Construction (Red Bank, New Jersey) are on the project team, and the project is expected to be complete in 2014. The current Light Source in place at Brookhaven enables more than 2,000 researchers from 400 universities, government laboratories and companies to utilize the facility's bright beams of x-rays, ultraviolet light and infrared light for research in such diverse fields as biology, medicine, chemistry, environmental sciences, physics and materials science.

Torcon is also on board for the second largest project of the quarter, the $800 million Phase I construction of the National Interagency Biodefense campus that is being built in Frederick, Maryland, at the Fort Detrick army base. With nearly 900,000 square feet of buildings and state-of-the-art laboratory equipment, the USAMRIID Medical Biodefense Research Replacement Facility will provide biological defense research and testing for the Department of Defense.

In terms of geographical locations for the projects, the Mid-Atlantic region snared the top spot with $1.8 billion being invested into 13 projects. This figure was given a healthy boost by the aforementioned lab at Fort Detrick. The Northeast region has $1.2 billion going into the construction for 12 projects, including a $250 million translational research facility being built by Mount Sinai Hospital in New York City. Designed by Skidmore Owings & Merrill LLP (New York, New York) and built by Bovis Lend Lease LMB (New York, New York) the project calls for the construction of an 11-story, 450,000-square-foot building, fully equipped for translational research with the focus on reducing the time it takes to discover and distribute a medicine.

There is a chance, of course, that some of these projects will be delayed or put on hold. Yet in all likelihood the majority will eventually proceed as planned, as most have funding and project teams in place, and project designs have been completed. With the current fear of swine flu sweeping the world, research labs capable of developing new remedies to stop this and similar diseases in their tracks are at the top of everybody's list.

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