Drama Aside -- Pharmaceutical-Biotech Industry Diagnosed for Healthy Investment of Nearly $13 Billion in 2005 North American Project Activity

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). As the 3rd quarter gets underway, Industrialinfo.com has taken an analytical snapshot of capital and maintenance project activity in the Pharmaceutical-Biotech Industry sector thus far for 2005. In January of this year there were 339 projects with a total investment value (TIV) of $14.3 billion scheduled to kick-off by year's end. When those figures were analyzed in June 2005, a 9.9% decrease in project activity was reflected, with a loss of $1.4 billion in project spending.

Mid-Year Gap Measurement - By June of 2004, $1.55 billion in project activity had fallen out of the 2004 Construction Year compared to $1.42 billion in fallout activity during the same period for 2005.

Questionable marketing practices, bad press, product failures, illicit gifts, in many ways, the Pharmaceutical-Biotech Industry has emerged to find itself as the soap opera of the industrial marketplace. Actually, a number of factors have contributed to the decrease in project activity, ranging from a project simply being moved out to 2006 and beyond to being put on hold until funding can be secured. As reported in Industrialinfo.com’s 2005 Pharmaceutical Industry Forecast, the actual site selection project for grassroot projects and major expansions can add years to the originally planned kick-off date. Merck had locations across the globe lobbying hard before finally deciding to build their $300 million vaccine plant in North Carolina. As Industrialinfo.com constantly monitors and tracks projects throughout their active life, it is likely that in our quest for accuracy, a project's investment dollars will fluctuate from month to month or year to year until the final decision is made, whether in funding or site selection.

Despite the fallout in regards to TIV for the first six months of 2005, there was an actual increase in the number of active projects, up to 352 from 349 in January. When these same figures are compared to the same time frame in 2004, the industry has actually experienced a slight increase in project retention for 2005. From January through June 2004, the original 327 projects valued at $14.9 billion experienced a 10.6% loss, which translated into 6 projects with a TIV of $1.5 billion.

Despite the dip in project activity for the year, the Pharmaceutical-Biotech Industry remains one of the biggest industries in terms of annual capital investment activity. As a multitude of problems plague the industry, ranging from product failures to spiraling drug costs, there is no avoiding the fact that drugs must and will continue to be developed and produced. Different sectors of the industry are experiencing increased exposure and activity. Diagnostics are expected to continue to grow for a variety applications, including self-administered consumer drug tests and the development of highly complex tests aimed at detecting everything from mad cow disease to biotoxins.

While there are still large blockbuster projects on the books, such as Genentech's massive nearly $1 billion plant under construction in California, there has been a growth in the number of smaller investments. Contract manufacturing operations (CMOs) and contract research operations (CROs) are more apt to invest several million dollars at a time to beef up capacity as contracts are secured. This is expected to continue well into 2006 and beyond as more companies, both large and small, find it cost effective to turn to these suppliers for clinical-scale or specific product runs. As the drug products moves past FDA approval, some companies are remaining with the CMOs for full-scale commercial production.

While this intriguing industry is not cyclical, it is subject to a much harsher influence...itself and the people it serves. The human quest to live long and look good while doing so drives this group, as does the question of who should have access to which drugs and for how much money. Should the companies ship free drugs to third world countries, when an ailing senior on social security can't afford his cholesterol meds? On top of these and a thousand other moral dilemma-laden questions, the companies must also try to turn a profit a fact that is always guaranteed to open yet another line of charged discussion.

Despite the ongoing series of events, the industry is not only here to stay but it will continue to grow. The unique graphic illustration of Pharmaceutical-Biotech plant and research sites found in the North America Pharma Industry Wall Map displays the pervasiveness of the industry and highlights the almost 300 plants currently under development.

Industrial Information Resources (IIR) is a Marketing Information Service company that has been doing business for over 22 years. IIR is respected as a leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.