Pharma-Bio Industry Expects to Wrap Up $12.6 Billion in 2012 North American Capital/MRO Investments

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Before the doors close on 2012, the North American Pharmaceutical & Biotech Industry is on track to wrap up nearly $16 billion worth of capital and MRO (maintenance) investments. Spread over 716 individual projects, this figure covers all the projects scheduled for completion from January 1, 2012, through December 31, 2012. While some of the large projects started construction this year, others began years ago.

Click on the image at the right for a graph detailing North American pharamaceutical and biotech projects completed in 2012.

With projects reported for both the manufacturing and research sectors, the 2012 number represents a small increase of 31 projects, or 5%, over 2011, when 685 projects were completed. When considering the total investment value (TIV), 2012 is on target for a miniscule dip of $200 million from 2011's $12.8 billion in project completions. The average TIV of the 2012 projects is $17.5 million, another small decrease of six percent from the 2011 average TIV of $18.6 million.

All that the above numbers reveal is that it was pretty much "same old, same old" for the industry at this point. Unlike analyzing projects yet to begin, project completion data becomes more valuable as it ages. After enough time has gone by, an analytical eye can compare what types of projects were being built in the past to what is now being planned and built. That is when a clearer picture of industry trends and direction emerges.

In the case of the pharmaceutical-biotech industry, the most definite hallmark of today versus the so-called industry "golden-years" is both the size and scope of the majority of capital projects. Whereas the average TIV in the industry for completed capital projects was $42 million in 2006, today it is the aforementioned $17.5 million.

In another five to six years, the picture will surely be different. As to whether that means there will be fewer projects carrying a higher value, or visa versa, remains to be seen. It will be a different pharmaceutical-biotech industry then.

For now, lean, mean and cautious are the by-words imprinted upon every industry planners' playbook. With the industry still battling to reinvent itself for the "middle years," each and every capital expenditure is being carefully evaluated as to being absolutely essential. The companies have the money, yet like most entering middle age, the folly of youthful overspending has necessarily been curbed.

Keeping in mind that virtually all of the large projects that are wrapping this year were started several years ago, they nevertheless portray an accurate picture of what types of projects are in demand. That would be those addressing wet research and biological anything, with a specific focus on vaccines.

The nearly $1 billion University of Alberta Edmonton Health Science Clinic North and South is firmly at the top. Edmonton's PCL Constructors served as the project construction manager, adding more than 1 million square feet between two towers fully equipped to deliver research and patient care.

The University of Massachusetts Worcester landed the second spot, delivering the $449 million Albert Sherman Research Center. With Suffolk Construction (Danvers, Massachusetts) overseeing construction and design by Architectural Resources Cambridge, the new center has a total 500,000 square feet, offering 300,000 square feet of research space.

New York's Rockefeller University was a very close third, with its $400 million Collaborative Research Center. Designed by New York City's Mitchell/Giurgola, the project added an eight-story tower to connect two existing buildings, which were also renovated, resulting in 125,000 square feet of modern research space. Turner Construction (New York, New York) handled construction for the project.

From a regional standpoint, the activity occurred in almost every state and province. This underscores the power of incentives and the continuing success of site-selection lobbyists. It also illustrated the strong lure of attracting life science investment. Projects were completed everywhere from Lancaster, Pennsylvania, ($2 million nutraceutical plant relocation) to Minnetonka, Minnesota ($2 million scheduled maintenance).

Nevertheless, the traditional industry location favorites placed high, with the Mid-Atlantic region at the top in terms of TIV with $2.4 billion, followed by New England with $1.5 billion. The West Coast placed third with $1.4 billion in project completions for the year.

A peek ahead into 2013 reveals 648 projects scheduled for completion with a cumulative TIV of $13.4 billion. It is important to bear in mind when considering these figures that a project finish date is subject to change. In addition, when considering manufacturing projects, the actual construction may be complete but the plant does not become operational until validation, which can take months, if not an entire year.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.