Biopharmaceutical Industry Is Banking on Boston

January 5, 2010 : The New York Times, by Susan Diesenhouse

Companies battling for an edge in the biopharmaceutical industry have $2.3 billion in manufacturing plants in development in the Boston area to produce genetically engineered drugs.

For the first time since the early 1990s, new factories — not just expansions of existing ones — are going up in this area, according to the Massachusetts Biotechnology Council. In the early '90s, about 20 biopharmaceutical companies with about 2,500 workers built manufacturing plants in the state, according to the council.

With development costing about $2,400 a square foot for special materials, equipment and equipment testing, decisions to build in Massachusetts, where the cost of living is high, are not made lightly. But biotech companies come here to mine the region's research and production talent.

Those already here tend to stay to keep together the teams of scientists, doctors and engineers who create manufacturing processes to grow living cells that produce therapeutic drugs. By contrast, traditional drugs are often made by combining chemicals that react to one another.

Many biotech businesses want to be in Cambridge or Boston, close to mentors, colleagues, friends and competitors in the research communities around the Massachusetts Institute of Technology and Harvard. But in the last few years, several companies have developed space in nearby, less-expensive suburbs.

The companies can build a campus with separate buildings for offices, labs, storage and the factories that must be nearly as clean as a surgical suite to avoid product contamination. If a factory occupies its own building, it is easier to control the environment and avoid costly production slowdowns that can batter a company's image and stock price. Some suburbs approve new projects in months rather than the years Boston may require.

Seeking a balance between suburban convenience and proximity to Boston and Cambridge, the New York-based Bristol-Myers Squibb Company chose a site about 40 miles west of Cambridge for its largest development: a $750 million, 300,000-square-foot manufacturing and office complex with about 260 workers, a company spokeswoman said.

Construction has just been completed on the self-financed project, which has six buildings. In 2007 the company acquired the 89-acre site at Fort Devens, a former military base that the state converted into an office and industrial park. The company expects to have the factory in commercial production in 2011, said Christopher R. Perley, general manager of the complex.

“Massachusetts is supporting life science in places like Devens where it installed the utilities, wastewater treatment and roads we need,” Mr. Perley said.

This complex gives Bristol-Myers Squibb a chance to become a significant player in biopharma, said John Boris, managing director for investment research at Citigroup.

Bristol-Myers Squibb can now commercially produce the first major biologic drug that the company developed itself, Orencia, for rheumatoid arthritis, rather than contract out production.

“Its future growth depends on positioning itself for the biopharma explosion,” said Mr. Boris. Compared with chemically based pharmaceuticals, biologics are in demand because they can slow and even halt the progression of diseases. “They are life-saving, targeted medicines,” Mr. Boris said. But prices can be 10 times higher, reflecting the cost and expertise needed to produce them, he said. By 2015, he estimated, biologics could generate $3 billion, about 20 percent of annual company revenue, with half coming just from Orencia.

The architect for the new plant is Fluor Enterprises, a unit of the Fluor Corporation of Irving, Tex. Howard Boman, a senior vice president, said that creating a biopharmaceutical plant was very different from other jobs.

“It's like designing a fine chemical plant with a hospital on top,” said Mr. Boman, in reference to the sanitary conditions required.

Outside, the plant seems to be a red panel and glass suburban office. Inside, it is dominated by two steel 30-ton water tanks and six 25,000-liter stainless-steel bioreactors. These are so large, they hang between floors, and the ceilings are nearly 30-feet high, said Michael A. Benedetto, the project executive for Skanska USA Building, the contractor.

“These facilities have a top-down layout because gravity helps move liquids through the system,” he said.

To create an uncontaminated environment, walls and floors are made of easy-to-clean materials like epoxy, urethane and tile that can cost $15 a square foot compared with the concrete floor of a typical factory, which costs 25 cents a square foot. During construction, cleanliness was paramount. Pipes and ducts were sealed during fabrication, transport and construction to keep out dust and dirt. The building was sealed and special walkways set up for the crew “to limit boot and mud traffic,” Mr. Benedetto said.

Given the cost of building, companies want their facilities to be in operation quickly. To speed up the process, sections of the factory were built elsewhere, brought to an assembly plant nearby, then transported to Devens. During six months, 78 truckloads carried modules of tanks, pipes, instruments, platforms and stairs on trips that often required special permits, police escorts and road closings because of load size, he said.

In suburban Framingham, the Genzyme Corporation has just built a $300 million manufacturing complex and $150 million warehouse facility nearby, said Henry Fitzgerald, vice president of facilities operations for the Cambridge-based biotech company. Last month, Genzyme completed construction on a self-financed $168 million, 70,000-square-foot factory in the Framingham Technology Park that is expected to start commercial production in 2011. Genzyme already occupies one million square feet in 18 buildings there, 15 of which it owns, he said.

Framingham approved the new plant in 60 days and invested $12.9 million in water and sewer upgrades.

“It's striking that $13 million helped us make a $300 million investment, but we can't grow without infrastructure,” Mr. Fitzgerald said.

A competitor, Shire Human Genetic Therapies, a unit of Shire, based in England, recently uprooted from Cambridge to build a $394 million, 545,000-square-foot production complex in Lexington, where construction will be completed early this year. In Cambridge, its staff was in different buildings spread over several blocks. “In Lexington, it had its pick of spaces,” said Mr. Boris of Citi.

Meanwhile, Organogenesis, a company in Canton, Mass., is designing a 54,000-square-foot production plant across the street from its current site, said Geoff MacKay, the chief executive.

“We make living cells that replace tissue injured by accident, disease or aging,” he said. “A wound center can call us at 5 p.m. and we guarantee that by 8 a.m. the next morning we ship a live product with a 15-day shelf life.

“This is one of those rare instances when it doesn't make sense to manufacture offshore,” he said.

He added: “We have 50 Ph.D. scientists, medical doctors and engineers who work every day shoulder to shoulder with our manufacturing people.” He said that “we're an M.I.T. spinoff plugged into the academic and scientific community. We didn't want to lose those ties or our employees.”

© Copyright 2010 The New York Times.