Pharmaceutical Commerce - April 2010 - (Page 10)

Business & Finance Site Selection 2010 < continued from page 1 Merck and Schering-Plough, virtually eliminated big pharma’s need for new expansion. These companies had been a main source of marquee projects in past years. Also, Kinum says, changes to the healthcare system signed into law this year are changing the cost and pricing structure for many biopharma companies, which will have a negative impact on their P&L statements, further limiting their ability to expand. The site selection game has changed. Biopharma companies are still using the same checklist: low cost of doing business, access to a skilled labor pool, high quality of place and a culture of innovation. But gone are the days of marquee projects creating thousands of jobs and millions in revenue for single communities. Today, the projects are smaller, the competition is fiercer and the stakes are high- as well as the country’s eighth-largest community college system. And Snell classifies his state as “very aggressive” when it comes to offering strong financial support to bioscience companies locating in Arizona. The city also has invested $1 billion in a downtown revitalization project and is on the fast track to establishing a light-rail system. Tucson also has taken on an even more targeted approach to recruiting new businesses: Through a strategic planning process initiated in 2006, the city carved out an economic blueprint that identified and then focused on diagnostics as a primary industry that could realistically help establish Tucson as a leading biotech center. As a result, TREO now focuses its bio recruitment efforts on diagnostics companies. “Like many cities and states, Tucson was shotgunning its approach, targeting the whole bio Competition Goes Global China, Singapore, South Korea—notice a trend? All eyes from California to Massachusetts are on Asia as a major player in the now global site selection competition for biopharma expansion and relocation. China: Chris Kinum of Cushman & Wakefield says this country has seen explosive growth: “China is developing a middle class rapidly. Twenty-one cities have more than a million people. There’s a middle class with disposable income, so companies can go over there to make their product cheaply, and now they can also sell it there. That’s a huge paradigm shift.” South Korea: As the host of the 2010 International Association of Science Parks (IASP) conference, South Korea is increasing its visibility as a thriving bio center, says Jay Garner of Garner Economics. According to the Korea Biotechnology Industry Organization, the bio industry market size in 2006 was US$2.3 billion; the goal for 2011 is to produce $20 billion and export $10 billion. Singapore: “Singapore is trying to develop a manufacturing base for more mature companies, so that’s on the horizon as a competitive threat,” says Tracy Lefteroff of PricewaterhouseCoopers. “Over the next five or 10 years, you could see them growing in influence.” Gail Maderis of BayBIO adds that Singapore never had the venture capital and investment necessary for a bio hub, but “the government stepped in and basically created those things,” she says. Fig. 1. Milken Institute’s Overall Composite Index of the life sciences provides a single comprehensive measure in analyzing how life sciences clusters compare. Source: “The Greater Philadelphia Life Sciences Cluster 2009: An Economic and Comparative Assessment” er. To succeed, the economic development authorities in many cities and states are being forced to reshape their recruitment strategies, and in some cases, reinvent themselves. Taking a more focused approach Despite the nationwide lack of activity in new biopharma site development, Joe Snell, president and CEO of Tucson Regional Economic Development (TREO), says his city’s recruitment success rate is “through the roof.” Earlier this year, Sanofi-Aventis opened a new 110,000-square-foot Tucson Research Center, more than doubling its footprint there. The impact of the 2008 acquisition of Tucson-based Ventana Medical System by Roche Diagnostics has yet to be fully realized, but Snell expects the number of jobs to balloon from 645 to 3,000. An emerging bio center whose 100-plus companies generate $6 billion in revenue annually, Tucson has all the right assets to attract and retain biopharma companies. Major pharma companies already are located there. It’s home to the University of Arizona, 10 APRIL 2010 industry,” Snell says. “But now we’re much more focused, and it’s really paying off. We’ve realized it’s better to be deep with a few industries than to dabble in many.” Taking a more focused approach to recruitment is a trend that Jay Garner, president of site selection consulting firm Garner Economics (Atlanta), is seeing with economic development organizations across the country. “Eight years ago, everyone wanted to be a biotechnology capital of the world,” says Garner, who this year is working with the Research Triangle Park Foundation on a new comprehensive master plan. “Now they’re looking at doing things smarter. They’re getting more strategic with their marketing and targeting companies that fit their niches. They see the value of focusing their resources smartly, rather than throwing a bunch of marbles up in the air and seeing where they land.” Utilizing logistics expertise For Indiana, the focus in the past few years increasingly has been on supply chain and logistics. The state, which is already home to major pharmaceutical companies like Eli Lilly and Roche Diagnostics, welcomed Medco Health Solutions, the largest US pharmacy benefits manager, to a new mail-order pharmacy and research facility last year. The 452,000-square-foot facility is located in Anson, a 1,700-acre mixed-use development in Boone County situated right on the I-65 corridor near Indianapolis. In choosing the greater Indianapolis area, Medco president Kenneth Klepper noted the site’s location and access to infrastructure as key in helping the company get prescription medications out to patients in a timely and cost-effective way. Last year, PBM giant ExpressScripts (St. Louis) took over WellPoint’s in-house PBM and its specialty drug distribution facility at the Indianapolis Airport. The company plans to add 182 jobs at that facility by the end of 2012, the Indiana Business Journal reported in January. The company is also expanding in St. Louis, which chose that city over Philadelphia as the site for its new $60-million drug distribution facility. A logistics hub, the Indianapolis International Airport is the eighth-largest cargo center in the US and the 21st-largest in the world, according to Airports Council International-North America. It’s home to the second-largest FedEx distribution center in the world, and global logistics company DB Schenker also has a large presence at the airport, which is located within the Greater Indianapolis Foreign Trade Zone. In 2006, the company worked with the Indianapolis Airport Authority to create a state-of-theart cold-chain operation. Airport Authority Air Service Director Christofer Matney says the proprietary program, now in its fourth year, has been successful in mitigating the risks associated with transporting temperature-controlled materials, not only for DB Schenker but for other supply chain companies that have been able to take advantage of the facility. “The aircrafts are landing without any issues, and products are able to get staged indoors with minimal ramp exposure. It’s been very successful for them.” Matney notes that Indianapolis has long had a presence of companies involved with temperature-controlled supply chain logistics, but the DB Schenker facility has added to that expertise, making Indianapolis an even stronger center for this type of transportation. “Fifty-four percent of temperaturerelated excursions for pharma air cargo occur at the airport itself,” Matney says. “It’s clear that the airport and its environment are an area where most improvement in cold-chain transportation can be found. We’ve been very fortunate to have been able to help these companies create an environment where excursions are not an issue.” The Indianapolis Airport also boasts a new passenger terminal, which officially opened in November 2008. While having no effect on the transportation of cargo, the new terminal did make an impact on Medco when it was considering Indianapolis as a location, Matney says. “They mentioned the quality of the new airport serving as a welcome mat to visitors and potential clients they would bring to the region. Before, the airport was a function as opposed to a source of inspiration. It’s helped fuel a lot of enthusiasm toward economic development activities.” Kristin Jones, president and CEO of the Indiana Health Industry Forum, expects her organization’s upcoming supply chain conference to fuel interest in the state, as well. The Midwest Healthcare Supply Chain continued on page 12>

Table of Contents for the Digital Edition of Pharmaceutical Commerce - April 2010

Pharmaceutical Commerce - April 2010
Top News
Business & Finance
BrandMarketing | Communications
Supply Chain | Logistics
Information Technology
Packaging & Drug Delivery
Legal | Regulatory
Executive Training & Development
Editorial Index & Meetings

Pharmaceutical Commerce - April 2010