Pharma Closed How Many US Plants This Year?

Pharma Closed How Many US Plants This Year?

December 14th, 2011 // 1:07 pm @

If you guessed that 38 plants are being closed by drugmakers and biotechs this year, you would be right. Given the extent to which the pharmaceutical industry is downsizing, this most likely would not come as a surprise. But while that certainly is a large number, there were 65 facilities closed in 2010, according to Industrial Info Resources, a research firm that tracks construction projects.

On its face, these closings translate into a lot of lost jobs. Last year, for instance, Annette Kreuger, who is IIR vp production for the pharma and biotech group, tallied approximately 13,000 positions that disappeared. This year, the closings will take about 5,000 jobs. However, she adds, the actual net loss may be something less, since some drugmakers are selling facilities and then outsourcing work.

“Yes, there are plant closings and sales, but a company like Pfizer, for instance, will sell a site and do a contract deal,” she says. “Another example was Eli Lilly, which sold some facilities to Covance and is now contracting out work to Covance.” Even though headcount at drugmakers may fall, “some jobs are being maintained as part of the deal. We’re seeing more of this.”

Nonetheless, the closings are real and, not surprisingly, most are are located in the Northeast, where eight facilities will have closed by the end of this year, translating to roughly 1,400 jobs losses. Among them is a Bristol-Myers Squibb plant in Annandale, New Jersey, which was acquired as part of its 2009 purchase of Medarex.

Next up is the Mid-Atlantic, with seven site losses. One example is an Owing Mills, Maryland, plant run by Shire, which once made four of its best-selling drugs, including the Adderall XR ADHD pill and employed 260 people. All production was outsourced to a site in Greenville, North Carolina, that is run by DSM Pharmaceutical Products, according to IIR.

There is another side to this story, though. Construction by life sciences entities – including not just industry, but also universities and the federal government – continues. A total of 106 new North American plants and research centers are under way, representing a potential total investment value of $4.3 billion, including original construction costs and possible future phases that are already planned or under consideration, according to Kreuger.

One example is a new Shire facility in Lexington, Massachusetts, with a $394 million price tag, not including an additional $92 million project under way at the site. Another is the International Vaccine Center (InterVac) in Saskatoon, Saskatchewan, which was a $140 million project that was spearheaded by the University of Saskatchewan and the Vaccine and Infectious Disease Organization.

The 2011 tally tops the 75 that opened last year, although the total investment value in 2010 represented a much larger $7 billion. The difference was partly attributed to a number of high-dollar projects finished last year, some of which included what Kreuger described as sizeable future phases that were already planned.

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