The study - 2004 North American Pharmaceutical-Biotech Forecast - published by IndustrialInfo, has found that in spite of a 14 per cent drop in planned spending, the industry still expects to start with just under $13 billion in projects this year.
IndustrialInfo's project surveys revealed that a little more than $2 billion in projects were cancelled or put on hold from the nearly $15 billion in projects originally forecasted to start in 2004.
While the pharmaceutical-biotech sector is global, the U.S. accounted for half of total sales in 2002, reaching $219 billion, a growth of 12 per cent from 2001.The cost to take a drug from development to market is now estimated to approach $900 million. Other challenges range from fake prescription drugs that threaten people's lives as well as company profits to drug importation laws, which are not being enforced.
The report also cites public institutions and organisations as accounting for an increasingly large portion of life science project investment. Leading the current list with eight projects scheduled to begin in 2004 is Eli Lilly & Company representing a total investment value (TIV) of over $700 million. Merck follows closely, with seven projects, with a TIV of $696 million. Biotech pioneer, Genentech landed firmly near the top with one mammoth project valued at $600 million.
Pharmaceutical-Biotech construction activity from government entities remains strong. The National Institutes of Health (NIH) is scheduled for three projects, which start this year, with a combined TIV of over $300 million. Project activity at the university level remains intense, as the University of Arizona has four projects scheduled, valued at nearly $200 million.
According to the Pharmaceutical Research and Manufacturers of America (PHRMA), the US invested more than $32 billion in research and development in 2002 and more than $200 billion over the past decade. As a result of this spending, between 1993 and 2003, the U.S. Food and Drug Administration (FDA) approved more than 363 new medicines, biologics, and vaccines for the prevention or treatment of more than 150 diseases and conditions.
As competition for virtually any major capital investment in the life science sector continues to grow, companies are often delaying site decisions, as they "shop" for the best location. With offers of tens of millions of dollars in incentives, tenders of free land, and promises of trained workforces, companies are taking longer than ever to name final site decisions. They can afford to delay a construction start, since they often receive promises of fast track permitting, once the decision is made.