Pharma-Biotech Global Expansion to Canada and Belgium


Expanding Companies Find Belgium To Be at the Center of Europe

Companies locate life sciences, logistics and headquarters operations in Belgium.

Pharma-biotech manufacturing, logistics operations and headquarters concerns are three sectors that are highly competitive in this corner of Europe, and these projects continue to flock to Belgium. The reasons are many. For one, 60 percent of the buying power in the European Union is concentrated within an 800-mile radius of Belgium. Belgium has an open economy and one of the highest productivity levels in Europe.

Belgium achieved more than $3.5 billion in revenues in 2005 from the pharma-biotech sector, which employs about 10,000 people. Pfizer, GlaxoSmithKline (GSK), Baxter, and Johnson & Johnson (J&J) are among those firms making substantial investments there.
In January, Pfizer revealed plans to invest around $93 million in its factories in Puurs and Louvain-la-Neuve, as well as in a new European data center in Brussels.

Pfizer’s Louvain-la-Neuve facility, located in the Fleming Research Park at Catholic University, is receiving about $45 million of that total. The plant produces animal vaccines and benefits from synergies created by 100 companies in the park, including Carmeuse, Eli Lilly, American Home Products, Ajinomoto and McKinsey.

GSK Biologicals in Rixensart inaugurated its new $195 million vaccine quality control center in Wavre, Wallonia, in February. GSK Biologicals conducts its most critical R&D activity outside the United States and the United Kingdom in Wallonia, according to the company.

Baxter will invest more than $110 million in its Lessines production site through 2009. The investment, which began last year, is deemed necessary to maintain the production of high-tech products developed on site, to develop new processes of production, and to use the same capacity of knowledge to develop new innovative products, according to the company.
The location is home to two manufacturing units in Medical Devices and Bio Sciences, as well as a distribution center. The investment represents Baxter’s fifth in 15 years in the facility.

J&J is investing $169 million in a new pilot plant on the chemical production site of Janssen Pharmaceutica in Geel. The plant is scheduled to start operations in 2011 and will support the development of new medicines.
The investment is expected to strengthen the cooperation between J&J Pharmaceutical Research & Development and the production site in Geel, which will bolster the competitive position of Belgium in the pharmaceutical industry.
J&J invested $60 million in its Beerse site in 2004 for the Dr. Paul Janssen Research Center and $40 million for the Drug Safety Evaluation Center in 2005.

Ajit Shetty, managing director of Janssen Pharmaceutica, described the investment as a solid indication of the confidence that the company has in Belgium.
“In the past few years, we have systematically invested in new research buildings and new production facilities on the Belgian sites,” he said. “But this is by far the biggest investment project that we have ever had. It confirms again the importance of the role of our company and of our country in the pharmaceutical sector.”
Major Logistics Strengths

BELGIUM’S LOGISTICS ADVANTAGE IS important to pharma-biotech entities and other sectors. J&J operates a $36 million European distribution center (DC) for medical devices and diagnostics in Courcelles, near Charleroi in Wallonia.
“The efforts deployed by the Wallonia region, its central location in Europe, its proximity to airports and other transport infrastructures, as well as the possibility of a partnership with TNT Logistics, were all critical factors in determining the outcome of this important investment decision,” said Guy Lebeau, group chairman of J&J Medical Devices & Diagnostics.
TNT Logistics, which changed its name to CEVA Logistics in December, operates its hub at Liege Airport.
Contact lens manufacturer Coopervision opened a $3.25 million European DC in December at the Hauts-Sarts Business Park, outside Liege.
“Leige is located close to the German, Dutch and French borders, plus the city has a good airport and a network of motorways,” said Michel Bosa, director of logistics for Coopervision. “Liege was chosen because of its location, the ability to provide 24-hour delivery, the presence of strong logistics partners, a skilled logistics work force, and the availability of capital and employment grants.”
The whole of Belgium benefits from an excellent transportation infrastructure, which includes an extensive rail system and the Port of Antwerp in Flanders.

Flanders, in particular, is a magnet for distribution. More than 400 DCs there distribute products that range from food and pharmaceuticals to electronics and earth-moving machinery. All distribute to more than five European countries, with some operating across Europe, the Middle East, Africa and other parts of the world.
Nearly 60 percent of the centers are operated by third-party suppliers, such as NYK and Caterpillar Logistics. Others are run by companies such as Bridgestone, Nike and SKF.

Magnet for Headquarter Operations

Brussels, the EU’s capital city, is an attractive location for corporate headquarters. Flanders and Wallonia are also drawing in major investments. Kodak’s Graphic Communications Group (GCG) , for example, consolidated its EMEA (Europe, the Middle East and Africa) operations in Waterloo last year. 
“At the scale that GCG now operates, a regionalized approach is the most effective solution,” said Kevin Cazabon, regional consumables director for GCG. “Our customers will benefit from more local support, regional warehousing and a logistics operation based on years of experience in serving customers and delivering goods in a timely and efficient manner.”
The Belgian Ernst & Young head office is relocating from Brussels to nearby Diegem, Flanders. Corporate executives cited a need for larger space and more parking, difficult to find in crowded Brussels. The location offers proximity to public transportation and Brussels Airport.

Reforms Encourage Investment

Several Belgian government reforms are encouraging further investment. These include the government’s recent abolition of the dividend withholding tax, the notional interest deduction, and the fact companies can establish themselves in Belgium in three days.
In January, Belgium abolished its dividend withholding tax for dividend payments made to corporate shareholders resident in countries that have tax treaties with Belgium, including the United States. As a result, U.S. companies that use Belgium as their holding location for investments into Europe will be able to repatriate European profits exempt from dividend withholding taxes, without a limitation on benefits.

Under the notional interest deduction, a new and innovative measure in international tax law, all companies subject to Belgian corporate tax will be able to deduct from their taxable income an amount equal to the interest they would have paid on their capital in the case of long-term debt financing. This deduction gives Belgium the lowest effective tax rate on capital among 81 developed and developing countries, according to the 2006 Tax Competitiveness Report by the C.D. Howe Institute in Toronto.
Recent reforms and electronic filing systems in Belgium also make it possible to start a company in Belgium in three days, the fastest of any country in Europe, according to the World Bank.


NPS Pharmaceuticals Relocates Research Lab to Ontario, Canada

Expanding life sciences companies see Canada as a cost-effective location alternative to the U.S.
Canada’s new flagship biotech hot spot, dubbed the MaRS Discovery District, is packaging up what executives claim is North America’s most concentrated cluster of biomedical research and expertise.
It doesn’t hurt that MaRS was sited in the center of Toronto, braced by world-renowned teaching and research hospitals, the University of Toronto, Canada’s financial core, and the Ontario provincial legislature.
MaRS houses laboratories, research institutes, biotech companies and venture capital firms, serving as a convergence innovation center dedicated to accelerating the commercialization of new ideas and new technologies.

Access to the U.S. market is always a major consideration in a company’s decision to locate their operations in Canada.
Biotech and life science companies locating in Ontario are looking to supply the U.S. market, according to Greg Wootton, director of the Investment Branch Ontario in the Ministry of Economic Development and Trade.

“European countries see Canada as a gateway to North America, because Canada is seen as an easier market to get into than the U.S.,” Wootton said. “American companies treat Ontario as a state and, in fact, it competes with all states for startup dollars.”
Wootton said there are other advantages for U.S. biotech companies considering a relocation to Ontario, including its many colleges and universities that provide access to skills that are helpful to small businesses as they grow and their markets expand.
“Ontario is the third largest biotech center in North America,” he said. “And it’s a renowned site for clinical trials.”
Ontario has 10,000 researchers, and a large, stable, demographically diverse and multi-ethnic population, Wootton said.
“A centrally managed public healthcare system facilitates patient recruitment and trafficking,” he said. “The data from clinical trials is recognized by U.S. and EU (European Union) medical authorities and costs for phase II/III trials is lower than in the U.S.”
Parsippany, N.J.,-based NPS Pharmaceuticals recently announced a $1 million investment in the relocation of its research lab to MaRS. The company commercializes small molecules and recombinant proteins as drugs for the treatment of metabolic, bone, mineral and central nervous systems disorders.

NPS occupies the top three floors of the eight-story building. The facility includes chemistry labs with 24 eight-foot fume hoods, a vivarium and labs for molecular biology, tissue culture and pharmacology/histology. The facility also houses administration support areas, conference rooms and an area for future expansion. The company created 150 jobs as a result of the project.
NPS also has a research facility in the Toronto suburb of Mississauga.

SFBC Anapharm, a subsidiary of SFBC of Florida, is investing $2.4 million for the construction of a new facility in Toronto. It will house 150 beds for phase I clinical trials.
SFBC performs studies and phase I clinical research for the pharmaceutical industry.

Quebec City Offers Highly Skilled Workers

Compared to similar-sized urban areas, the Quebec City, Quebec, region is the most cost-effective place in the world to do business, according to Caroline Tremblay, consoler of Promotion, POLE Quebec Chaudiere-Appalaches.
“Taxes are among the lowest in North America, with a total corporate rate of 31.02 percent,” Tremblay said. “Labor costs in Quebec are among the lowest in the industrialized world at 15 percent less than in the U.S.”

The Quebec City region has a highly skilled work force, excellent educational institutions and a top-notch economic development network, said Johanne Boucher-Champagne, CEO of SFBC Anapharm, which has facilities in Montreal and Quebec.
“With stakeholders placing considerable emphasis on quality-on-life issues, the region is particularly well suited for business in which human resources are a key driver of success,” he said.

A recent benchmarking study done by the Conference Board of Canada ranked the Quebec metro area ahead of 10 Eastern U.S. metro areas for overall economic performance. The U.S. metros include Hartford, Conn.; Harrisburg, Pa.; Albany, N.Y.; Allentown, Pa.; Rochester, N.Y.; Portland, Maine; Syracuse, N.Y.; Providence, R.I.; Buffalo, N.Y.; and Springfield, Mass.
Quebec has a tradition of innovation, which results in a high concentration of research and development, internationally renowned research centers and cutting-edge research in many specialties, Tremblay said.

Franklin Lakes, N.J.,-based Becton, Dickinson and Co. (BD) announced in February the commitment of $34 million for a major expansion of its BD Diagnostics manufacturing operation in Quebec.
The capital investment supports acquisition of land, construction of a new facility, and the purchase and maintenance of equipment.
“We are pleased to be expanding in Quebec, which has a highly skilled work force and is the center of research and development operations for BD GeneOhm products,” said Bill Kozy, executive vice president of BD. “This expansion reflects the increasing demand worldwide for diagnostic tests that can detect microorganisms and deliver tests results within two hours, offering the potential for improved patient outcomes and lower costs of care.”

GlaxoSmithKlyne Biologicals (GSK) has an ongoing expansion project, estimated at $90 million, to increase its vaccine production capacity in Quebec in order to face a potential pandemic flu.
“With the acquisition of ID Biomedical in Quebec, GSK reinforces its commitment on the American vaccines market,” said Jean-Pierre Garnier, CEO of GSK. “This transaction follows the recent initiative to confirm its vaccine research and production network in North America, namely, the acquisition of the Corixa Corp. and the Marietta vaccine production facility in Pennsylvania.”

B.C. Life Sciences Sector Looking For More Growth

British Columbia’s life sciences sector has a web of interconnections – executives first mentor a startup into a success and then move on to another startup.
“Some of these people have been kicking around, starting up two or three major companies,” said Karimah Es Sabar, president of Life Sciences British Columbia. “I think more of that is going to happen now. It will happen in a more focused way, because these people are more sophisticated, they have learned a lot.”
Es Sabar points to Tony Holler, CEO of ID Biomedical, as an example of someone who successfully nurtured a local company to a stage where it attracted the attention of a major industry player, GSK, which will pay about $1.7 billion (Canadian) to acquire it.
Es Sabar said the attraction of a large multinational company to B.C. would help further develop the life sciences sector.
As for Canada as a whole, the administrative procedures to create new businesses are considerably more efficient in Canada than in other G7 countries, according to Anne-Marie Parent, a spokeswoman for the Trade Media Relations Office in Foreign Affairs and International Trade Canada.

“Canada ranks first among G7 countries for the fewest number of days (three) required for establishing a business, while the U.S. ranked second in the G7 with five,” she said. “In the recent Advantage Canada economic plan announced by the Department of Finance, the government is planning to establish the lowest tax rate on new business investment in the G7.”
To cement full access to the large and dynamic North American market – a market of 441 million consumers with a combined GDP of more than $16 trillion (U.S.) – Canada is working with the United States and Mexico to improve regulatory coordination and cooperation, Tremblay said.

Source: BW


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