Under the administration of Gov. Dannel P. Malloy, Connecticut has offered hundreds of millions of dollars in incentives to keep the likes of ESPN, Alexion Pharmaceuticals, CareCentrix and Bridgewater Associates from bolting to more business-friendly environs.
In Boehringer Ingelheim USA Corp., Malloy can breathe easily with the knowledge that one of the state”™s most profitable and cutting-edge employers is here for the long haul.
With annual sales of between $17 billion and $18 billion, Boehringer Ingelheim is the largest privately held pharmaceutical company in the world by sales, and the 12th largest including publicly traded firms.
The company, based in Germany, has had its U.S. headquarters in Fairfield County since the late 1970s, when the pharmaceutical giant ”” still run to this day by the Boehringer family ”” purchased a 300-acre former estate that straddles Ridgefield and Danbury.
“As you can tell from the site, Connecticut has been pretty good to us,” said Paul R. Fonteyne, gesturing at the company”™s sweeping campus and research and development facilities that are visible from his office windows and where $100 million in capital improvements are currently underway.
About $1 billion and 10 to 15 years of research, development and clinical testing go into each drug that ultimately makes it to the markets, said Fonteyne, the president and CEO of Boehringer Ingelheim (BI) USA, which has about 2,500 employees ”” including more than 1,500 scientists ”” at its Ridgefield site.
While not a household name like Pfizer, Johnson & Johnson or Bayer, BI currently markets at least 17 drugs that treat a variety of heart, nervous system and respiratory diseases as well as diabetes, urinary tract issues and other viruses.
“I think because it”™s privately held, because we talk mainly about our products … you don”™t hear the BI name so much, although many people will recognize our products,” Fonteyne said. “So there”™s no conscious effort to keep a low profile ”” it”™s just that we try to be purposeful about our work.”
Products marketed by BI include drugs like Spiriva, which treats a respiratory disease known as chronic obstructive pulmonary disease; Flomax, which treats symptoms resulting from an enlarged prostate; and Zantac, an over-the-counter heartburn treatment, among others.
Fonteyne said he expects the company”™s portfolio to grow significantly over the next several years.
“Every pharmaceutical company is really judged by how successful it is today, but more importantly, what types of innovation it”™s bringing for tomorrow,” he said. “Within the next two to three years, if all goes well, we could have close to a dozen new products on the market.”
Those drug candidates include a lung cancer treatment and diabetes medication, with BI recently filing for approval of both, and two medicines to treat Hepatitis C.
“We have more diabetes medicines in (2015), we have a second oncology drug in (2014 or 2015) ”” so it”™s a lot of stuff to work on, but that”™s what people here get excited about,” Fonteyne said. “It”™s unusual for the size of the company to have this many products in late stage development. Now, if we”™re really lucky, they”™ll all make it.”
The strong pipeline has led BI to invest $100 million in capital improvements, which include upgrades to a toxicology facility that can produce larger quantities of medicines for testing than a lab is capable of generating.
Additionally, Matrix Realty Group L.L.C., developer of the Matrix Corporate Center in Danbury that is adjacent to the BI property, announced last week that the pharmaceutical company renewed its 10-year lease for 327,000 square feet of space at the center, where Fonteyne said BI houses its 750-member clinical testing team.
“I think it”™s fundamentally good for the economy to have an employer like BI here that is just going to keep investing,” Fonteyne said. “There have been really very few challenges on expanding our footprint here.
“We”™re putting up new buildings that are going to be full of scientists,” he continued. “That can”™t be a bad sign. The U.S. is a key hub for innovation and Connecticut is well-placed to participate in that. There”™s no reason why it shouldn”™t.”
Growing the biosciences
Fonteyne applauded Malloy”™s Bioscience Connecticut initiative, through which the governor has proposed to invest $200 million over 10 years to grow the state”™s biosciences sector and to help boost startups in the field.
“I think it”™s really good because it”™s fundamentally about attracting the right people to Connecticut,” Fonteyne said, noting that he had spoken with Malloy on several occasions about the plan. “We”™re glad to see that happen, because sooner or later that will create opportunities for BI as well, either because these people will join BI after having come to the state or because we will find interesting projects that we will then acquire or invest in. It”™s music to our ears.”
With state and federal governments paying for about half the health care delivered in the U.S., Fonteyne said it is important to build a strong relationship with government.
“If the governor is committed to this initiative, he”™s bound to be committed to the health, first of his citizens, second of the biopharmaceutical industry,” Fonteyne said. “So that creates a positive conversation.”
Proceeding with caution
Fonteyne warned about discussions over changes at the state and federal levels to how health care and medicine is paid for through programs like Medicare Part D, which provides drug coverage to seniors.
He said Medicare Part D “has been very successful in saving seniors and the government a fair amount of money” since it was launched in 2007, adding that the program is running below initial cost projections for the federal government.
“That program represents about 30 percent or so of the sales of a company like this, and if the government were to decide on some short-term savings measures that would negatively affect us and physicians and hospitals and Medicare, it could have an impact,” Fonteyne said.
“Some of the discussions that have reared their head from time to time could mean a $300 (million) to $400 million difference in profit to a site like this. Not sales, profit. And so we watch that very closely.”
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