It's Ikea for Drugmakers

NJBIZ, Sep 19, 2005 by Strupp, Joe

A Swedish maker of prefab pharmaceutical factories has a toehold in New Jersey

WHEN PHARMADULE, a Sweden-based builder of modular pharmaceutical-processing units, wanted to open its first U.S. office two years ago, executives did their geometry. "If you draw a 50-mile circle from that location," says Pharmadule President Par Almhem about the company's Bedminster office, "you would include about half of the big pharmaceutical companies in the U.S."

True enough. Merck, Schering-Plough, Pfizer, Johnson & Johnson and other big names have made northern and central New Jersey their home for years. As Pharmadule sought to tap the North American market for its specialized pharmaceutical facilities, it was a natural choice.

The company's premier products are what amount to prefabricated drug factories. Think of modular homes, but instead of three bedrooms, two baths and a kitchen, Pharmadule installs the latest equipment, production lines and other processing gadgets tailored to make medicines. "Instead of constructing a building, we manufacture it in our facilities in Sweden and bring them over here ready to construct," says Gordon Leichter, one of two business-development directors who line up projects for the company out of the Bedminster office. "Pharmaceutical manufacturing is quite complex and Pharmadule has been able to design these products that fit the need."

When Pharmadule decided to get closer to its North American customers it took that logic a step further. Not only did it set up shop in Somerset County, it brought in two real Jersey guys to run the place.

There's Leichter, who joined the firm when the Bedminster office opened in 2003. He has multiple degrees from Thomas Edison State College in Trenton and had worked with the U.S. unit of Getinge, a Swedish medical-products manufacturer, in Bridgewater. Trained as an electrical engineer, he now lives in Rochester, New York, and splits his time between an office there and the Bedminster headquarters.

The other local is Scott Kaplan, a Somerville resident and Rutgers graduate with long experience in related pharmaceutical industries. Kaplan, who is trained as a civil engineer, says the Bedminster office allows him and Leichter to "be local for visits with the key decision makers," gaining a presence in "as active a market as there is."

The duo has spent the past two years building up Pharmadule's North Americanbased sales to the tune of some $150 million or more per year in revenue, says Aknhem.

Pharmadule started out in Europe in 1986 doing its own pharmaceutical manufacturing, but has since grown by building drug-making; telecom; and gas and oil production facilities.

The New Jersey operation handles only pharmaceutical and biotech production units, however. And the market it serves spans nearly the entire Western Hemisphere.

"We are handling any project from North and South America from this location," Kaplan says. "We are also dealing with specific clients who have operations in the New Jersey/Pennsylvania area."

Projects negotiated out of Bedminster have ranged from a $35 million bulk vaccine manufacturing facility in the Poconos for Sanofi-Pasteur of Swiftwater, Pennsylvania, to a $15 million oral-solid-dosage facility in Spain for Whitehouse Station-based Merck.

"The benefits are speed and execution and we have been able to benefit from both," says Carrier Li, a Merck project-design manager based in New Jersey, about the local Pharmadule connection. "From a communications point of view, it is easier talking to them because of the proximity."

There were also three projects for Eli Lilly, based in Indianapolis. Spanning locations from Indiana to Eqypt, these have brought in more than $130 million in revenue.

"We've bought into it," says Lee Karras, general manager of Baxter Pharmaceutical Solutions of Bloomington, Indiana, about Pharmadule's prefabricated approach. "The thing they bring to the table is their specialty in pharmaceuticals. They save us a tremendous amount of time."

Pharmadule executives hope to expand the Bedminster location and open other permanent offices nationwide soon. But they say there could be a slow period coming up for their operations in the U.S. They fear that the U.S. Food and Drug Administration may react to problems like those with Merck's Vioxx painkiller by becoming more stringent with approvals.

"For the next year or so, I see us bringing in more engineering people [to the U.S.] but not manufacturing," says Almhem.

Almhem, who works out of a California office and visits the Swedish headquarters often, adds that the New Jersey site is convenient for him as well. "It is only a half-hour from Newark Airport, which has direct flights to Stockholm as well," he said.

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