N O R T H C A R O L I N A B I O T E C H N O L O G Y C E N T E R
NC Biotechnology Center
Your Roadmap for U.S. Expansion: Insights from Deloitte Consulting and Medicago USA
Matt Szuhaj, Deloitte ConsultingMike Wanner, Medicago USA
Mark Lombard, NC Biotechnology Center
Deloitte Consulting LLP
NC Biotechnology Center Webinar – Location Strategy Considerations
Matt Szuhaj
Deloitte Real Estate and Location Strategy Practice
Over 8,000 site selection projects completed since practice founding 1919
Largest site selection consultancy built to advise clients on the most complex location strategy and site selection decisions
A dedicated team of 25+ practitioners focused on global location strategy and site selection
Deep understanding of issues critical to optimal location decisions:– Variable operating costs, conditions, and risks
– Labor market quality & availability
– Logistics/supply chain/infrastructure issues
– Utilities infrastructure and issues
– Real estate and site issues
– Taxes and incentives
Amgen - Asia operations market entry Express Scripts - North American deployment strategy Alcon/ Novartis - European country headquarter location Herbalife - US and EMEA deployment strategy Dendreon - Europe collection center location strategy Johnson & Johnson - China manufacturing strategy Novartis - US manufacturing location strategy Biomarin - Global manufacturing strategy Stryker- Asia manufacturing location strategy
On the ground experience in over 60 countries worldwide
Global Expertise
Deloitte’s Capabilities Sample of Recent Client Engagements
Market Entry Site Selection & Location Strategy
Real Estate & Incentives
On-shoring & Off-shoring
Footprint Optimization
Program Delivery & Management (PMO)
Location Strategy Considerations
Three Key Drivers for Expansion
Talent MarketAccess
Cost
Location Strategy Considerations Across the Life Science Value Chain
– Accessibility of Venture Capital
– Capital Costs– Operating Costs
– Capital Costs– Operating Costs
(taxes and labor)– Incentives
– Operating Costs (taxes and logistics)
– Incentives
R&D Clinical TrialsBulk Manufacturing and
Fill/FinishDistribution
– R&D Presence– Availability of
Resources– Regulatory
Environment– IP Protection & Ease
of Commercialization– Accessibility– Quality of Life
– Availability of Talent– Availability of
Medical Facilities and Networks
– Appropriate Population for Testing
– Regulatory Environment
– Availability of Skilled Labor
– Availability of Support Resources
– Regulatory Environment
– Business Disruption Risk
– Accessibility
– Availability of Labor– Regulatory
Environment– Proximity to
Markets/Customers– Business Disruption
Risk– Quality of Life (cost
of living)
Costs
Conditions
North Carolina Strengths
North Carolina Key Attributes that Affect Location Strategy Decisions
Strengths
Weaknesses
– Skilled labor pool– Quality of Life– Availability of resources/support– Regulatory environment– Utility costs– Capital costs– Labor costs– Cost of living– Accessibility– Business disruption risk– Culture of innovation– Tax environment– Access to venture capital
Key Attributes
Poll Question:
Is your company planning to expand to the United States in the next:
A. 1 yearB. 2 yearsC. 5 yearsD. 10 yearsE. None of the above
© Medicago Inc.All rights reserved
CONFIDENTIAL9
Business Review Webinar Medicago’s
Mike WannerVP – US Operations
February 23rd, 2012
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
Company Overview
Focus Vaccines and protein based pharmaceuticals
Manufacturing technology Transient expression in Tobacco
Vaccine technology Virus-like particles
Headquarters & cGMP facilities
Quebec City, CanadaResearch Triangle Park, NC, USAGénopole d’Evry, FRANCE
Clinical stagePandemic Flu H5 – Phase II Canada - completePandemic Flu H5 - Phase I USA - DARPA/IDRISeasonal Flu – Phase I USA - complete
Financing TSX: MDG, raised $65M in 2011
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL11
Products
Product Stage of developmentMedicagoPandemic flu VLP Phase 2 completedSeasonal flu VLP Phase 1 completedVLP vaccine 1 Animal studies ongoingVLP vaccine 2 VLP development
PartneredIDRI/DARPA (GLA + ID) Phase I PATH Enhanced flu VLP Animal studies ongoingVLP vaccine 1 (Big pharma) Prep. for animal studies Ebola (USAMRIID) Prep. for EM confirmationBiodefense product Grant application
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
Facilities
HTP Discovery platformsVLPExpress
cGMP large scalePandemic, seasonal flu
and other vaccines
Research
Development
Commercialproduction
cGMP Pilot clinical scale
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
Medicago USA• Based in the Research Triangle Park, North Carolina
– 120M doses pandemic or 40M seasonal vaccine per year– 12 months to build - $36M (building + equipment)– 97,000 sq ft facility of which 27,000 is greenhouse– 90,000 plant capacity in the greenhouse– Customized robotics/infiltration equipment– Designed as a multi-product facility
• $21M in funding from US Department of Defense (DARPA)– Goal: produce 10M doses of H1 VLP in one month
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL14
Medicago Location in NC
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
Why NC – RTP?• Partnership with
Alexandria Real Estate
• Experienced large-scale green house contractor (KBR) and engineering firm (ClarkNexsen)
• Access to biotech / ag-biotech talent
• Likelihood of success working with tobacco
• Strong support from NC, BIO, NC Biotech Center, Durham Cnty
RESULTS• Facility occupation in 12 months• Operational readiness one month after moving in to facility• Phase-appropriate approach to validation (GMP)
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
US Operations Staff66 total staff • Mike Wanner, VP of US Op Merial, 3 biotech start-ups• Todd Talarico, Sr. Dir of Ind Proc Alphavax• Dave Dumers, Dir of QA Wyeth/Pfizer• Kiyomi Carter, Dir of Project Mgt Biolex, Eli Lilly• Bruno Pancorbo, Ind Process Mgr Alphavax• Joe Sitko, Dir of Engineering Bristol Myers, KBI• Marianne Lorenc, QA Manager Wyeth/Pfizer• David Henry, Dir of Ind Proc Wyeth/Pfizer• Greg Miller, Facility Manager BD Diagnostics, BioMerieux• Charles Bryant- Greenhouse Mgr Athenix (BayerCropScience)• Shay Grogan– Fermentation Spv. Merck (Diosynth)• Dominic Risko – QC supervisor Eisai, Diosynth, Athenix• Jedidiah Leviner, Systems Spt Mgr Avid Solutions• Charlie McElhannon, GH Spv BASF
Nearly every hire is NC-based16
© 2010 Medicago Inc.All rights reserved
CONFIDENTIAL
7 Triangle Drive, Durham NCKeys to Success
• Vastly experienced and knowledgeable team from Medicago-Quebec
• Medicago is run as a single company
• Immediate contributions of newly-hired US team
• Open, collaborative, honest relationship between Medicago, ARE, KBR and Clark Nexsen
• Partial occupancy strategy
Case Study: Novartis North Carolina
Novartis sought a strong business operating environment where they could execute and move to
market quickly
– Project mandated by US government -limited domestic influenza vaccine manufacturing capacity
– Pioneering new influenza manufacturing methods and products – cell culture v. traditional avian based processes
– Competitive funding for the project from the Department of Health and Human Services
– Facility schedule linked to clinical trials and flu season
– Technology transfer from existing European operations
– Chiron acquired by Novartis during the project
– Schedule requirements
– Department of Health and Human Services requirements
– Favorable tax climate
– Labor availability
– Suitable site with flexibility for expansion
– Appropriate infrastructure
– Favorable operating conditions
– Moderate operating costs
Business Situation / Challenges Project Drivers
Selection made based on combination of tax structure, labor availability, labor costs and potential incentives
Selection based on access to skills, appropriateness of site and infrastructure, operating conditions and costs
Selection based on refined labor market evaluation, site and infrastructure review, regulatory and risk assessment, and operating costs
Selection based on state and local government support for the project
Select community
for the project
Deloitte led Novartis through a structured iterative approach to screen, identify, compare, and analyze
location options in the United States
Initial state screening
Additional state/community screening
Detailed due diligence
Investment agreementnegotiations
Domestic Market (50 states) Approach
Deloitte and Novartis identified optimal labor markets, operating environments, and structural costs prior to
engaging in incentive negotiations
Initial Screening Additional Screening Detailed Due Diligence Investment Agreement
Favorable tax structure
Labor availability
Indexed labor costs
Favorable incentives
Access to relevant skills
Acceptable site & proximity
Appropriate infrastructure
Operating conditions
Moderate operating costs
Labor market evaluation
Site and infrastructure review
Regulatory and risk review
Business conditions
Refined operating costs
Grants
Tax credits /abatements
Training
Recruiting
Infrastructure
Site preparation
Entitlements
13 States 5 Communities 3 Communities 2 Communities
Novartis selected Holly Springs, North Carolina
Raleigh, NC
The community best met the project requirements and was selected for the new facility
North Carolina Biotechnology Center
Mark Lombard, MBAProgram Director, Bioscience Industrial Development
23 February 2012
Supporting Biotechnology Research, Business and Education Statewide Since 1984
N O R T H C A R O L I N A B I O T E C H N O L O G Y C E N T E R
North Carolina
• Superior Science• Thriving Industry
• World-class Workforce• Strengths Statewide
• Long-term Commitment
North Carolina’s Competitive Advantage
N O R T H C A R O L I N A B I O T E C H N O L O G Y C E N T E R
Bay Area
San Diego
Boston
Metro DC
North Carolina
N O R T H C A R O L I N A B I O T E C H N O L O G Y C E N T E R
North CarolinaBiotechnology Center
Mark LombardProgram Director, Bioscience Industrial Development
North Carolina Biotechnology CenterResearch Triangle Park, NC
www.ncbiotech.org
