There has been a lot of expansion in the contract manufacturing corner of the market, often with state or local backing. But not every deal is a sure thing.
That has become evident with a foreclosure lawsuit brought by Greenwood, IN, which would like to retrieve the money it put up to jumpstart a $28 million insulin manufacturing plant that was also supposed to produce jobs for the community. The town put up $8.4 million toward the 50,000-square-foot $28 million plant proposed by Elona Biotechnolologies, a company founded by a former Eli Lilly ($LLY) researcher, according to the Indianapolis Business Journal. But the plant hasn't started production, efforts to bring in new investors are stalled and the city is tired of waiting. It has filed a foreclosure lawsuit, hoping to sell the plant and the equipment it helped fund and get back its investment, Krista Taggart, attorney for the Indianapolis suburb, told the newspaper.
The project started in 2010 when Elona officials said they intended to make an insulin biosimilar and that they expected to hire 70 people in 5 years. A consultant for the city estimated the plant would contribute about $500 million to the local economy over 10 years. The town loaned $6.4 million toward construction of the plant, then gave Elona $500,000 for equipment and $1.5 million to help it win approval from the FDA for its insulin. The funds were backed by a tax increment financing district that was expected to generate new tax dollars from businesses attracted by the development. The newspaper said officials with the company, which included founder Ron Zimmerman and several family members, could not be reached for comment and that the phone at the plant had been turned off.
With a tight job market and the allure that comes with well-paid positions at drug manufacturing plants, cities, states and even countries have been ready to open up their wallets in hopes of nabbing some of those jobs. Catalent Pharma Solutions got about $2.8 million worth of tax breaks for expanding a plant in Kentucky and the expectation it would hire 90 workers over several years. Hospira ($HSP) could get as much as $13 million in benefits for making $85 million in plant upgrades and a pledge of 200 new jobs for a facility in North Carolina. But on a percentage basis, neither of those investments comes close to the money that Greenwood put up, which amounts to 30% of the projected cost.
- read the Indianapolis Business Journal story