Berlex to build state's first big biotech drug factory

E-mail E-mail this article
Print Print this article
Print Search archive
Most read articles Most read articles
Most e-mailed articles Most e-mailed articles
The state's first major factory to make biotech drugs is coming to south Snohomish County, where Berlex Laboratories will build a $60 million plant with 70 new, highly skilled jobs.

The factory is considered a competitive coup for the state, whose officials would like to see biotech become a catalyst for economic growth. The region already is ranked among the nation's top biotech centers based on research and development, but it lags in manufacturing. Some officials worry the region's edge could be lost if the products coming from local research are manufactured elsewhere.

Now officials can hope other companies will follow the lead of Berlex, the American part of a $5.8 billion-a-year German company — Schering AG — that arrived in the Northwest two years ago by buying a piece of Immunex. For Berlex, the factory represents a high-stakes bet that it can pry open a bountiful new market for its drug Leukine.

The expanded production is a gamble that the company can get the drug approved for treating Crohn's disease, a painful inflammatory condition of the intestines that afflicts 300,000 to 500,000 Americans.

For the region, the plant marks the first time a company has locally invested in a large-scale factory to make biotech drugs emerging from its research and development labs. It also will pump an estimated $850,000 a year of tax revenue into state and local governments.

Berlex bought the 16-acre site in south Snohomish County after a global search. The land for the factory is being carved out of Opus Northwest's 90-acre Northpointe Corporate Center north of the intersection of Interstates 5 and 405. Berlex has workers in both Seattle and Bothell.

Ground is expected to be broken later this summer, and the four-building campus is scheduled to be certified for production by the Food and Drug Administration by late 2006 or early 2007. Room is being left for future expansion, to make more Leukine or other biotech drugs, and to employ 180 there if it chooses to move current manufacturing workers from Seattle and Bothell.

Initially, Berlex is outfitting the plant to produce Leukine, a genetically engineered drug developed 13 years ago by Immunex to stimulate the re-growth of white blood cells for patients wracked by chemotherapy. Berlin-based Schering AG, Berlex's parent company, bought the drug for $380 million two years ago, to diversify beyond birth-control pills and strengthen its foothold in the American health-care market.

Leukine isn't one of Schering's top 10 global sellers, but the company was impressed with results last year from a 124-patient clinical trial of Leukine against Crohn's disease, a painful inflammatory condition of the intestines. It is investing many millions in a larger clinical trial later this year to confirm it works. If that testing succeeds over the next two years, the factory will be ready by then to produce more Leukine.

To Berlex, the drug's new use could be worth hundreds of millions of dollars a year — it currently costs patients or their insurers $245 per shot, and it may require daily shots over several weeks.

If the Leukine trial fails, Berlex said it has backup options. It could re-tool the new plant to make other biotech drugs it may acquire, or do contract manufacturing for other companies.

David Carlson, Berlex vice president of biotech drug manufacturing, wouldn't be specific about the new plant's capacity but said it will at least double production of Leukine. He said the company chose to build in Snohomish County after closely scouting other West Coast sites. Carlson said Berlex's main reason for staying here is its desire to retain the workers who know how to make Leukine, and there was a chance the company would lose them if a factory was built elsewhere.

"There's nobody that knows Leukine better than the people here, and Berlex recognizes that," Carlson said. "This is really a framework the company can build on for the future."

Scott Morrison, U.S. life sciences leader for Ernst & Young in Palo Alto, Calif., said the factory, while not huge by industry standards, is bound to make other places with biotech aspirations envious. Earlier this month, delegations from 49 states and 60 countries came to San Francisco for the industry's annual convention, trying to woo companies to move labs or factories into their areas.

"This is another feather in the hat of the Seattle area," Morrison said. "These companies are becoming big very fast, and everyone realizes we're still at a low point in the technology curve, and we're working our way up. It will be decades before the industry matures."

Berlex said it didn't receive any special deals or tax breaks from Washington state or local governments, other than a sales-tax credit for manufacturing equipment that's part of existing law. But it plans to lobby in Olympia for more sweeteners.

Berlex spokeswoman Cathy Keck Anderson suggested Washington consider offering biotech manufacturers a tax break, as the state does for younger biotech companies that still are mainly focused on research and development.

"To have a fully commercial and mature industry, you (Washington state) have to look at incentives for commercial (biotech drug) manufacturing," Keck Anderson said. "Otherwise, you'll always be exporting your intellectual property."

Deborah Knutson, president of the Snohomish County Economic Development Council, who helped lure the factory, said she is thrilled by Berlex's decision and hopes it will send a signal to other biotechs that the county has a pool of skilled contractors, manufacturing workers and affordable land.

As research-based companies in Seattle grow and need to manufacture their products, she said, she hopes they will look to Snohomish County.

"We absolutely have to diversify from aerospace, and this is it," Knutson said.

Carlson said Berlex's local employees, many of them Immunex holdovers, will be relieved to hear the news. Berlex never showed any signs of pulling out of Washington and has increased from 150 to 200 workers locally the past two years. But some wondered whether Berlex had a future in Washington, or would find someplace cheaper to do business, he said.

"This is the kind of commitment a lot of people here have been looking for," Carlson said.

Luke Timmerman: 206-515-5644 or

Berlex Laboratories

What it is: The American wing of Schering AG, a $5.8 billion drug company based in Germany.

Founded: 1979.

Employees: 200 in the Northwest; Schering has 26,000 worldwide.

What it sells: Birth-control pills, hormone therapies, drugs for multiple sclerosis, cancer and diagnostic-imaging materials.

Tax impact of new factory: An estimated $850,000 a year to state and local governments.

Northwest origins: Arrived in July 2002 when it purchased the cancer drug Leukine from Immunex.