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Chinese pharma co. seeks $19M for Middletown campus

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The proposed project would be a major win for the state if landed, bringing more than 1,000 jobs according to officials. | PHOTO COURTESY OF STATE OF DELAWARE

MIDDLETOWN – A fast-growing Chinese pharmaceutical company seeking to land its first major American manufacturing site has been identified as the until-now codenamed mega prospect “Project Dragonfly” looking at nearly 200 acres in Middletown.

STA Pharmaceutical USA, a subsidiary of Shanghai-based WuXi AppTec, has applied to the state’s investment board, the Council on Development Finance, for a more than $19 million taxpayer-funded grant for its project. That sum would be by far the largest grant made under the Carney administration, if approved, totaling nearly four times that given to Amazon for its massive Boxwood Road fulfillment center.

STA, led by CEO Minzhang Chen, a former executive of Boston-based Vertex Pharmaceuticals, is a small molecule development and manufacturing firm. Chen has led the company from a research firm to a contract development and manufacturing organization (CDMO), aiding the development and manufacturing of small molecule drugs.

Delaware has a growing field of companies focusing on small molecule inhibitors, a developing therapy that is more targeted in approach with fewer side effects than traditional cancer therapies like chemotherapy or radiation, including AstraZeneca, Inctye, Prelude Therapeutics and NiKang Therapeutics. The pharmaceutical contract manufacturing global market is expected to reach $120 billion by 2027, growing at a high-single-digit compound annual growth rate, according to a recent Research and Markets report that identified STA as one of nine top companies in the space.

STA has received approvals in more than 95 countries for branded drugs and currently operates four facilities in and around Shanghai, China’s largest city on its central coast. In 2016, STA launched its American operations with a 4,200-square-foot research and development lab and manufacturing plant in San Diego.

Comparatively, planning documents submitted to Middletown and state officials in May show that STA Pharmaceutical’s proposed Delaware site would measure 1.74 million square feet, featuring at least seven buildings. The entire campus would be built out in phases on 190 acres off Levels Road currently owned by investment firm Sherman Capital Markets.

David Fleisher, senior managing director of commercial real estate advisory firm Savills, said that his client would manufacture active pharmaceutical ingredients and eventually package them in a “solid dose” form, like in a pill.

This farmland might become a major employer for New Castle County under a project working its way through local and state planning processes. | DBT PHOTO BY JACOB OWENS

“This site has really been focused on because it would allow the company to build its facility in a campus-style over a number of years and phases,” Fleisher told the Middletown Planning and Zoning Commission on May 20.

STA plans on constructing laboratory space to test its products, as well as some manufacturing and packaging operations for sterile and solid products. An administration building will also be central to the facility. The company anticipates employing up to 1,200 employees when the campus is completely built out, which could take years.

Early plans show 3,000 parking spaces, but Fleisher told planning officials the expectation is up to 1,500 parking spaces as operations will have multiple shifts of employees. The final design should have the site look more like a modern business park rather than an industrial facility.

“It’s important to note that Project Dragonfly has a global sustainability program that focuses on reducing emissions and employing environmentally friendly initiatives at their facilities, along with being the leading advocate for green chemistry solutions,” Fleisher told state planning officials during a May 26 Preliminary Land Use Service meeting. “These will be key elements in the engineering site development process.”

The Middletown site is only part of STA’s worldwide plans, as it announced in February that it had reached an agreement to purchase a Bristol Myers Squibb manufacturing plant in Switzerland, marking its entrance to the European market.

STA is also a part of the larger multi-billion-dollar WuXi corporate network, which has had a presence in the greater Philadelphia region since 2004 when WuXi AppTec opened lab space at the Navy Yard. WuXi labs and testing sites are operated in Pennsylvania, New Jersey, Minnesota and Georgia. The parent company has grown rapidly, employing more than 18,000 worldwide as of 2018, when it was named the Chemical & Engineering News’ Company of the Year.

The proposed project would take up much of the open space to the south of Amazon’s fulfillment center. | MAP COURTESY OF STATE OF DELAWARE

If the Delaware project clears state approval – Middletown has already signed off on the project – final engineering will be done this year and construction will start in 2022. Phase one of the campus should be completed by the end of 2023, and operations should begin by early 2024.

Phase one has yet to be defined by STA, although Fleisher said it is anticipated to include manufacturing for the active ingredients and the final drug product, the administration building, and the utility plant to ensure that further expansions could be supported.

“The plan is to start there at least, build out from there and get into the ultimate campus as business meets demand,” he told Middletown officials. “It’s going to be a number of years [for complete build-out.] You need the business demand for 1.74 million square feet, although you could build it fast.”

When informed of the identity of the company looking at Middletown, Michael Fleming, president of the Delaware Bioscience Association, called the project another “transformational opportunity for the state.”

Noting that Delaware has a strong heritage in the life sciences, a comparatively strong tax and quality of life climate, ample access to qualified workforce, and a need to build out world-class workspace, the potential investment by STA is an exciting prospect, Fleming said. As a CDMO capable of securing research and manufacturing work from major pharmaceutical companies around the world, the campus could become a major employment engine, he added.

“I think a lot of people don’t understand that there’s so many great job opportunities in manufacturing. These are highly skilled jobs, but many of them don’t require a bachelor’s degree,” Fleming said.

Reporter Katie Tabeling contributed to this story.

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