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How WuXi STA’s Project Dragonfly landed in Delaware

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WuXi Pharmatech STA Middletown Delaware

A WuXi Pharmatech Inc. employee works at one of the production facilities on the outskirts of Shanghai, China, in October 2007. This month, WuXi STA announced it would build a manufacturing campus in Middletown. | PHOTO COURTESY OF QILAI SHEN/BLOOMBERG VIA GETTY IMAGES

MIDDLETOWN – As Gov. John Carney recently stood at the edge of a soybean field at the end of a dead-end road on the southwest side of this burgeoning former farm town, he could begin to envision the high-tech manufacturing hub for some of the world’s cutting-edge drugs that will operate there within five years.

“It’s a really important win for us,” he told Delaware Business Times. “When I was in Congress and running for governor, I always said that if we could make big investments at our universities and try to develop that biopharma expertise, we could land such a manufacturing facility.”

The project confirmed June 28 by WuXi STA Pharmaceutical includes a seven-building campus developed over 189 acres off Levels Road, containing manufacturing plants for drug ingredients and final commercial forms, research and development labs, and administrative offices. By 2026, it will employ nearly 480 people, but it has expansion plans for as many as 1,200. If fully developed, the local investment by the Chinese company would likely approach $1 billion.

For generations, Delaware has been growing a biotech workforce in the Wilmington suburbs from major companies like AstraZeneca and Incyte and startups led by University of Delaware researchers. The arrival of WuXi STA to Middletown, however, will dramatically expand how companies think about Delaware, where they look to locate and, consequently, where Delaware’s population grows.

Started with a call

Delaware’s public-private economic development agency, the Delaware Prosperity Partnership (DPP), has already landed some high-profile wins in its short life, including Amazon and Delmarva Corrugated Packaging, but it has been in search of a high-tech employer that would bring high-paying jobs.

DPP first learned of the WuXi STA project – pronounced “woo-she” – through the Select Greater Philadelphia Council, the business attraction organization for northern Delaware, southern New Jersey, and southeastern Pennsylvania connected to the Chamber of Commerce for Greater Philadelphia.

Kurt Foreman | PHOTO COURTESY OF DPP

“There’s no wrong door into Delaware,” said Kurt Foreman, president and CEO of DPP, of the chance opportunity a year ago.

DPP officials met with the WuXi project team numerous times over the course of about a year to host site visits and meetings with community leaders – but the First State wasn’t alone in those pitches. At one time or another, there were some 70 different sites in the region being reviewed, according to Foreman, and Middletown was ultimately one of two finalists.

Richard Connell, a WuXi AppTec senior vice president and U.S. chief operating officer, said that WuXi’s criteria was fairly straightforward: it needed to be on the East Coast, have enough acreage to accommodate a massive campus, and have access to a workforce with the necessary skills.

Richard Connell | PHOTO COURTESY OF WUXI APPTEC

“In the end, you’re looking at a few places in this region, but at this particular [Middletown] property, everything just lined up,” he said. “I think the strategy of this global company is to continue to build facilities where we get the right workforce, the right partners, and develop things where our customers want us – in some cases that is driving distance from where they’re working.”

Middletown Mayor Ken Branner, who has orchestrated development of his town over more than 30 years in office, said he first heard from the company about a year ago when they were in their earliest fact-finding period. He only knew of them as Chinese pharmaceutical company representatives connected to “Project Dragonfly” – and in fact, he’d never learn their company’s identity until Delaware officials announced it through the Council on Development Finance agenda in June. (Company officials say there is no special reason for the Dragonfly name they utilized through the process.)

Middletown Mayor Ken Branner | PHOTO COURTESY OF MIDDLETOWN

“We met with them and talked about Middletown and what was attractive here, and then it sort of went dormant for a while,” Branner said, noting that reps reached back out about three months ago to enter more serious discussions.

Town officials met with WuXi officials to discuss site and infrastructure logistics, and the town’s planning and zoning commission signed off on the project while the mayor and council gave preliminary approval last month.

Who is WuXi?

WuXi AppTec is a 21-year-old, Shanghai-based global pharmaceutical, biopharmaceutical, and medical device company led by Chairman and CEO Ge Li.

Under its billion-dollar portfolio of companies is WuXi STA, a small molecule development and manufacturing firm led by CEO Minzhang Chen, a former executive of Boston-based Vertex Pharmaceuticals. Chen has led the company from a research firm to a contract development and manufacturing organization (CDMO), which aids in the development and manufacturing of drugs for contracted clients. It already works with industry leaders like AstraZeneca, Pfizer, Johnson & Johnson, GlaxoSmithKline, Sanofi, Abbvie and Lilly, among dozens of others.

WuXi STA Pharmaceutical reactor in San Diego. Similar for Middletown, Delaware

Shining reactors like these at WuXi STA’s San Diego site will likely be a part of the future Middletown site. | PHOTO COURTESY OF WUXI APPTEC

WuXi STA has received approvals in more than 95 countries for branded drugs and currently operates five facilities in and around Shanghai, China’s largest city on its central coast. It also recently announced plans to soon begin European operations in Switzerland. In 2016, STA launched its American operations with a 4,200-square-foot research and development lab and manufacturing plant in San Diego.

Comparatively, the planned Delaware site would measure 1.74 million square feet, featuring at least seven buildings. The entire campus would be built out in phases on land currently owned by investment firm Sherman Capital Markets.

According to Dean Childers, the project manager and future site leader, the first phase of construction would include 600,000 square feet of space in at least three buildings, including one for drug products, one for administration and one for drug substances. Construction is expected to start in May 2022, with the start of phase one operation planned for the first half of 2024.

WuXi STA Pharmaceutical campus rendering for Middletown, Delaware

The planned campus project would break ground next year, with operations beginning in 2024. | PHOTO COURTESY OF WUXI APPTEC

With an estimated phase one cost of $510 million, according to the company’s grant application, it’s feasible that the total investment would be upward of $1 billion once fully built out. The campus would be WuXi’s largest in the U.S. and would invest heavily into 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.

“You have to take the long view on these things. We do think the marketplace is going to reward companies like WuXi that make these kinds of investments in technology, different platforms for different customers, and so on. So, I think we’re quite optimistic that the small molecule space will be a very solid market,” said Connell, the WuXi executive.

Job diversity a plus

Perhaps the most exciting prospect about the WuXi STA project for Middletown is its mix of jobs, including manufacturing operators, lab technicians, quality assurance and quality control staff, scientists and management, administrative and warehouse support staff.

Childers told state officials that the minimum salary would be around $40,000, equating to more than $19 an hour, while state documents note that the average salary across the 479 jobs is $65,000, indicating that there will be plenty of higher-wage earners.

According to WuXi STA’s application, the 479 jobs include 242 engineering or skilled labor jobs, 192 professional or managerial jobs, and 45 unskilled labor positions.

Michael Fleming | PHOTO COURTESY OF DELAWARE BIO

Noting that Delaware has a strong heritage in the life sciences, a comparatively strong tax and quality of life climate, ample access to a qualified workforce, and a need to build out world-class workspace, the potential investment by STA is an exciting prospect, said Michael Fleming, president of the Delaware Bioscience Association. 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.

Foreman, of DPP, noted that state officials pulled together panels of leaders from the University of Delaware, Delaware State University, Delaware Technical Community College, the state’s Career Pathways program and its vocational tech schools to discuss how they could support WuXi’s workforce needs over the coming decade.

Branner said that he’s excited to bring an employer with such job diversity to his town, giving all residents an opportunity to benefit.

“It’s a good mix of everything combined and so reminds me of my early years at DuPont,” said the retired DuPont chemist. “It’s going to be a good fit for us.”

State investment

As part of Delaware’s pitch to land the WuXi STA project, DPP backed a grant application to the state’s taxpayer-backed Strategic Fund, which subsidizes investments that create or retain jobs.

The more than $19 million investment unanimously approved by the Council on Development Finance on June 28 is the largest made during Gov. John Carney’s term, totaling nearly four times that given to Amazon for its massive Boxwood Road fulfillment center last year. It is the largest grant approved by the state since Bloom Energy was given $16.5 million to locate in Newark in 2011.

WuXi STA was granted $3.25 million in a job performance grant to hire 479 people by 2026, a capital expenditure grant of up to $15.3 million to aid in the facility’s construction cost, and a training grant of up to $500,000 to help prepare workforce for the jobs that would be at the manufacturing plant.

The company also reportedly plans to seek $2 million from the state’s separate Transportation Infrastructure Investment Fund this year to aid in the funding of road and infrastructure development to the site.

At the CDF hearing, WuXi STA was supported by the Delaware Bioscience Association, Delaware State Chamber of Commerce and Delaware Contractors Association, along with the town of Middletown. The lone opposition voice came from a state Libertarian Party leader who argued that the sheer size of the grant to a foreign, billion-dollar company was better spent on local small businesses instead.

State officials reported that even with the large allocation to WuXi STA, however, the state’s Strategic Fund for grant investments in projects would have about $20 million remaining.

What’s next?

With the deal done, local and state officials believe WuXi STA will be an anchor to biotech firms looking to settle near its contracted R&D or manufacturing partner. Plentiful land with favorable tax climates and a constantly growing skilled workforce will prove to be fodder for more developments, they believe.

“The key is really making sure that we deliver on the promises we make to the companies,” DPP’s Foreman said, adding that includes helping WuXi through the build-out process and sourcing and training a workforce.

WuXi STA Pharmaceutical site sign in Middletown, Delaware

This farmland is set to become a major employer for New Castle County under a project by WuXi STA. | DBT PHOTO BY JACOB OWENS

Mayor Branner said that he expects many ancillary companies, whether the biotech firms that would be WuXi clients themselves or suppliers and manufacturers connected to WuXi’s needs, will take a look at locating in town with the project now announced. New Castle County Executive Matt Meyer agreed, pointing to how DuPont’s operations led to a wealth of spin-offs and support companies to locate in the Wilmington suburbs. WuXi’s arrival could lead such firms to look farther south than has been typical.

“It never hurts to have your customer or supplier down the road,” Meyer added.

The area’s already booming housing market – median home sales have increased $100,000 in five years to now exceed $400,000, according to Redfin – could subsequently grow as well. Branner said that he’s been receiving congratulatory calls and supportive messages from town business owners for bringing additional well-paying jobs into the fold.

“It’s really one of those once-in-a-lifetime opportunities to be able to land a company like this,” Branner said.

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    Thank you for a great article that supports our efforts

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