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Boston-based firms that build biomanufacturing space see big opportunity in Raleigh-Durham

February 5, 2024

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3D rendering drone view of a vast, modern life science community

Boston-based firms that build biomanufacturing space see big opportunity in Raleigh-Durham, posing a threat that a key pillar of our region’s economy could grow faster elsewhere

MORRISVILLE, N.C. — Ten minutes from the Raleigh airport, the future of biotech is under construction. On either side of a new stretch of four-lane highway sit two $1 billion biomanufacturing campuses, which will bring a combined 2.5 million square feet of research and development and advanced manufacturing space to a region that has become the No. 1 place where North America makes prescription drugs.

One campus, called Pathway Triangle, is being built by a developer from Boston, King Street Properties. King Street — which has projects in Cambridge, Waltham, Allston, and Lexington — is building a similarly vast biomanufacturing campus in Devens. But these days it also sees a land of opportunity 700 miles to the south, in North Carolina.

And King Street isn’t alone. Most of the major real estate players in Greater Boston’s life-science world either have a presence in North Carolina’s Research Triangle area or are considering one. They have to. It’s where their tenants are looking to grow.

“You’ve got the global names,” said Chris Rouches, a King Street managing director. “The market has something these companies want.”

Maintaining Massachusetts’ competitive edge is top of mind these days for political and business leaders alike. And, to be clear, few places on the planet compare to Greater Boston’s drug making expertise. But the life science industry isn’t just about researchers with PhDs. New drugs have to be physically produced somewhere, too. And while biotech has become the crown jewel of Greater Boston’s economy, other parts of the country are eager to pluck a few of those gems for themselves.

One place especially well positioned to do so: Raleigh. It too has elite universities and a talented workforce. But it also has expansive land, flexible permitting, and — crucially for large-scale manufacturing — lower costs to do business.

Electric rates for industrial users in North Carolina are less than half those in Massachusetts, according to federal data. Construction workers here earn on average $47 per hour, per the US Bureau of Labor Statistics. In North Carolina? $33.

And housing prices? Nowhere near the stratosphere of Boston. All these factors make it a very appealing place for drugmakers who want to open a plant in the United States but keep their costs in check, said Mark M. Sweeney, a longtime site selection expert in South Carolina.

“You can do onshoring and locate a facility in a high-quality location around Raleigh-Durham,” he said. “And almost every major factor is going to be less expensive than Boston.”

Demand for biomanufacturing — the making of materials used in medicines and other products — is growing fast. Third-party manufacturers have long waitlists, and many drug companies are bringing biomanufacturing back to the United States to speed and simplify product development.

Massachusetts has benefitted too. At least 10 biotech plants have recently expanded or are under construction here. Today, twice as many people work in biomanufacturing in Greater Boston as do around Raleigh, according to real estate firm JLL. But JLL expects the business will grow faster in Raleigh, and recently ranked it — not Boston — as the No. 1 biomanufacturing market in the country.

Each of these expansive and expensive facilities can create hundreds of jobs — not so much for scientists with PhDs as for workers with technical degrees and experience. And that’s the core of North Carolina’s workforce.

Raleigh-Durham also has top-tier universities — Duke University, the University of North Carolina at Chapel Hill, N.C. State — where spinouts have fostered a growing cluster of research and development. Add abundant land, a growing talent base, and “an increasingly favorable business environment,” and “Raleigh-Durham is uniquely positioned to meet the need” of drug developers, the JLL report states.
That’s drawing big players.

The Japanese conglomerate Fujifilm may be best known for its cameras, but it’s also a major contract drugmaker. It has an 80,000-square-foot “collaboration center” in Cambridge and a smaller space in Watertown, but it’s now building a $2 billion manufacturing facility in Holly Springs, about 25 minutes south of Raleigh airport.

The campus is reached by a nondescript two-lane road lined with tall trees and small local businesses — an auto-body shop, a gymnastics gym, a brewery. But at nearly 2 million square feet, it will be North America’s largest contract drug factory and has already attracted its first occupant: Johnson & Johnson subsidiary Janssen Supply Group. The facility itself is across from a 687-acre master-planned community, with homes, restaurants, a golf course, and tennis and pickleball courts.

On a recent sunny day in Holly Springs, heavy machinery trod the red clay soil of the North Carolina Piedmont. Massive gray concrete boxes — about three stories high and as long as multiple football fields — that will eventually hold sophisticated manufacturing facilities stand already built.

Fujifilm is one of several big biotech companies that have moved to Holly Springs, a growing town about a half hour from the 7,000-acre Research Triangle Park. When the corporation announced its decision to locate there in 2021, its officials touted a “rigorous data-driven evaluation process.”

Fujifilm’s existing facilities in nearby Morrisville and the region’s strong pool of technical talent were big factors, the company said. It probably didn’t hurt that Raleigh-Durham is a less expensive place to
operate than other established life science hubs such as Boston, San Francisco, and New Jersey.

Cost tends to be a bigger factor for companies deciding on locations for big manufacturing facilities than for headquarters or high-end research operations, where they may prioritize access to talent. But there, too, Sweeney warned, Greater Boston’s advantage could erode.

“The economic development community there would be wise to recognize that there is a threat to even that part of the business with the Raleigh-Durham area,” he said. There also tends to be a clearer picture in North Carolina of what can be built, and when.

Permitting even a small project in Greater Boston can take months. By contrast, getting approvals for a modest interior fitout at one of King Street’s Morrisville projects took just a few weeks, Rouches said. Local economic development operators are easy to deal with, he said, and listen to what private industry needs. “There’s still room to grow,” he said. “And they’re jumping on it very eagerly.”

Massachusetts has its success stories too. King Street’s 45-acre Pathway Devens project has landed several major tenants, in large part because the town and quasi-public agency MassDevelopment, which oversees redeveloping the old Fort Devens army base, took steps to smooth complex permitting. Across the street from Pathway, Bristol-Myers Squibb operates an 89-acre campus, and in June it received approval to expand.

Experts agree there’s opportunity in both markets. Greater Boston is unmatched in its concentration of universities and their track record in spinning research out into new companies and patents. Education remains the region’s sharpest advantage.

But North Carolina has education strengths, too, particularly when it comes to training blue-collar workers for highly skilled jobs — exactly what biomanufacturing facilities are looking for. Massachusetts is working on this, too, with new apprenticeships and training programs. But North
Carolina has taken it to another level.

In 2022, Wake Technical Community College and Durham Technical Community College launched RTP Bio, a workforce development partnership with big-name drugmakers. On Wake Tech’s RTP campus sits a gleaming new Lilly Science and Technology Center, full of technical equipment and products to train tomorrow’s workforce. Amgen, too, has a lab outfitted with its own equipment to train future employees for a facility that isn’t even open yet.

During a tour of the facility, the presidents of Wake and Durham Tech look through a set of big windows and point. Out there, in the abundant North Carolina sunshine, lay acres of land eyed for yet more life science development, all of it owned by Longfellow Real Estate Partners, a developer based in downtown Boston.


From Catherine Carlock at the Boston Globe:

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