Why LakePharma left a Worcester project for Hopkinton, allowing a Chinese competitor to take its place
Photo | Grant Welker
LakePharma was initially negotiating to move into the Worcester Business Development Corp. campus at the former Worcester State Hospital site, but the company pulled out after it wanted a more pad-ready site.
LakePharma CEO Hua Tu.
LakePharma, Inc. wanted to expand its presence in Massachusetts, and a planned biomanufacturing campus at the former site of the Worcester State Hospital seemed like a good opportunity.
The California company was going to bring 150 jobs and invest heavily in Worcester, but a Chinese competitor took its place after LakePharma decided it couldn't wait any longer and moved into a Hopkinton facility.
Massachusetts, specifically the Boston area, has a booming biotech cluster. The industry has grown by 28 percent from 2008 to 2017, and the industry paid an average annual salary of just under $150,000 in 2017, according to the Massachusetts Biotechnology Council.
“It's the No. 1 biotech cluster in the world,” LakePharma CEO Hua Tu said.
According to MassBio, more than 500 biotech companies and 48 colleges occupy the Boston-Cambridge area. Those figures dwarf the Central Massachusetts numbers of 50-plus and 16, respectively.
LakePharma had been in Worcester since acquiring BlueSky BioServices in 2016. That facility at the Worcester Polytechnic Institute campus is still operational and the headcount has grown, but the company wanted a larger space.
In late 2016, LakePharma began discussions to increase its presence in Worcester and continue to grow Worcester as a biotech hub by anchoring a 44-acre biomanufacturing campus at the former site of the Worcester State Hospital.
The company was even publicly cited by Worcester lawmakers like State Rep. James O'Day (D-Worcester) when a state law was passed to convey state-owned land parcels to the Worcester Business Development Corp.
LakePharma needed a shorter timeline
The conversations between LakePharma and WBDC continued about midway through 2017, but despite enthusiastic conversations about the project, the discussions never approached an agreement, according to LakePharma.
Worcester has great potential to become the next breeding ground for biotech but requires a large player coming in to kickstart that initiative, Tu said.
“We thought we would be the one, but it didn't work out,” he said.
The timeline for construction for a facility that LakePharma wouldn't own, a projected two years, was too long.
When decision-making time came for LakePharma, demolition hadn't even started at the WBDC site. Demolition eventually began in 2018 after a $15-million state grant was awarded for the project in October.
“That two years can turn into three or four years,” Tu said. “It was out of our control.”
A shell building outfitted for a biologics company like LakePharma should have been built in advance, said the 10-year CEO and 21-year biotech expert.
“The market is strong,” he said.
WBDC declined to comment for this story.
Growing in Hopkinton
With a desire to move quickly, LakePharma changed gears, and in December 2017 the company purchased a 69,000-square-foot vacant biomanufacturing building in Hopkinton for $4.6 million.
That move coincided with a announcement that same month of the company's raising of $30 million to expand its presence in Massachusetts.
That's dwarfed by the $60 million being invested in Worcester from Chinese firm WuXi Biologics. That company, Worcester and WBDC announced in June the plans to open WuXi's first facility in the U.S. and 11th worldwide at the new biomanufacturing campus.
WuXi and LakePharma operate in the same domain, but Tu pointed out one stark difference: LakePharma was founded and operates in the U.S., while WuXi has never had a U.S. presence.
WuXi will receive up to $21 million from the city and state in grants, rent abatements and loans.
On the other hand, LakePharma received no such public help and owns its Hopkinton building rather than having to answer to a landlord. That opens the door to possible expansions and renovations.
LakePharma actually began staffing the Hopkinton facility just a few months after the 2017 acquisition, but it began commercially manufacturing plasmid DNA at 35 South St. this past December, said Lisa Alexander, LakePharma's vice president of quality and regulatory and the lead at the Hopkinton facility.
Unlike WuXi Biologics, LakePharma didn't need to build the facility from the ground up. It was the former home of a shared space between drugmakers Bristol-Myers Squibb and Olympus Biotech, so much of the necessary infrastructure was already in place.
The building is in an ideal location right off of I-495 and the Massachusetts Turnpike, Alexander said, so it can draw from the talented professionals living in the suburbs and Central Massachusetts, the industry professionals living near the Cambridge biotech hub and the area's wealth of higher education partners.
The South Street area where LakePharma plans to add up to 150 jobs is full of biotech and big business. Dell subsidiary EMC's headquarters are right down the street.
Many nearby buildings are also available for sale or for lease, which could possibly play into the company's future expansions, Tu said.
“If you drive up and down South Street, there are for lease or for sale signs on many buildings,” Tu said.
Already, there are about 60 employees at the Hopkinton facility and over half of the facility is in use. Much of the building is still slated for work.
The building will be at full capacity within two years, Alexander said.
Worcester was LakePharma's first choice, and it's still looked at as a promising destination for future biotech businesses, but developers and city officials need to make available biotech space a priority, Tu said.
“Somebody should take notice: We still like Worcester,” Tu said. “There are great people there, and we like the environment, so they should create the real estate opportunity for us.”
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