Let's hope BMS can keep Hummingbird's wings flapping!

Let's hope BMS can keep Hummingbird's wings flapping!One thing almost everyone in Massachusetts seems happy about is Bristol-Myers Squibb's plan to build a biotech manufacturing facility on the site of the old Fort Devens. In last night's gubernatorial debate, Democrat Deval Patrick praised Republican Kerry Healey for her role in making it happen. There was even more exuberance when the deal was announced:

"We're walking on air," said Thomas Finneran, president of the Massachusetts Biotechnology Council, among the many industry and state groups that worked to lure Bristol-Myers. "It was very impressive. For us to beat North Carolina in this type of competition is almost like a Nixon-to-China type of breakthrough. Nobody would have expected it."

Governor Mitt Romney praised the announcement as evidence of his administration's ability to nurture high technology in the state. The legislature approved tens of millions of dollars in infrastructure improvement for the site and the BMS facility is the return on that investment.The facility is supposed to break ground around now and begin production by late 2011. BMS expects to hire about 550 people and spend around $600 million.It sounds wonderful and I hope everything comes to pass as planned, but I'm starting to get a little worried. Consider:

• BMS still hopes that its one biotech drug, Orencia, will be a billion dollar product. But considering it's a late entry in the rheumatoid arthritis arena and that the drug requires a 30-minute intravenous infusion rather than subcutaneous self-injection like competing products, I'd say it's doubtful. Sales were only $34 million in Q3 2006.
• It's far from certain that BMS will have additional biotech products in the near term. It's impressive that they were able to develop and launch Orencia, but that doesn't mean they'll be able to do it again. If Orencia sales are lower than expected and there aren't other products, do they really need to build a whole new facility?
• BMS is not in a strong financial position overall. Probably one reason they decided to build the new facility in the continental US rather than in a tax haven like Puerto Rico is that they need to generate cash onshore to fund the dividend. That's doubly true in the wake of the Plavix fiasco, which sent BMS's 3rd quarter profits down to $338 million from $964 million a year earlier. If BMS is acquired how secure is the commitment to Massachusetts?

I don't doubt BMS's sincerity, I just hope they have the wherewithal to pull off their original plan. Meanwhile, I wonder what kind of recourse Massachusetts would have, if any, if BMS has to walk away.