Pharma giant’s expansion could be a prescription for a better economy

Friday, March 04, 2011 – Globe and Mail

The wannabe lifesaving vaccines of the future are being test-driven on a treed campus in Toronto’s north end.

Here, in Sanofi Pasteur’s Canadian headquarters near Dufferin and Steeles, serums vaccines go from painstaking prototypes to mass-produced doses ready to be shipped worldwide. It’s a good time to be in the inoculation business – even for a site that’s been doing it for a century.

The vaccine giant’s made-in-Toronto breakthrough, a five-component shot protecting kids from whooping cough, has proven a billion-dollar international hit – so much so that the company is building a new $180-million manufacturing plant to keep up with exponentially growing demand.

But that’s just the beginning: Over the next 15 years, Sanofi Pasteur hopes to develop now largely fallow areas of its campus, land currently occupied primarily by trees and a couple of storage facilities.

The company views the expansion not only as an economic shot in the arm for a city whose industrial sector is ailingcould use a little love, but as a vital step in maintaining a strategically important Canadian asset – in an increasingly disease-averse world, they argue, access to medical equipment can be a matter of national interest.

“We basically have a billion-dollar biotech product … that was developed here, made here and exported from here,” says Mark Lievonen, president of Sanofi Pasteur Ltd. – the Canadian vaccine arm of Paris-based Sanofi-aventis.

“R&D and manufacturing jobs are important in Canada.”

But before Sanofi can push its plan forward, there’s a pair of hurdles that need to be cleared: the city and the company’s not-so-enthusiastic neighbours.

To solidify their expansion plans, Sanofi Pasteur needs city approval to designate land now zoned as residential into an industrial employment area – an anomalous exception for Toronto, where the manufacturing industry is still recovering from a recessionary swan-dive. The request makes Torontonian urban planners double-take: The norm in this town is that jealously guarded employment areas are coveted and snapped up by residential developers. Here, it’s the opposite.

With the expansion’s economic benefits in mind, the city is mostly on board – as long as they don’t disturb the neighbours.

“We don’t want to see it, we don’t want to hear it, we don’t want to smell it,” says Shelley Stillman, who can see the now-wooded southern tip of Sanofi Pasteur’s property from her Hidden Trail ??living room.

“We want them to blend into our residential neighbourhood.”

A high-tech campus with an urban plan

Sanofi Pasteur’s sprawling, 22-hectare 54-acre Toronto site is almost a city unto itself.

And if it is, Norm Medeiros is its mayor.

The executive director of facilities management is in charge of everything from sidewalks and steam pipes to maintaining buildings the city has deemed of heritage value – not to mention making plans for high-tech, multimillion-dollar manufacturing facilities designed to meet a slew of standards from countries around the world.

“We have an urban plan. Oh, absolutely.”

It’s called a “campus” because in many ways it resembles university grounds – if you went to a super-nerdy, space-age university that was far cleaner than any space trod by ordinary undergrads.

And the latest addition to this fleet of about 40 facilities is Building 95. The gleaming facility was completed last year. It’s meant to be the best of the best when it comes to exploring, testing and proving vaccination innovationsbrainstorms. Or, as Mr. Medeiros calls it, “140,000 square feet of state-of-the-art research facilities,” where multicoloured tiles and abstract lamps hanging in concrete stairwells complement the laboratories’ far more minimalist, immaculate aesthetic.

Mr. Medeiros argues Sanofi Pasteur is the perfect corporate citizen: It employs close to 1,200 people and paid more than $1.5-million in property taxes in 2010; they build their own plumbing and power much of the site using their own cogeneration plant. From an upper floor of Building 95, Mr. Medeiros points out their own $3-million groundwater treatment system, completed last year.

If anything, he argues, they could use a little more help from the city.

“They need more of a consultative process with industry. … We’re a large part of the city’s revenue.”

The pharma giant next door

Shelley Stillman moved into her Downsview house 30 years ago – one of the large lots built by Bramalea Development on streets featuring such pastoral names as Hidden Trail, Fawnhaven Court and Carriage Lane.

At the time, she recalls, the most annoying thing about their pharmacological neighbour was the scent of manure: Until the mid-1980s, the company kept a lone horse – a holdover for the days when animal-based serum was the norm for vaccine development. “When they cleaned out the barns, we called them about the smell.”

Now, Ms. Stillman and her neighbours are pushing back against a modern drug-maker they don’t understand, but which they’d rather didn’t disturb the view.

They’ve found an ally in newly elected councillor James Pasternak (Ward 10, York Centre).

“My responsibility is to advocate for the community,” he says. “We have to find out what, exactly, is going into those buildings. What are they going to be used for?

“We have to make sure that all their concerns are addressed.”

Those concerns are myriad. There are complaints around noise, smell and light-pollution from existing facilities, to say nothing of what expansion plans might look like. But there’s also the fear of having drugs mass-produced a stone’s throw from your back porch.

All that said, Mr. Pasternak notes, “to have a world leader in pharmaceuticals right here in our neighbourhood is actually an honour. I mean, the work that they do … is actually quite remarkable. And Toronto should be proud and honoured to have a company like that here.”

But “when it was [first] situated at Dufferin at Steeles, there wasn’t much happening.” Now, that’s changed.

Sanofi Pasteur plans to submit a revised proposal for the site this month. Mr. Medeiros said he’s confident they can address their neighbours’ concerns.

“We’re essentially just tying up some loose ends,” he said. “They had some questions around some of the plans. … We’ve got a forum for addressing some of the issues that the neighbours may have and what we’re doing in order to mitigate those issues.”

The search for an economic remedy

It’s an interesting time for a pharma company to be expanding, says Carleton University professor Marc-André Gagnon: Merck Frosst and Pfizer both announced closures or retrenchments of their Montreal facilities over the past several months. He says risk-averse pharmaceutical companies around the world are focusing on making money with products that already work, rather than trying to find new ones.

But it’s a good time to make an industrial-expansion pitch in Toronto: The city is struggling to kick-start its sluggish, post-recession blue-collar sector. While everyone’s hoping for a recovery in industrial real estate, it’s been slow so far.

“It’s something that we want to support, we want to encourage,” says councillor Michael Thompson, the city’s economic development chair. “I’ve seen the campus – they do an amazing job in terms of the investment they’ve made in the area.”

And while Mr. Thompson agrees residents’ concerns need to be addressed, he rejects the suggestion that industry can’t cohabit with houses and backyards.

“I hope the day never comes when anyone says that,” he says. “I certainly do not support the idea that Toronto is going to provide the bedroom capital for anybody. We have an obligation to provide good-paying jobs for our residents.”

To survive economically, he argues, the city needs to get that balance right.

And while Sanofi Pasteur seeks a municipal truce, it also has national-sized fish to fry: “Strategic asset” controversy? This is one company dying for Ottawa to designate it as strategic. Mr. Lievonen hopes it will mean a push for vaccine CanCon, and maybe an easier time of it when it comes to meeting bureaucratic rules and regulations.

And, he notes, the U.S. has already named them a global strategic site – in a cable WikiLeaked last year.

“The U.S. diplomatic corps has identified a number of sites around the world that are strategically important. … They actually identified the Toronto site of Sanofi Pasteur for polio production,” he says. “So that makes us think, ‘Okay … so we should be strategically important to Canada.’

“We’ve had a history of success. We’ve got a lot going on here.”

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