Two years after Eli Lilly and Co. announced that it would start building a plant this summer to make insulin in Prince William County, the drug company said it has delayed construction while it reviews the cost and design.
The Indianapolis-based company said it ordered the delay after cost estimates for the 600,000-square-foot plant came in above expectations, and now it doesn't expect to start construction until next year.
"We are going to build it," said Patty Tracy, a Lilly spokeswoman. "We are just not going to build it as fast as we had originally anticipated."
The company still plans to invest $425 million and employ more than 700 people on the 120-acre site just west of Manassas, Tracy said. The project was announced in May 2002. The plant was to have opened in late 2005 and been fully operational in 2007. Now construction won't begin until 2005, Tracy said.
"We are hoping to have a review of the design completed by year-end, at which point we will have a much firmer handle on what the proposed timeline will be," she said.
Eli Lilly plans to make and package Humalog and Humulin -- synthetic forms of insulin used in the treatment of diabetes -- at the plant. Each drug had worldwide sales of more than $1 billion last year. For Humulin, U.S. sales were $507.5 million and foreign sales were $552.9 million; for Humalog, domestic sales were $658.6 and foreign sales were $362.7 million. U.S. sales of Humalog grew last year; Humulin sales decreased.
The company disclosed the construction delay about a month after it reported that in the first quarter of this year, Humalog's U.S. sales had started to decrease too. Humalog domestic sales were down 1 percent and Humulin's were down 9 percent from the first quarter of 2003, Lilly said in its most recent quarterly filing to the federal Securities and Exchange Commission. The company attributed the decline in U.S. sales to "continuing competitive pressures."
Overseas, Humalog sales increased 27 percent and Humulin's increased 16 percent.
Martin J. Briley, executive director of the Prince William County Department of Economic Development, said he is not worried or surprised by the construction delay.
"It's a big project, and it's complicated, but these guys know how to do it," Briley said. "We have full confidence that they remain committed to this project and to the county. We're measuring this in terms of a long-term, positive impact over decades. This is one of the best projects we've seen in Virginia in many, many years."
Eli Lilly is one of the world's largest pharmaceutical manufacturers. The company has 43,000 employees and reported earnings of $2.6 billion on sales of $12.6 billion last year. Its research led to the first commercial insulin product in 1923.
The company has received financial incentives to build the plant, including $2.25 million from Virginia and $2 million from Prince William County. The county also donated 2.5 acres of land, Briley said.
For now, though, the site is largely vacant except for temporary offices and an occasional dump truck or earthmover. Tracy said Eli Lilly decided to disclose the delay because "everyone has been wondering why they haven't seen any concrete and steel yet."
Moody's Investor Service recently cited the project in affirming Prince William County's strong debt rating. "Moody's believes this project has the potential to attract additional health and pharmaceutical firms to the area," the bond-rating agency said.