A Fayetteville startup plans to invest $31.3 million in a generic medication manufacturing facility in the city, the company announced Monday (Nov. 27) at a groundbreaking ceremony attended by business and state leaders including Gov. Asa Hutchinson.
The ceremony was symbolic, as construction of the 24,000-square-foot facility is not projected to begin until January or early February, said OurPharma founder and CEO Peter Kohler, former vice chancellor of University of Arkansas for Medical Sciences Northwest.
The planned facility will add 124 jobs in seven years, Kohler said, and it will sit on almost 15 acres in Fayetteville Commerce Park. Kohler bought the property from the city for $223,500 in September, according to county records.
Cromwell Architects Engineers of Little Rock and Clark Contractors of Bentonville are the architect and general contractor, respectively.
Construction is estimated to take about 10 months, and then the facility must go through a testing process where the stability of conditions like temperature and potential contamination are examined. It will be subject to Food & Drug Administration and Arkansas Pharmacy Board standards.
OurPharma plans to build its way up to producing generic medications for consumers, but it will start out mixing or compounding medications for use in hospitals and clinics, the company said.
From there, it will move into the low-cost prescription medicine market with a focus on products that have proved cost-prohibitive for area residents.
Epi-Pens show potential for the company’s work, and so does insulin for diabetics, according to OurPharma.
“I have been appalled by how much a month’s worth of insulin costs,” said Kohler, an endocrinologist. He noticed an issue during his time at UAMS when treating the Marshallese population, in which 70% of individuals have Type 2 diabetes or prediabetes, he said.
Many of those patients are not insulin-dependent, but for those who are it can pose a financial problem, he said. “They’re the ones that can’t afford it. I mean, $400 a month for them means they have to choose between eating and getting treatment, and so they don’t do it, and then they get worse, and then they have complications.
“It shouldn’t cost that much,” Kohler said. There are some brand-name drugs that are in line for their patents to expire, and from there OurPharma will be able to offer them at a lower cost.
Low supply has posed a problem in the prescription drug market, and it was compounded recently by the effect of Hurricane Maria in Puerto Rico, where medicine manufacturing was moved in recent years. The issue will only get worse as the population ages, Kohler said.
OurPharma will work toward the manufacturing of lower-cost alternatives to prescription tablet and capsule medications, but that is about three years out, he said.
Gov. Hutchinson said, “The demand for generic drugs and compounding drugs will continue to increase in the future, so I’m confident this foundation with the workforce here will grow and expand even beyond what’s been envisioned.
“This is a big win for Arkansas. That’s why I’m here today. It reflects job creation. It’s going to create good-paying jobs in this community, in this state, but it is also a capital investment that is going to spur more job creation and grow our economy, and it also expands the biotech industry in this state,” Hutchinson said. Research and technology are two areas the state has worked to expand.
Kohler said, “You’ve heard the overused term, ‘win-win.’ This project is going to be a quadruple win.” He said it will benefit consumers, hospitals, clinics and suppliers, in addition to OurPharma’s investors and the regional and state economy.
“[The hospitals and clinics] need the products. The people that supply them need products,” Kohler said. In terms of the economy, “This is something that can really help.”
Investors in OurPharma are eligible for an income tax credit from the state, said Mike Preston, executive director of the Arkansas Economic Development Commission.
The company also will be granted incentives that include a payroll rebate of up to 5% of its annual payroll, Preston said. According to the AEDC website, the rebate is offered in “highly competitive situations” and provides annual cash payments for the creation of new, full-time jobs.
“You guys looked all around the country. You could’ve taken this project anywhere, but you’re an Arkansas-based company that decided to grow here in Arkansas,” Preston said. “This is step one of a long process. We want to see you guys grow and be successful.”
OurPharma has management team members in place that, in addition to Kohler, include Ramona McLean, chief operating officer and former director of pharmacy at Washington Regional Medical Center in Fayetteville, Brooke Culp, chief financial officer, and Adam Kohler, vice chair of the board. Adam Kohler, Peter Kohler’s son, is the chief operating officer of North Little Rock-based welding supply company WELSCO, which has 16 locations throughout Arkansas and in Tulsa, and will serve in an advisory capacity to OurPharma, according to the company.
Peter Kohler said he plans to make 10 to 12 other hires in the coming months.
Licensed pharmacists will oversee trained technicians. The College of Pharmacy at UAMS will serve as a pipeline, and for the technician jobs Kohler hopes to engage some underemployed populations, including the Marshallese community.
OurPharma is still raising money for construction of the facility. Once the first building is in business, Kohler hopes to use profits from compounding to fund subsequent phases of the project.
Mayor Lioneld Jordan said, “OurPharma is an Arkansas homegrown business that will add a great deal of value to our primary target investment sector of specialized manufacturing. It’s a win not only for this city, but for the region, the state and I believe the nation.”
Third District U.S. Rep. Steve Womack also appeared and spoke at the ceremony.