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Columbia Business Monthly

Life Sciences Cluster Booms in Midlands

Oct 02, 2017 10:45AM ● By Makayla Gay

By John McCurry

Growth has accelerated in 2017 for Nephron Pharmaceuticals, the West Columbia-based manufacturer that is one the the Midlands’ most prolific firms in the region’s burgeoning life sciences sector. Nephron produces respiratory medications for hospitals, retailers, and nursing homes.

The Midlands plays a major role in the state’s overall life sciences industry. A recent study commissioned by the S.C. Research Authority and SCBIO, which promoted the industry, pegs the industry as having an annual economic impact of $11.4 billion. Statewide, the industry has more than 400 companies and employs more than 15,000.

Lou Kennedy, Nephron’s owner and CEO, speaks about the Midlands pharmaceutical and medical device production potential with exuberance.

“Pharma is hot,” Kennedy says. “It’s a hot industry all the way around. It’s also an interesting time to be in pharma with the new FDA commissioner [Dr. Scott Gottlieb] saying he will do what’s in his power to get drugs to market sooner. We have been heartened beyond belief by that.”

During a recent interview, Kennedy noted that Nephron had two consulting firms working rapidly to derive data from new drugs on a drug shortage list to try to get generic approval. She says that’s Nephron’s current business model: compile, date, and file for expedited review.

Kennedy believes the Midlands will continue to attract life sciences companies due to the area’s and state’s business friendly environment regarding permitting and regulatory issues. However, she believes the industry could benefit from a better state and federal tax structure.

One of the Midlands’ biggest advantages is its educated workforce. Kennedy says she has been happy with the region’s talent pool. The University of South Carolina’s College of Pharmacy, to which Kennedy and her husband have been huge benefactors, is another major draw.

“In what other state could this happen?” Kennedy asks. “The university allowed us to make a donation and we were able to build a sterile compounding lab. This program is also taught in a two-year fashion at local technical schools in South Carolina.”

Kennedy recounts how local educational institutions are responsive to the needs of manufacturers. When she told USC and Midlands Tech that she needed to hire 50 to 75 technicians and 40 PharmDs [doctor of pharmacy degree recipients], they helped provide them. She asserts that this level of cooperation may not exist in other states.

Nephron launched a spinoff medical device business in April, called Micro Vapor Devices. In simpler terms, it’s a pocket nebulizer, or as Kennedy calls it, a “pocket neb.” She says it was designed to be about the size of a pack of cigarettes to accommodate emphysema sufferers.

“This way, it feels the same in their hand as a pack of cigarettes,” she explains. “This is a nifty invention It’s rechargeable like a cell phone.”

The Kennedys began work on the device in Florida. They eventually moved the operation to the Midlands Tech accelerator building. Growth has been rapid, and Nephron will soon need larger space for its spinoff.

Lou Kennedy says that new space could be found at the Nephron campus, which has ample room for expansion. Nephron currently assembles the devices by hand, and as of August, was producing 1,000 per month. But demand is increasing and the next step will be automation, requiring a larger location.

“We have our own little cluster developing,” Kennedy says. “The two major respiratory product companies in the U.S. are based in the Midlands, us and RiteDose. And now, we have a spinoff. Who knows what will happen next?”

Possibly some industry suppliers locating nearby. She speculates that a supplier to both Nephron and RiteDose, currently based in North Carolina, might one day want to establish a base in the Midlands.

In addition to the spinoff, Nephron launched a new division in January to produce sodium bicarbonate injections, which have been in short supply. The company has invested heavily in equipment for the new division, including an automated syringe filler due to arrive in November. Kennedy says sales have doubled every month, going from $60,000 in January to $2.4 million in July.

Nephron, which began operations in the Orlando, Fla., area, is now all in in its South Carolina faciity. The Florida operation was shuttered in December. Nephron now employs 475, and Kennedy contents that the company is well on its way to its promise to the state of South Carolina to reach 700 within 10 years.

“We will achieve that way in advance of 10 years,” she says.

RiteDose, Nephron’s cross-town competitor, was acquired by a China-based private equity firm in June in a deal valued at more than $600 million. RiteDose, which has expanded operations in recent years, specializes in manufacturing inhalation products, eye drops, ear drops, and unit dose oral liquids, with expertise in blow-fill seal (BFS) technology. It employs approximately 300. 

Another fast-growing medical device company, Rhythmlink, has expanded several times in Columbia over the past several years. The company specializes in devices that connect patients to machines to measure physiologic information.