Foreign-Trade Zone 230 Greensboro, North Carolina Application for Subzone; Banner Pharmacaps, Inc.; (Pharmaceutical and Soft Gelatin Capsule Manufacturing) High Point, North Carolina

An application has been submitted to the Foreign-Trade Zones (FTZ) Board (the Board) by the Piedmont Triad Partnership, grantee of FTZ 230, requesting special-purpose subzone status with manufacturing authority for certain prescription pharmaceutical products and soft gelatin capsules at the manufacturing facility of Banner Pharmacaps, Inc. (Banner), located in High Point, North Carolina. The application was submitted pursuant to the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally filed on February 12, 2008.

The proposed subzone facility (51.3 acres, 2 buildings totaling 263,000 sq. ft. approx. 40% of which is devoted to manufacturing) is located at 4125 Premier Drive in High Point, North Carolina.

Banner is a contract manufacturer of soft gelatin capsules for prescription and over-the-counter (OTC) pharmaceuticals, and nutritional products. The Banner facility (500 employees) has requested authority to manufacture under zone procedures a variety of prescription pharmaceutical products that fall within HTSUS categories 3004.50 and 3004.90 (duty-free). The initial products within these categories to be manufactured under FTZ procedures are a treatment for obesity, using active ingredient MK-0364; and, a drug for the prevention of organ rejection, using ISA 247. These ingredients are classified under HTSUS 2933.39 6.5% duty rate. Other potential products include treatments for obesity, migraines, organ rejection prevention, seizures, Parkinson's disease, viral infections, cold and cough, and prescription vitamin D. Banner is requesting authority to make these products with active ingredients that fall within the following categories: HTSUS 2915.90, 2921.30, 2922.49, 2933.39, 2933.79, 2935.00, and 3503.00. Active ingredients from these categories specifically cited in the application include valproic acid, amantadine, benzonatate, ethosuximide, cyclosporine, nimodipine, and zonisamide. Foreign-origin active ingredient inputs to be used in the manufacturing process (up to 50 percent of finished product value) have duty rates ranging from 3.7 percent to 6.5 percent, ad valorem. For each of the finished prescription pharmaceutical products (HTSUS 3004.50 and 3004.90), the active ingredients may be combined with edible gelatin (HTSUS 3503.00 − 2.8 cents/kg. + 3.8÷) and a non-active filler ingredient (HTSUS 3906.10 − 6.3÷).

Banner is also applying to produce over-the-counter pharmaceutical and nutritional products (HTSUS 3004.90 and 3004.50 duty-free, HTSUS 1517.90 − 8%, and HTSUS 2106.90 − 6.4÷) under zone procedures with requested authority limited to a single foreign-sourced input: edible gelatin (HTSUS 3503.00 − 2.8 cents/kg. + 3.8÷).

FTZ procedures would exempt Banner from customs duty payments on foreign materials used in export production. Some 5 to 10 percent of the plant's shipments are exported. On its domestic shipments, Banner could defer duty until the products are entered for consumption, and choose the duty-free rate that applies to the finished product for the foreign components used in production. The company may also realize certain logistical/procedural savings related to zone-to zone transfers and direct delivery procedures, as well as savings on materials that become scrap/waste during manufacturing. The application indicates that FTZ procedures would help improve the plant's international competitiveness.

In accordance with the Board's regulations, a member of the FTZ staff has been designated examiner to investigate the application and report to the Board.

Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is April 28, 2008. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period (to May 12, 2008).

A copy of the application will be available for public inspection at each of the following locations: U.S. Department of Commerce Export Assistance Center, 342 North Elm St., Greensboro, NC 27401; and, Office of the Executive Secretary, Foreign-Trade Zones Board, Room 2111, U.S. Department of Commerce, 1401 Constitution Avenue, NW, Washington, D.C. 20230-0002.

For further information, contact Diane Finver at Diane_Finver@ita.doc.gov or (202) 482-1367.