North Carolina Remains Pharma Heavyweight as 2005 Begins with $400 Million in New Plant Construction Investment Underway

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). With literally every state in the nation forming a life science sector within its economic development agency, in a bid to attract pharmaceutical and biotech investment, the competition for the sector's capital projects has become fierce. As reported in the recently released Industrialinfo.com 2005 North American Pharmaceutical-Biotech Forecast, from Arizona to Minnesota, state and local governments are pulling out all the stops to encourage companies to invest in their states. Seeking construction of virtually any type of life science enterprise, companies are being lured with incentives ranging from free land to lucrative tax breaks. Despite this bid for new projects, as 2005 begins, the stalwart pharmaceutical hub of North Carolina is celebrating its success in snagging a couple of important capital projects.

The state is loaded with existing life science manufacturing facilities, as detailed in the constantly updated Pharmaceutical Tracker. Major players include GlaxoSmithKline (NYSE:GSK) (Middlesex, England) with over 6,000 employees at its two North Carolina locations in Research Triangle Park and Zebulon. Novo Nordisk (NYSE:NVO) (Princeton, New Jersey) with almost 400 employees in Clayton, North Carolina, where Bayer Biological Products (NYSE:BAY) (Berkeley, California) (this site is currently in the process of being sold with the deal expected to be finalized in the first half of 2005) also employs over 1,500. Biotech giant Biogen Idec (NYSE:BIIB) (Cambridge, Massachusetts) also is a major presence with roughly 750 employees in Research Triangle Park.

When Merck (NYSE:MRK ) (Whitehouse Station, New Jersey) finally named Durham, North Carolina, as the site of its new $300 million vaccine manufacturing plant, the state had faced down some stiff competition. Several states and countries had vied for this plum construction project, which will eventually employ hundreds in fairly lucrative positions. Novo Nordisk seemingly slipped under other states' radar before the company revealed it was expanding its Clayton insulin plant to the tune of $100 million over the next three years.

The state has faced some vocal opposition from its tax-paying residents over the size of the incentives offered to attract projects of this size, such as when it was revealed that Merck would benefit from $39.4 million in state incentives in exchange for spending $300 million on its vaccine facility, which will employ about 200 people. The General Assembly approved $36 million in incentives for Merck when legislators met in a special session last December, but the value of tax credits and sales tax refunds proved to be even higher. This will be the first vaccine manufacturing facility for Merck outside of its vaccine division headquarters in West Point, Pennsylvania. Merck, founded in 1891, employs nearly 64,000 people worldwide, including 500 at a production facility in Wilson.

Novo Nordisk is spending $100 million to expand its insulin filling plant in Clayton, a project that will eventually add an additional 200 employees. The 181,000 square foot addition will allow the company to more than double its insulin filling capabilities. The second phase of the expansion will include two new assembly and packaging lines to accommodate Novo Nordisk's insulin delivery device, FlexPen, as well as administration and storage space, with the expected completion of the entire project in 2007. The company recently completed a $12 million two-story addition, which expanded the quality inspection, cold storage capabilities, and quality control laboratories, as well as additional administrative and employee areas.

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