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MD, NC finalists for drug plant Novartis would hire 700 to make vaccines

May 25, 2006  •  source

After secretly scouting out possible locations for a flu-vaccine manufacturing plant under the code name "Aardvark" during the past year, Novartis AG has narrowed its list of contenders to two states: Maryland and North Carolina. The decision, confirmed by Maryland's top economic development leader without identifying the company's name, pits the Old Line State against the Tar Heel State. Although the competition is expected to be stiff, the win would be worth the incentives that Maryland intends to present—at least 700 jobs and millions of dollars in economic spin-off, economic development leaders said.

In an interview with the Baltimore Business Journal May 23, Aris Melissaratos, secretary for the Maryland Department of Business and Economic Development, said, "We have offered some [incentives] and we could offer some more." The secretary declined to be more specific, saying he did not want to tip his hand to North Carolina economic development leaders.

But Melissaratos did characterize the enticements as "normal financial incentives," some of which would be tied to investment and job growth. He also mentioned the possibility of loans and training incentives.

Plant: Drug giant Novartis close to picking location to manufacture vaccines

Landing the $500 million flu-vaccine plant would be a coup for the state. Not only would Maryland gain 700 to 800 jobs, but also the ability to attract other similar operations at a time when the region is banking on biotechnology and bioscience as its growth engine. "Winning this would be huge for this state," Melissaratos said.

At the same time, the secretary said a victory over North Carolina would require some "innovative" proposals because it would be difficult to match the Southern state on a dollar-to-dollar basis. "Their reputation has been that they throw big money," Melissaratos said. In 2004, North Carolina economic development leaders offered $279 million to Dell to build a computer plant in Winston-Salem, N.C.

A lawsuit challenging the state's hefty incentive package was thrown out of court earlier this month. Greg Thomas, a North Carolina Department of Commerce spokesman, declined to comment about the state's use of incentives to lure a potential flu-vaccine plant. "We are always looking for opportunities to recruit companies to North Carolina," he said. "However, the North Carolina Department of Commerce does not publicly discuss whether it is or is not working with any company in any capacity." While Thomas and Melissaratos declined to mention the company by name, other real estate and economic development sources familiar with the deal said Project Aardvark is a Novartis endeavor.

Swiss drug giant Novartis AG finalized a deal to acquire Chiron Corp., an Emeryville, Calif., biotechnology company, in April for $5.4 billion. Novartis, which makes Ex-Lax and Gerber baby food, has said it plans to make significant investments to the vaccines and diagnostic business.

Eric Althoff, a spokesman for Novartis, said the company has shortlisted three states for its U.S. flu cell culture manufacturing plant. He confirmed only North Carolina as a possibility. Real estate sources familiar with the search said Georgia is in the running but is considered a long shot.

Officials with Novartis recently toured sites within Research Triangle Park and Treyburn Corporate Park in Durham, N.C. The company's U.S. headquarters for its Animal Health division is based in Greensboro.

The Business Journal first reported last May that Crossroads @ 95, a planned business park in eastern Baltimore County, had made the final round of cuts for Project Aardvark.

Initially, Project Aardvark was looking for roughly 250,000 square feet to one million square feet of space on 100 acres of land. Some of that space would be dedicated to clean rooms, which are typical requirements of bioscience and pharmaceutical companies.

Mike Caruthers, president of Bethesda-based Somerset Construction Co. and a developer for Crossroads @ 95, declined comment. Mark McConnell, a regional director for First Industrial Realty Trust Inc., said he was unaware of the latest developments with Project Aardvark.

First Industrial is developing some industrial space at Crossroads. But real estate professionals, familiar with the situation, said Crossroads @ 95 is the No. 1 choice in Maryland for Novartis. A final decision is expected within a few months.

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