Week of May 20, 2002
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database
 
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$250M, 400 Jobs . . . for Starters
Technology Square
Novartis' major move into Cambridge includes leasing 250,000 sq. ft. (22,500 sq. m.) of lab and office space in Technology Square (pictured), which is owned by the Massachusetts Institute of Technology.
Novartis Moving Worldwide Research Headquarters to Boston Area

By JACK LYNE,
Site Selection Executive Editor of Interactive Publishing


CAMBRIDGE, Mass.Novartis AG (www.novartis.com) has injected a horse-size shot - a US$250 million, 400-employee project - into the burgeoning biotech cluster in Cambridge, Mass. (www.ci.cambridge.ma.us).
        And the deal represents more than just another massive expansion in the snowballing life-sciences sector. The decision signals that the Swiss drug-development giant is establishing the Novartis Institute for Biomedical Research Inc. (NIBRI) in Cambridge. That, in turn, means that the Cambridge location will become Novartis' center for its worldwide research activities. Heretofore, the company's global research was based in Basel, Switzerland, its headquarters city.
        What's more, the $250 million, 400-employee operation is just the warm-up act. The NIBRI plans to hire a total of as many as 1,000 researchers and scientists over the next five years, said Novartis Chairman and CEO Daniel Vasella.
Vasella
"Our establishment of NIBRI in Cambridge, in the midst of one of the world's most impressive pools of scientific talent and academic institutions, will help attract the best researchers and increase research productivity," said Novartis Chairman and CEO Daniel Vasella (pictured).

        San Diego and San Francisco were the other two finalists for Novartis' research headquarters, Vasella said. Cambridge won out because of its scientific talent pool, high-quality academic base and comparative proximity to Europe, he explained.
        "Our establishment of NIBRI in Cambridge, in the midst of one of the world's most impressive pools of scientific talent and academic institutions, will help attract the best researchers and increase research productivity," Vasella said.
        The Boston-area NIBRI, which will focus on developing new drugs for diabetes, cardiovascular and infectious diseases, will "capitalize on the vast increase in therapeutic targets stemming from the sequencing of the human genome," Vasella explained.

Move Signals Focus on Internal Research

Novartis wasted no time in dipping its toe into the local talent pool. Coincident with its announcement of its choosing Cambridge, the company announced that Mark Fishman had been tapped as president of NIBRI. Fishman had headed Massachusetts General Hospital's cardiology division and directed its cardiovascular research.
        Fishman's introduction of the Zebra fish as a new "model organism" changed how research is done on the cardiovascular system's developmental biology, Novartis officials explained. The tiny Zebra fish, only two inches (5.08 centimeters) long on average, has proved to be a particularly fertile model in gene discovery for heart and vessel development.
        "I think we can invent a new field of science," said Fishman, also a Harvard Medical School professor. "I believe we can invent a culture that is neither industry nor academia, but the best of both worlds."
        Inventing that culture is a major driver in Novartis' strategy in coming to the U.S.A. - and to the Boston area in particular, Vasella explained. Rather than choosing the pricey alternative of licensing technologies developed by other companies, the Swiss-based firm has decided to concentrate on internal research. Like many other foreign-based firms, Novartis has found U.S. universities, regulations and markets more conducive to drug development.
        The Boston area's top-tier talent and schools are key elements in making Novartis' internal-research strategy work, the chairman and CEO emphasized. "This is a premier academic environment," said Vasella. "We looked at Europe and the U.S. and the East Coast and the West Coast, and Boston was the best location."
Aredia, an intravenous treatment
Aredia, an intravenous treatment for skeletal complications from cancer, is one of the 15 drugs that Novartis has brought to market in the last two years - the highest number any drug maker recorded during that span.

        Novartis, in fact, was so sold on Cambridge as the right site for its new strategy that it reportedly turned down state officials' offers of assistance.
        Fueled by sales of a host of newly introduced drugs, Novartis rang up $18.8 billion in sales last year, a 10 percent increase. The company's 2001 net income of $4.13 billion marked an 8 percent uptick. The company has brought 15 drugs to market in the last two years - the highest number recorded by any drug maker over that span. Last year alone, Novartis' drug division spent some $2.2 billion in research and development.

Kennedy: Kendall Square
Area 'Epicenter of Biotech World'

U.S. Sen. Edward M. Kennedy (D-Mass.), who chairs the Senate's panel on health issues, was one of the dignitaries invited by Novartis to the company's announcement of its Cambridge project. "Novartis will be a significant new resource for the city of Cambridge, and for all the people of Massachusetts," Kennedy said. "Novartis' strong desire to be in Cambridge further strengthens Kendall Square as being the epicenter of the biotech world."
        Kendall Square, more than a few observers would argue, doesn't yet rank as the world's unchallenged biotech mecca. But the Cambridge area near the Charles River, most would agree, is certainly shaping up as a heavyweight contender.
        Once the domain of high-tech startups, Kendall Square has become the anchor of Cambridge's growing cluster of biotech and drug companies. Collectively, that cluster employs more than 25,000 workers. Thirteen of the 25 largest biotech firms in Massachusetts have set up operations within a mile (1.6 kilometer) of the Massachusetts Institute of Technology (MIT).
        Novartis is continuing that cluster strategy. The company's initial Cambridge presence will include 250,000 sq. ft. (22,500 sq. m.) of lab and office space that Novartis is leasing in MIT-owned Technology Square. The company is leasing another 150,000 sq. ft. (13,500 sq. m.) at the Bent St. development owned by Cambridge-based Lyme Properties.
        And Novartis is already demonstrating serious intent to further enlarge Cambridge's biotech cluster. The company is currently looking at two or three other area facilities for the next phase of its expansion, an unnamed high-ranking Novartis executive told The Boston Herald. Two are reportedly Kendall Square buildings owned by Lyme Properties.

HQ Will Remain in Switzerland, Officials Say

Novartis isn't the first drug-making blueblood to set up operations in Cambridge. Merck, Pfizer and Wyeth, for example, have all recently moved in or announced plans to do so. Novartis, however, is the first major drug company to base its global research in Cambridge.
        Vasella, however, said that Novartis has no intention of following the strategy of Pharmacia, which in 1998relocated its headquarters from London to Peapack, N.J. Tax advantages in particular dictate that Novartis maintains its headquarters in Switzerland, he explained. The company will also continue all of its 1,400 existing research positions in Basel, the Novartis chairman and CEO said.
        Some job reshuffling, however, will result from the research headquarters' coming to Cambridge. Researchers relocated from Novartis' operation in Summit, N.J. will fill roughly one-third of the company's initial 400 jobs at the Boston-area NIBRI, Vasella said.




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