Novartis set to begin $60M Holly Springs expansion

akenney@newsobserver.comApril 22, 2013 

— Even as some analysts and investors have asked whether Novartis might sell or change its vaccine production business, which has a $1 billion presence in Holly Springs, the company has been moving forward with another significant expansion of its local manufacturing plant, according to plans filed at Town Hall.

Novartis has requested the town’s permission to add a “technical services building” of about 38,000 square feet to its 176 acres in the Holly Springs Business Park. It would be the second major construction on the land since the opening of the plant in 2009. Novartis added a $36 million research lab last year.

The planned $60 million expansion is part of a Novartis contract to develop and manufacture vaccines for a U.S. Department of Health and Human Services chemical and biological threat response program.

Construction is slated to begin this summer and last through 2015, and the contract may run up to 25 years. Novartis also will be working with N.C. State University and Duke University.

Rumors of a corporate restructuring began as Novartis prepared for a change of leadership this year. With board chairman Daniel Vasella departing, some major stakeholders in the company began to call for a change of direction, according to a January report by Bloomberg News.

In the report, several of the company’s larger shareholders specifically singled out the company’s vaccine business, which posted operating losses of about $250 million in 2012 and 2011, making it the company’s only production segment with a deficit.

Any changes to the vaccine venture would have local repercussions, as the Holly Springs plant is focused almost exclusively on vaccine production. The company, however, has signaled that the new leadership won’t bring much change for Holly Springs.

“Novartis leadership remains committed to the company’s diversification strategy, which includes ongoing investment in the Vaccines & Diagnostics division,” spokeswoman Meghan Flanagan wrote in an email.

Holly Springs’ leadership hasn’t been worried either. Novartis representatives have been in touch “on a daily basis with that change of leadership,” said Jenny Mizelle, the town’s economic development director.

Mizelle is already familiar with Novartis’ next chairman, Joerg Reinhardt, who has had a long tenure at the company.

“I toured him around Holly Springs,” Mizelle said. “He’s always been supportive of this project and this facility here in Holly Springs. We’re glad to have someone who knows us.”

The company expects to win federal licenses for its Holly Springs vaccine production this year, with full operation expected by the 2014 flu season, she said. The company’s local development lab and “viral plant,” which opened for business in 2012, also are in “start-up” mode.

The maturation of the project is a relief for the government. To lure Novartis to town, Holly Springs borrowed $8.3 million to buy the company 167 acres and spent $12 million on road improvements and other infrastructure upgrades.

Kenney: 919-460-2608 or twitter.com/KenneyOnCary

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