A pharmaceutical services company that generated more than $650 million in revenue last year is moving its headquarters to the Triangle and creating 100 jobs.

Patheon, a publicly traded company now based in Toronto, also announced Wednesday that it plans to open a laboratory in Research Triangle Park.

Patheon manufactures prescription drugs and provides services such as developing the formulation of experimental drugs.

The 100 jobs will be evenly split between the two operations, and just a handful of executives will be transferring from Toronto.

"Almost everybody will be new hires," said Terry Novak, Patheon's president for North America.

The company has been losing money and is in the midst of restructuring its business. About half its revenue comes from U.S.-based pharmaceutical companies.

"This is the perfect storm for us," said Kevin Johnson, vice president of business development at the Research Triangle Foundation, which owns RTP. "We got the R&D and the headquarters."

Landing a corporate headquarters increases the region's luster and could lead to lucrative work for law, accounting and other professional-services firms.

"It really sends the word that the Triangle is the best place to be," said Ted Conner, vice president for economic development for the Greater Durham Chamber of Commerce. He was in San Diego on Wednesday for the Biotechnology Industry Organization's annual gathering.

Patheon has selected a site in RTP for its laboratory and is considering three RTP sites for its headquarters, Novak said.

The company expects to move into the lab by the end of the summer and hopes to start moving its headquarters before the end of the year.

Novak said the company rated the Triangle and other sites it considered -- in Pennsylvania, New Jersey and Atlanta -- on criteria such as quality of life, the cost of doing business and proximity to customers. The Triangle came out on top.

In addition, "the state of North Carolina was very kind to us in offering incentives," Novak said. He declined to be specific.

The state Department of Commerce didn't offer incentives to Patheon, spokesman Charles Winkler said.

But the company might qualify for worker training assistance from the state community college system and research-and-development tax credits from the state Department of Revenue.

A community college spokeswoman, Audrey Bailey, said that Patheon "isn't something on our schedule" but that it appears to qualify for worker training available to new and expanding companies.

Bailey said she couldn't assign a dollar value without knowing what level of training would be needed and for how many employees.

Executives like N.C.

Novak said top management's familiarity with North Carolina also was a factor in the decision.

CEO Wesley Wheeler is former head of DSM Pharmaceuticals, the contract manufacturing arm of a Netherlands-based company that has a facility in Greenville.

Wheeler also is a former senior vice president of logistics and strategy for GlaxoSmithKline, and he was based in RTP during his tenure at the British drug maker.

Novak also is a former president of DSM and was based in Greenville for four years.

Patheon began restructuring after the acquisition of a Puerto Rico company soured. Generic competition emerged for two of the brand-name drugs that the business manufactured, putting a big dent in sales.

Patheon's action plan

Patheon has been selling off nonstrategic operations, such as a unit that made over-the-counter medications, and cutting costs.

Analyst Maher Yaghi of Desjardins Securities said that "there is still a lot of work to be done," but that the company appears to be on the upswing under its new management team. The CEO, Wheeler, was hired in December.

Earnings looking up

In the quarter that ended April 30, Patheon posted a loss of $8.5 million, an improvement over a $22 million loss a year earlier.

Revenue for the quarter rose 16 percent to $186 million.

"We continue to like what we see," analyst James Kuo of Dundee Capital Markets wrote after the latest earnings were released.

"Overall, the quarter slightly exceeded our expectations, and we continue to believe that Patheon remains on track for a transformational year in 2008."

"We've turned the corner with our second-quarter performance," Novak said. "It is definitely a business that is growing."

Patheon shares, which rose to nearly $10 in the spring of 2005, closed Wednesday at $4.09, up 35 cents. Shares have risen 29 percent this year.

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