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Xellia says it planned to invest in Raleigh plant before new tax deal

By Gareth MacDonald+

04-Sep-2014
Last updated on 05-Sep-2014 at 09:07 GMT

Xellia to invest $100m in newly acquired North Carolina plant
Xellia to invest $100m in newly acquired North Carolina plant

Xellia has agreed to invest $100m in equipment, retain staff and create 40 full time jobs at the plant it bought in Raleigh, North Carolina in return for business incentives. 

The Danish API and finished dosage form maker – in which Novo Nordisk’s holding company is majority shareholder – bought the facility from Fresenius Kabi in July telling us the acquisition moved it closer to US customers and enhanced its network.

In the weeks since, Xellia has agreed a deal with the City of Raleigh that will allocate 50 percent of paid property taxes to Xellia Pharmaceuticals on a yearly basis for five years.

CEO Carl-Aake Carlsson told in-Pharmatechnologist.com: “The acquisition of the Raleigh plant was undertaken prior to the award of any incentive. Our subsequent application for the business incentive was not guaranteed as it required review and approval from the City of Raleigh.

He reiterated that: “The opportunity to apply for a business incentive is of course an attractive prospect but we were committed to developing the Raleigh site from the beginning.”

Under Fresenius’ ownership the facility produced anti-infective drugs and housed extensive freeze-drying capacity, which is one area that could benefit from the $100m investment according to Carlsson.

“We intend to invest significantly in expanding the existing freeze drying capacity at the site but will also consider increasing our capabilities with other injectable product technologies” he said.

If it does decided to invest in injectables Xellia will join other services firms like Hospira , PSC Biotech , DPT and AMRI , which have all been trying to build in the space following the collapse of former sector leader, Ben Venue .

Business incentives

The issue of business incentives has been in the headlines of late after authorities in Hopkinton, Massachusetts decided not to ask Lonza to pay back taxes after the firm decided to shut down its facility in the city.

Carlsson does not expect any problems with Xellia’s incentive deal because “the terms of the business incentive are based on the level of investment that Xellia makes in the site and the meeting of set milestones, therefore we do not envision a situation where taxes would need to be repaid.”

Taylor Floyd, from the Raleigh office of economic development, told us "there is not as of yet a contract in place to formalize this agreement, so the particulars are not available."

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