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MARCH 2005

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Take With Plenty of Water

    Because the facility will primarily serve the U.S. market, Merck decided to look at U.S. locations, beginning broadly and whittling away as states were eliminated from consideration. Wagner says the search started in Pennsylvania, made its way south and then west to Arizona. Sixteen states made the first cut.
      "The next step was to develop sets of criteria with our senior management group," Wagner says. "We did this with our consultants, setting priorities such as the physical criteria, our engineering needs, the size of the plot of land we needed and other aspects such as availability of utilities and water."
      Using mostly publicly available data, Merck's consultants set up a model that factors in its criteria. For example, quality of life considerations include average commute time, education opportunities, crime statistics and availability of recreational and cultural activities.
      "It balances 20 to 25 indices, and we ranked 136 municipalities from top to bottom," Wagner says. "We re-ran our model with increased sensitivity and narrowed it down to the top 15. We ran the model with multiple weighting scenarios to determine if one or a few criteria were overwhelming the analysis. We found that the results for the top locations were pretty consistent and felt comfortable to move to the next phase of the process."
      The search team and Merck's senior management trimmed the list to six. Two of these quickly dropped out due to questions of water availability, a key factor since vaccine manufacturing requires large quantities.
      To this point, Wagner says the search was mostly desk work. Now came the time to put boots on the ground at the final four locations. Consultants interviewed companies in and out of the industry, economic development agencies and government officials in each of these areas. This brought the contenders down to two: Durham and a location east of Atlanta off of I-20.
      Removing the cloak of anonymity at this point, Merck opened up detailed discussions with North Carolina and Georgia state officials regarding incentive packages. This end process took about six months.
      "What Raleigh/Durham brought to the table was a clear strategy and vision around the biopharma industry and creating and maintaining a cluster," Wagner says. "The region had recently done a study that reaffirmed a commitment to this strategy. They have a substantial industry presence and a well-developed work force training program. Other areas are working on these things, but Raleigh/Durham has a very mature program. Not only is a qualified work force available now, but it's sustainable."
      Wagner cites a $60-million grant from the state's Golden LEAF Foundation for programs to train biotech workers at N.C. State and North Carolina Central universities, plus several of the state's community colleges. The foundation awards grants with the state's tobacco settlement money.
      Construction is now progressing in Durham. The complex will be a combination of conventional and modular construction. Building modules will be constructed off-site, brought to the site and assembled. Wagner says the projected completion will be during the third quarter of 2007. Production will begin a year later following a validation process. Merck will begin initial recruiting late this year with the bulk of employees hired in 2006 and 2007.
      Also boosting the North Carolina vaccine manufacturing sector is Novo Nordisk, which is investing $100 million to expand its operations in Clayton in two phases. The first phase, set for completion in 2006, will double the company's insulin filling capacity. The second phase, to be completed a year later, will include two new assembly and packaging lines to accommodate Novo Nordisk's insulin delivery device, FlexPen. The company says the expansion will add about 190 employees to the current work force of 380.
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