Teva Pharmaceuticals USA said Thursday that $4.7 million in state aid helped convince the pharmaceutical giant to put its new distribution facility in Philadelphia's Somerton neighborhood, where the company hopes to employ 500 people in the next five years.

Teva, a fast-growing generic drugmaker will employ 250 people initially at the proposed $295 million facility.

The 1.2-million square foot distribution buildings will sit on 136 acres at 1 Red Lion Road, formerly home to Budd Co.'s railcar division, which closed in the 1980s.

William Marth, chief executive of the Israeli company's American operations, said government officials from many places had tried to convince him to put the center in their areas.

In addition to the state grants and tax credits, Teva favored Philadelphia and Pennsylvania for many reasons, Marth said, but mostly because, "It's our home."

The company also had considered putting the facility in Willow Grove or Warrington.

Island Green Country Club, which is currently at the Red Lion site will close, said Greg Rogerson, principal of J.G. Petrucci Co., which will develop the new Teva facility.

Teva's U.S. operations are headquartered in North Wales. The new distribution center will not affect the North Wales operations, Teva officials said. In April, Teva announced that it was eliminating some jobs at its Sellersville manufacturing plant, but the company has not said how many employees were affected.

At Red Lion Road, the company will construct three buildings that will house distribution, warehouse and office space. Marth said he expects it to open in 2013.

Mayor Nutter said the construction phase should employ 400 to 600 workers.

Gov. Rendell, who also attended Thursday's news conference announcing the deal, said he believes Teva will employ as many as 1,000 people there in 10 years.

For now, however, Teva is saying total employment will on Red Lion Road will reach 500 in the next few years.

Rendell's projections were based on Teva's strong growth. It is the world's largest maker of generic drugs, which are expected to continue to gain market share as patents expire on brand-name products.

Teva Pharmaceutical Industries specializes in developing and selling generic and proprietary drugs. It had 2009 revenue of $13.9 billion and net income of $2 billion. Marth said he expected revenues to hit about $16 billion in 2010.

Acquisitions have fueled much of that growth. In 2008, Teva acquired Barr Pharmaceuticals, a maker of generic birth-control pills, for about $7.5 billion.

A generic is a federally approved medication that contains the same amount of the same active ingredient as a branded drug. Generics are significantly less expensive than branded drugs, making them a popular choice as consumers and businesses seek ways to lower health-care costs.

Contact staff writer Miriam Hill at 215-854-5520 or hillmb@phillynews.com.