A Teva plant for Northeast Philadelphia now seems uncertain
Teva Pharmaceuticals Ltd.’s plans to build a facility in Northeast Philadelphia now appear uncertain, as the drugmaker goes through tumultuous change at the top of its global organization.
Teva Pharmaceuticals Ltd.'s plans to build a facility in Northeast Philadelphia now appear uncertain, as the drugmaker goes through tumultuous change at the top of its global organization.
In September, the world's leading producer of generic medicine organized a groundbreaking ceremony to herald planned construction of a $300 million, 1.1 million-square-foot distribution/warehouse/computer data complex on the site of the former Budd Co. plant along Red Lion Road in the city's Bustleton section. The facility was to bring together 200 jobs from other Pennsylvania locations and create 200 more jobs within three years.
"Not only are we celebrating the commencement of the new building, but starting today, Teva will be an official member of the city of Philadelphia," Teva Americas chief executive officer and president Bill Marth said at the Sept. 27 event, adding that the project and the search for a location had been in the works for several years. The property, a former Superfund site purchased by Teva, had remained zoned for industrial use.
"This is the biggest economic-development project of our administration, and we could not be more excited," Mayor Nutter told politicians, business leaders, and media representatives assembled for the groundbreaking.
But these days, the gates to the site remain closed, and the only apparent change is removal of a small clubhouse that once served a scruffy golf course and driving range.
Teva, on the other hand, has undergone a significant leadership change since September, in part because its stock, which traded above $63 in March 2010, has faltered, closing Monday at $38.92, down 9 cents, near its 52-week low of $35.
On Jan. 1, Israel-based Teva, whose Western Hemisphere headquarters is in North Wales, Montgomery County, named Jeremy Levin to replace Shlomo Yanai as chief executive officer. Levin took over May 10 and says he is reviewing all parts of the organization, with an eye to laying out his strategic plan by year's end.
On May 24, after withdrawing previous 2012 financial guidance and worrying Wall Street, Levin spoke on a conference call with analysts, saying that the company was dropping its revenue projections for this year from $22 billion to between $20 billion and $21 billion.
On Thursday, Levin helped ring the opening bell of the New York Stock Exchange to mark Teva's shift there from the NASDAQ. That afternoon, at the Sanford C. Bernstein investor conference, Levin was asked whether the company would be building more facilities.
"We are right in the midst of that," Levin said. "My question to the organization was, 'We've got 74 facilities. How many do we need? Where should they be located? What are the core facilities that you need?'?"
Asked about the fact that construction has not begun at the Northeast Philadelphia site, Teva Americas spokeswoman Denise Bradley could not say for "certain" that the facility would be built, but she added that to call it "uncertain" would be "sensationalizing" the situation.
In recent weeks, Levin has said that any potential corporate acquisition should be thought through completely before entering into preliminary negotiations.
In this case, Bradley said via e-mail, "The purchase of the land was approved by Shlomo Yanai and the board of directors. The construction would also have to be approved by the CEO and board of directors, however once we announced a new incoming CEO, it would have been inappropriate to have the outgoing CEO approve — and we could not have the incoming CEO approve until he took office [May 10]."
Bradley said she did not know whether the board would discuss the Northeast construction plans at its next meeting, the date for which she declined to reveal.
No two projects are alike, yet Teva's might be compared locally to global drugmaker GlaxoSmithKline's planned move to the Navy Yard. GSK signed a 15?½-year lease to move from Franklin Plaza on Feb. 8, 2011. Construction began a few days later, and a groundbreaking ceremony took place June 9, 2011. Construction of the 205,000-square-foot building is scheduled to be completed at the end of this year, with employees moving early in 2013.
Mayor Nutter's spokesman, Mark McDonald, declined to comment about the Teva plans.
As part of the Northeast Philadelphia project, Teva could receive $2.5 million from Pennsylvania's Redevelopment Assistance Capital Program, but a state official said payment is contingent on the construction being completed and the new jobs being filled.
Meanwhile, Teva also has submitted paperwork for a potential new facility in Florham Park, in North Jersey. On April 10, the New Jersey Economic Development Authority approved a $15 million tax credit for Teva if the company spends $73 million to build a new facility and bring 215 new jobs to it.
Teva has six months to take advantage of the tax credit, but to date has made no announcement about the New Jersey location.
At the September groundbreaking, U.S. Rep. Allyson Y. Schwartz (D., Pa.), whose district includes that part of the city, said: "Keeping [Teva] in the region and seriously considering Philadelphia was something I talked to them about. They were being wooed by New Jersey, and they discussed Bucks County. It is a growing company, and one you want to keep in the region. The concern was that if they move this, then they might move the whole thing."