After months of playing coy, the British drug maker Shire PLC says it plans to go forward with a $394 million expansion in Lexington that is expected to create 680 jobs over the next eight years, one of the largest economic development projects in the state.
The decision is a coup for Governor Deval Patrick, who has been aggressively trying to encourage Shire and other life sciences companies to expand or move to Massachusetts. And it comes as Patrick is pressing legislators to approve the $1 billion life sciences initiative he proposed last year. Lawmakers are expected to unveil the latest version of the bill today, and vote on it within two weeks.
Shire executives said they were already committed to going forward with a portion of their project in Lexington. Shire's Human Genetic Therapies unit, which develops drugs to address rare medical disorders such as Fabry disease, is based in Cambridge, but needs additional office and laboratory space nearby to accommodate its rapid growth. Shire, however, threatened to build the centerpiece of the expansion project, a pharmaceuticals manufacturing plant, in another state if Massachusetts didn't come up with an attractive enough incentive package.
Shire said Massachusetts initially offered $24 million, compared with $40 million from Rhode Island, $42 million from North Carolina, and $50 million from South Carolina, according to documents obtained by the Globe. But after the company threatened to go elsewhere, the Town of Lexington agreed to give Shire $7.6 million in tax breaks over 20 years. And on Dec. 10, Patrick, Senate President Therese Murray, and House Speaker Salvatore DiMasi signed a letter promising to secure $40.5 million to help Shire - making the total incentive package worth more than $48 million. At least some of that is expected to be included in the life sciences bill. Patrick also personally courted Shire, even calling executives while he was on a trade mission in China two months ago.
Still, Shire executives said they decided to wait until yesterday to publicly confirm plans to go forward with the project, because they wanted to see what would happen with the life sciences bill.
"Now we feel confident that the commitment letter will be honored," said Sylvie Gregoire, president of Shire Human Genetic Therapies.
Jessica Cotrone, a company spokeswoman, said Shire also wanted to coordinate its announcement with the state. Cotrone said Shire hopes Patrick will attend a groundbreaking for its plant in the next two months.
Some criticized the decision to offer Shire $48 million in incentives. State Senator Mark Montigny, who questioned the offer, said he has concerns about steering tax breaks to particular companies or industries.
"The government is highly incompetent with picking winners and losers," said Montigny, a New Bedford Democrat. "It comes down to who is the best at public extortion."
Jim Stergios, executive director for the Pioneer Institute, a Boston think tank, said it would be better for the state to focus on finding ways to reduce the cost of doing business in Massachusetts, such as lowering the cost of unemployment insurance, instead of offering tax breaks to specific firms.
State Representative Daniel Bosley, who helped shape the life sciences bill, said he generally shares Montigny's concerns. But Bosley said there are exceptions, like Shire, that deserve support.
"Sometimes, you say this is a good company that we want to invest in," said Bosley, a North Adams Democrat. Shire's project is particularly important, he said, because it includes hundreds of manufacturing jobs that will help the economy and generate tax revenue.
And Shire HGT's senior vice president, William Ciambrone, said that without the additional tax incentives, it probably would have built the plant in North Carolina.
North Carolina and South Carolina officials did not return calls seeking comment. But Saul Kaplan, executive director of the Rhode Island Economic Development Corporation, said it had only preliminary discussions with Shire.
"We made repeated efforts to try to connect with the company to see whether they were serious [about Rhode Island], and they weren't," Kaplan said.
Shire plans to renovate several buildings and build a manufacturing plant on Patriot Way in Lexington, near the intersection of Route 2 and Interstate 95. Some of the buildings were formerly used as Raytheon Corp.'s headquarters before the defense contractor moved to Waltham four years ago.
The company currently has about 675 employees in Massachusetts and expects to have 1,350 - mostly in Lexington - within eight years. Most of Shire's jobs in Cambridge will gradually be moved to Lexington.
Shire's Human Genetic Therapies unit has two key drugs on the market to treat rare diseases: Elaprase for Hunter syndrome and Replagal for Fabry disease. In the first nine months of the last fiscal year, HGT recorded more than $229 million in sales from Elaprase and Replagal, up from $90.8 million in the same period a year earlier. The unit also has other experimental therapies in the works, including some to treat Gaucher disease.
Todd Wallack can be reached at firstname.lastname@example.org.