Teva Pharmaceuticals cancels plans for a new complex in Northeast Philadelphia

by David Sell

Teva Pharmaceuticals Ltd. said Monday that it had halted plans to build a $300 million facility on a former brownfield site on Red Lion Road in Northeast Philadelphia.

Distribution, warehousing, and data functions were planned for 1.1 million square feet of space in three connected buildings. Two hundred jobs were to be moved from existing Teva facilities, 200 new ones were planned, and thousands of temporary construction jobs would have been created.

"Teva recently announced that it would be reassessing its global network footprint," a spokeswoman said in a statement. "As such, we have made the decision to cease development plans for the proposed distribution center on Red Lion Road in Philadelphia. At this time we cannot elaborate further about plans for this property. Road improvements as committed along Red Lion Road continue and are scheduled to be completed in the spring. Teva remains committed to maintaining the property and working with local government."

Teva is based in Israel; the company's Americas headquarters is in North Wales, Montgomery County; and it has a manufacturing facility in Sellersville, Bucks County.

On Sept. 27, 2011, company officials and local politicians gathered with smiles on their faces and ceremonial shovels in their hands to break ground on the Bustleton site, which had been used for decades by the Budd Co. to produce railroad cars.

"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 event.

But a lot has changed with Teva since then, including Marth's departure from that role and, soon afterward, the company. Shlomo Yanai, who approved the land purchase along with the board of directors, resigned as chief executive officer on Jan. 1 and was replaced by Jeremy Levin on May 9.

Teva is the world's leading seller of generic drugs, but with almost 80 percent of Americans now using generic medication amid greater competition, Teva has struggled to increase profits.

The company's stock price was $63 per share in March 2010 but closed Monday at $38.39, 99 cents above its 52-week low.

In May, Levin was asked at a Bernstein Research investment conference about the company's facilities and said in part, "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?"

On Nov. 30, Levin said the company would cut from $1.5 billion to $2.0 billion in costs over the next five years, but he was criticized by some stock analysts for not being specific about the nature of the cuts and how soon they would translate into better profits.

Teva's Sellersville factory had job cuts and work shifted elsewhere in 2010.

"Over the years, I worked closely with Philadelphia officials and state leaders to encourage Teva to build a distribution center in Northeast Philadelphia. This is a disappointing corporate decision, and a loss for economic growth for the city and the region," U.S. Rep. Allyson Y. Schwartz, whose district includes the Bustleton area, said in a statement.

"As we move forward, I stand ready to work with the local community and the city to ensure that a new use for the site can be found that both carries the support of the local community and can benefit the people and economy of Southeastern Pennsylvania."

Mayor Nutter said at the 2011 ceremony that the project was "the biggest economic development project of our administration, and we could not be more excited."

Deputy Mayor Alan Greenberger said Monday evening that Nutter had spoken with Teva officials after reading their statement and preferred to view the company's decision as a "pause" in its plans, allowing for possible resumption.

"They are continuing to maintain the property and do the road improvements on Red Lion Road," Greenberger said. "But they indicated to the mayor that they won't go ahead right now with this project while they go about their businesswide reassessment."
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