April 6, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Merck & Co. , with headquarters in Kenilworth, NJ, is considering investing almost $30 million in an IT center in Austin, Texas.
Company representatives will be briefing the Austin City Council on a proposal today to discuss various incentives. According to a statement released by the city’s Economic Development Department, “The City’s proposal includes a performance-based investment of $856,000 over a 10-year period.”
Merck has proposed investing $20,532,000 in construction, approximately $2 million annually in local services, and about $500,000 in annual local purchases. The company would provide about 600 new jobs, which it indicates have an average annual salary of $84,586.
The IT hub, which would be Merck’s fourth, would, according to an Austin city statement, be “focused on digital health and other information technology solutions.” A memo from the city’s department director Kevin Johns indicated the project would “elevate the status of our bio and life-sciences industry to the level of other global (Merck) locations such as Prague … and Singapore.”
If Austin was chosen for the site, it would likely be planned for an “Innovation Zone” near the Dell Medical School complex. This would allow the city to create a major medical partnership with the Dell Medical School within the north Downtown Innovation Zone.
“While a number of details need to be worked out, a collaborative relationship with this company could create unique opportunities to fulfill our mission in different and far-reaching ways,” said Clay Johnston, Dell Medical School Dean, in a statement. “We have discussed projects and initiatives to improve health, reduce inequities, improve patient outcomes and lower community health costs—potentially ranging from an effort to eradicate human papillomavirus (HPV) and cervical cancer in Austin, to pilot projects around better uses of health data, to community-based programs that increase the pipeline from schools into the health professions. These kinds of initiatives would be difficult to achieve without a relationship with this specific kind of collaborator.”According to Merck, the data center would focus on data collection and developing technology platforms for “personalized, proactive and preventative health care.”
If approved, the project would launch quickly. The proposal indicates that Merck plans to create 119 full-time jobs and invest almost $6.4 million to start a temporary facility by the end of this year. And by the end of 2020, it expects a payroll of 341 full-time jobs and a $20.2 million investment in long-term office space that would eventually be about 90,000 square feet.
Austin is not the only site Merck is considering. Its search has encompassed more than 50 other cities. However, Merck has said that its mission “aligns with the (University of Texas), Central Health, People’s Community Clinic and many other groups that could support the transformation of health-care delivery and affordability.”
Merck, as part of its sales pitch, indicates that its presence in Austin would help drive its innovation zone by hosting summits and working closely with local healthcare and high-tech companies. The company pointed out that its tech hub in Branchburg, NJ, according to the Austin American-Statesman, “hosts 150 to 200 workers from partners such as Cognizant, Accenture and Ernst & Young.”
Merck’s other two IT hubs are located in the Czech Republic and Singapore. Based on its experiences in Branchburg, Merck said it expects suppliers and partners would likely spend about $70 million annually in Austin.
The incentive proposal being considered by the city would average about $200 per each full-time job. For comparison, in 2014, Austin provided subsidies to Dropbox that amounted to $150 per job, Websense ($100 per job) and AthenaHealth ($250 per job). An analysis of the Merck project’s economic impact estimated it would directly contribute $1.9 million to Austin after the cost of the incentives.
