Chinese Biotech Company May Get $18M in Incentives for Worcester Project

Lisa Eckelbecker, Worcester Telegram & Gazette

WORCESTER – The Chinese biotechnology company planning a $60 million manufacturing center in Worcester may get more than $18 million in state and local financial incentives, according to an agreement signed last week.

The proposed incentives include a $5 million state grant to a Worcester agency that would develop land off Belmont Street for WuXi Biologics and a possible $1 million property-tax relief deal with the city of Worcester.

Not all of the grants, loans and tax relief would flow directly to WuXi, and all must still be formally approved by different agencies and boards. Together, they form a package aimed at assisting the Shanghai-based company as it builds a plant that could employ 150 workers.

“I can’t stress enough that this is really big for the industry to have them select Worcester as their first entrée to the United States,” said Craig L. Blais, president and chief executive officer of the Worcester Business Development Corp., an agency that is developing the property that WuXi has chosen. “I think it’s a big, big deal.”

WuXi Biologics is an affiliate of WuXi App Tec of Shanghai, a global company that performs experiments, makes biological products and performs other work for drug and medical device companies. WuXi App Tec has six sites in the United States, including a research and development group in Cambridge.

WuXi Biologics manufactures biological products such as proteins under contract for drug and medical device companies. The company posted revenue of about 1.6 billion yuan, or about $253 million, in 2017, and had 2,543 employees at the end of the year. It recently announced plans to build a plant in Ireland.

The deal with WuXi is the second that state and local officials have offered to bring an initial tenant to a 44-acre swath of former state hospital land. The Worcester Business Development Corp., or WBDC, has been tearing down old buildings and doing road work on the property to remake it into a center for companies that manufacture biological materials such as proteins.

LakePharma Inc. of Belmont, California, considered the land in 2017 for a new biomanufacturing center but ultimately settled on an existing plant in Hopkinton.

Under a memo signed June 8 by state, local and WuXi officials, the Massachusetts Life Sciences Center would grant $5 million to the Worcester Business Development Corp. for infrastructure such as roads at the property.

The WBDC would lease land to WuXi and give WuXi a rent abatement for five years.

The state would support WuXi for $1 million in workforce training funds over four years. A state quasi-public agency, the Massachusetts Development Finance Corp., would offer WuXi a $2.5 million loan to furnish and equip the building.

The participants also pledged to support WuXi in seeking a $7.5 million personal property tax exemption.

At the local level, Worcester officials proposed a tax increment financing package that would shave $1 million off WuXi’s property tax bill over five years. Worcester also could offer a $1.5 million district improvement financing deal, a measure that typically uses taxes collected in an area to improve that area.

Worcester City Manager Edward M. Augustus Jr. said city councilors would have to approve local incentives on the property, which has never previously been subject to local property taxes.

“Because all of the money is new to the tax rolls, it’s almost like new money,” Mr. Augustus said. “If you have three or four buildings of the size WuXi is (proposing), you could have a very substantial increase to your tax base and the jobs that come with it.”

The WBDC has been meeting with WuXi officials for about a year, according to Mr. Blais. The company contacted state officials first, and state officials referred the company to Worcester.

WuXi has not selected a specific spot on the former state hospital property for its plant, Mr. Blais said. He said officials hope to agree on details for WuXi’s development and obtain approvals over the next three months.

Bringing WuXi to Worcester fits into an effort that began five years ago to boost biomanufacturing in the city.

A 2013 report by the consulting and accounting firm PricewaterhouseCoopers found that while Massachusetts was home to more than 550 research and development companies in the life sciences industry, most of the treatments emerging from that work would be manufactured outside the state because of a lack of production options. The report suggested that Worcester could attract businesses that manufacture biologicals.

The aim is “to try to create biomanufacturing outside of the greater Boston metro area and get back into the game we haven’t been in for a while now,” said Kevin O’Sullivan, president and chief executive of Massachusetts Biomedical Initiatives of Worcester, a nonprofit organization that operates business incubators.