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PPD leaves research campus
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Published: June 24, 2009
Updated: 06/25/2009 10:09 pm
KANNAPOLIS - PPD, the Wilmington-based contract research organization, has ended its lease with the North Carolina Research Campus. The company said late Wednesday it would not move into the long-delayed medical office building on campus.
"Progress in developing, constructing and recruiting tenants to the North Carolina Research Campus has been much slower than we expected," PPD spokeswoman Sue Ann Pentecost said in a statement. "We understand that this is the result of the economic conditions and the global financial crisis."
Penetcost said PPD would be open to evaluate ways in which it could participate with the campus in the future.
Clyde Higgs, vice president for business development at the research campus, said he would not comment on PPD's decision.
The company was to bring 300 jobs to Kannapolis and share space with Carolinas HealthCare System in the 160,000-square-foot medical office building, to be built on the site of the old Curb Motorsports Museum. Construction on that building has been delayed because of financing issues.
This is the second setback for the research campus in the past month. In May, Pepsico, the worldwide beverage maker of Pepsi-Cola and Gatorade, said its plans to move into the Core Research Laboratory were "in flux," Dole Food Company owner David Murdock said.
CHS spokesman Scott White said nothing has changed with the agreement between CHS and the research campus.
"We've just learned of this and haven't had time to respond to it," White said.
Was a big 'get' for research campus
PPD's CEO Fred Eshelman announced he would open a branch office at the research campus in April 2008 and said he would create 300 new jobs in Kannapolis. At the time, PPD would rent temporary space in the former Cannon Village, then move into the new medical office building.
Eshelman and Murdock had personally negotiated the arrangement.
"For a couple of years, I have heard many great things about the N.C. Research Campus," Eshelman said at the time. "After meeting with Mr. Murdock and visiting the campus, I realized this project is a once-in-a lifetime opportunity where industry and academic scientists can freely collaborate to bring innovations in scientific research to market, increasing the length and quality of human life."
Eshelman founded PPD out of his home office in Maryland in 1985, then relocated it to Wilmington later. It went public in 1996 and expanded its research and clinical trial services. It has 30 offices worldwide — in India, Greece, Australia, Denmark, Peru and Spain — and employs about 10,000 people.
Last month, PPD announced that Ret. Gen. David L. Grange would replace Eshelman as PPD's CEO, effective July 1. Eshelman would then hold the title of executive chairman. Pentecost said the decision to leave the research campus had nothing to do with Eshelman's changing role.
The research campus approached Eshelman in 2007 to talk about a potential partnership, Higgs said last year. When Eshelman met Murdock, Higgs said they hit it off immediately.
"You have to get the people that make the decisions involved very early on," Eshelman said. "It is a waste of time to send a team out, not because they aren't smart, but because I'm going to have to make the decision, so I might as well get in early."
Campus officials heralded the partnership with PPD in April 2008 as a critical component to have the research campus. PPD has contracts with major pharmaceutical companies, like Pfizer and Merck, so having a contract research organization on campus would be an incentive for biotechnology or pharmaceutical companies to join the campus.
Andrew Conrad, Murdock's science adviser, said in April 2008 that PPD would be a catalyst to drive research on campus.
"They handle a lot of the development in (research and development)," Conrad said. "If you have a trial that involves 500 people, they are the ones that make the people show up on time."
Slow economy, slower growth
This announcement is another blow for the research campus, which has been slowed down in construction and business recruitment progress because of the economic downturn.
"It isn't the best news, but it doesn't derail anything," said J. Mac Holladay, founder of Market Street Services in Atlanta.
Market Street did a market analysis for Kannapolis in 2006 to identify the city's strengths and weaknesses to help plan for the affect the research campus would make on the region.
Now in the midst of the recession, there isn't an industry sector out there that hasn't been affected, Holladay said.
"Everybody is seeing projects delayed," he said. "They are showing interest, but are pulling back. It's not good news, but at the same time, I certainly don't view it as a reflection of the NCRC. It still provides the most transformational opportunities in this."
Holladay said when you are changing culture – from a manufacturing-based economy to a biotech hub – it will take time.
"The key to the future is that it [the research campus] is a public-private partnership," he said.
Rowan-Cabarrus Community College was expecting to train the workers that PPD would hire. But president Carol Spalding said it would not affect RCCC's work force training efforts at the campus.
"It's a reflection of the world economy played out in Kannapolis – again," Spalding said. "Though it is disappointing, we're still going full speed ahead."
After an eight-month construction hiatus, Castle & Cooke began construction on the building for RCCC last month. Campus and community college officials had to negotiate the financing, but finally got it settled.
Murdock held a groundbreaking at the end of May to celebrate the occasion, and he was adamant that progress at the campus had slowed, but not stopped.
"We're going to be teaching thousands and thousands of people here over the years," he said.
Job growth, usually a two-sided process, with companies creating new jobs and community colleges supplying trained personnel, seems to be one sided amid the recession.
"Which comes first, the jobs or the trained employees?" Spalding said. "Some of the jobs don't take much training … the word 'training' is broader for us, it includes much broader education that has many more applications than just one industry and one employer."
The economy has slowed progress in other areas on the campus.
The City of Kannapolis has not put its $168.4-million self-financing bond package on the market because of high interest rates. As a result, infrastructure projects on and around the campus cannot be completed.
Cabarrus Health Alliance, which would get $15 million from the bond package to construct a new building across the street from the research campus, cannot begin construction because the bonds have not been sold.
Public Health Director Fred Pilkington has said that, because of lower construction material prices, he could get his building for cheaper than the $15 million price tag.
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