Novartis moving 2d unit to area

Two years after opening its global research headquarters in a former Central Square candy factory, the Swiss drug giant Novartis AG said yesterday it will move a second division to Cambridge in an expansion that will make it the city's largest corporate employer.

The company hasn't yet settled on a location, but said the new office will house 250 executives and researchers for Novartis Vaccines and Diagnostics , a unit that makes flu shots and blood tests. Their arrival next year will bring Novartis's total Cambridge footprint to nearly a million square feet and 1,550 people, larger than local biotechnology giants Genzyme Corp. and Biogen Idec Inc.

Novartis's move continues the rush of mainstream pharmaceutical companies into a city once known mainly as a hatching ground for obscure new biotech ideas. Drawn by the talent pool of local employees and the cutting-edge science at Harvard University and the Massachusetts Institute of Technology, several drug companies have opened large research labs in the Boston area in recent years.

Merck & Co. built a 12-story research building in Boston's Longwood Medical Area in 2004, and last month Schering-Plough Corp. cut the ribbon on a lab in Kendall Square where it plans to move 200 scientists. AstraZeneca PLC and Wyeth have nearby labs with several hundred researchers each.

Even in that group, however, Novartis stands apart. Its worldwide research chief, Mark Fishman , was hired from Massachusetts General Hospital and directs thousands of employees worldwide from his office in the former Necco factory in Cambridge. Executives at the planned vaccine headquarters, a separate division, will oversee 4,500 employees from California to India.

With $36 billion in sales and market value of nearly $140 billion, Novartis is one of the world's richest drug companies. It develops treatments for cancer, diabetes, and heart disease in its Cambridge labs. It also has an infectious-disease research unit.

Local life science leaders see Novartis's continued expansion as a symbol of Massachusetts' growing prominence in the field. Thomas M. Finneran , president of the Massachusetts Biotechnology Council , said that as other states and regions increasingly compete to land new biomedical jobs, the presence of the massive Swiss company has a powerful effect on the rest of the industry.

"People know that Novartis doesn't screw around," Finneran said. "Their due diligence is of the highest caliber, and it sends just an incredible signal."

Novartis said it plans to move executives and administrators from California, Philadelphia, and Oxford, England, in the first half of 2007. By the end of next year, the company expects to have more than 250 employees at its vaccine headquarters, including at least 90 new hires.

The vaccine division chiefly consists of the former Chiron Corp. of California, which Novartis bought this year for $5 billion. Thanks to Chiron's products, Novartis is now the second-leading producer of flu vaccine in the United States, and plans to ship 30 million doses this season. It also makes rabies vaccine and is trying to develop a vaccine for avian flu.

Since relocating its research division to Cambridge, Novartis has built strong ties to local companies. It signed drug development deals with biotech firms Infinity Pharmaceuticals Inc. and Alnylam Pharmaceuticals Inc. , and also collaborates with the Broad Institute of Harvard and MIT.

Bob Richards , president of real estate company Richards Barry Joyce & Partners, LLC , calls the Novartis move a "vote of confidence" in Cambridge, but also cautions it could increase pressure on the smaller start-up companies that helped build the city's reputation.

"Kendall Square is going to start becoming really an epicenter for the big pharmaceutical companies," Richards said, "and [smaller] biotech firms are going to start having seriously considering the suburbs."

Stephen Heuser can be reached at sheuser@globe.com.