Lonza gets a break on the tax break it got for the U.S. plant it is closing

Lonza's Hopkinton, MA heaquarters--Courtesy of Lonza

A growing list of pharma companies are leaving the U.S. for Europe, at least theoretically, as a way to cut their tax bills through so-called tax inversion. Swiss-based CMO Lonza is cutting its tax liability here not through a tax inversion but through the blessing of local economic development. It is not being required to return any of the tax incentives it got for a plant expansion after deciding to abandon a Massachusetts manufacturing site.

The Swiss contract manufacturer was granted tax benefits from the state through a tax increment financing plan when it agreed in June 2007 to an 8-year deal to invest $70 million in its plant in Hopkinton, MA, keep 130 jobs and create 300 more jobs over the course of the deal. But that deal went south when Lonza said last year it would close the plant and lay off its 200 employees. According to Wicked Local Hopkinton, the city was told in December that the state had decided to "decertify" Lonza.

Because most of the incentives kicked in once new construction was complete, city officials figure Hopkinton is not out much. No accounting has been made, or is expected, on what Lonza might owe in clawbacks. The publication says the city took a more aggressive attitude toward Stryker Biotech ($SYK) in 2012 when it reneged on job promises after it was bought out by Olympus. In that case, the city settled with the company for $450,000.

In Lonza's case, it had struggled to get the plant up to FDA expectations after receiving an FDA warning letter in 2011. In July 2013, it threw in the towel and said it would move the work from Hopkinton to its large plant in Visp, Switzerland.

The news is not all bad for Hopkinton. Town Manager Norman Khumalo pointed out to Wicked Local that in anticipation of the plant expansion, the city received $2.5 million in state funds to upgrade its sewer system.

- read the Wicked Local Hopkinton story