With $6 million grant from state, Merck announces tech hub in Austin

Gov. Greg Abbott on Monday announced that Merck Sharp & Dohme Corp. will move forward with plans to develop a major technology innovation center in Austin, becoming the key anchor for an innovation district developing around the Dell Medical School.

The global pharmaceutical titan made the announcement after the governor’s office announced it would provide the company a $6 million grant from the Texas Enterprise Fund. That grant comes on top of a 10-year, $856,000 city tax incentives package approved by the Austin City Council in April.

In return, Merck said it will create at least 600 jobs, paying an average annual salary of $84,586, and it would invest almost $29 million to build and equip the new innovation center.

“Texas continues to excel as an economic powerhouse because global industry leaders like Merck recognize the Lone Star State as a premier state for business expansion and enterprise,” Abbott said in a news release.

In documents filed in March with city officials, Merck said it could create 119 full-time jobs and spend almost $6.4 million to equip a temporary facility by the end of this year.

By 2020, it would target a payroll of 341 full-time jobs and a $20.2 million investment to build and equip a long-term office space, which ultimately would expand to about 90,000 square feet.

Merck has not determined a final location but previously said it expected to locate the center at the medical school or in the adjoining innovation zone.

At the time, the company said its presence here would help fuel the growth of the innovation zone, noting that the center would host summits, work closely with local healthcare and high-tech companies, and draw additional suppliers to the region.

“We look forward to working with the innovative and collaborative community (in Austin and Texas), including partners like the Dell Medical School at UT Austin and the Austin Healthcare Council,” Merck global CIO Clark Golestani said in the news release.

On any given day, Merck’s similar center in Branchburg, N.J., hosts 150 to 200 workers from partners such as Cognizant, Accenture and Ernst & Young, the company said in its initial filings with for city incentives. (Merck also operates similar facilities in the Czech Republic and Singapore.)

Based on the activity at Branchburg, Merck said it expected suppliers and partners would spend about $70 million a year in Austin.

Even the possibility of a Merck hub in Austin spurred interest from companies that Greater Austin Chamber of Commerce previously tried to recruit with little luck, officials there said.

“The potential partnership between Merck and Dell Medical School is a testament to the qualities of Austin as a place for investment in medical technology and health care delivery as well as our city’s ability to work together to recruit great businesses and jobs,” said Kerry Hall, the chair of Opportunity Austin, which worked with city, state and regional partners to recruit Merck.

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