11.2019 | THE SCIENTIST 55A change of hands
Pfizer was founded in Brooklyn’s Wil-
liamsburg neighborhood in 1849 by
German cousins Charles Pfizer and
Charles Erhart. The company headquar-
ters stayed there for well over a century as
Pfizer grew into the pharmaceutical behe-
moth it is today. But when several of the
company’s best-selling drugs began to lose
patent protection just over a decade ago,
compounding difficulties the company
was already facing in managing world-
wide drug production, Pfizer launched a
global push to cut its workforce and oper-
ating costs. That decision included letting
go of its Brooklyn birthplace and the 600
or more jobs associated with it.
The move reflects a pattern of closures
in the pharmaceutical industry since the late
1990s that has left empty hundreds of facil-
ities once dedicated to drug manufactur-
ing and research and development (R&D).
Some of the earlier closures were prompted
by changes in regional tax laws or other reg-
ulations. But now, most are likely driven by
two key shifts in the industry over the last
couple of decades, says biomedical indus-
try expert Erik Gordon of the University of
Michigan’s Ross School of Business.
One is the increasing frequency of
mergers and acquisitions among pharma
companies. “The corporate management
feels a lot of pressure to show that combin-ing two companies gives you a company
that is better and more efficient,” says Gor-
don. Consolidation often means closing
manufacturing or R&D facilities, as Pfizer
did with 13 more of its sites after it acquired
Pennsylvania-based Wyeth in 2009.
Big Pharma has also changed how it
conducts R&D. To cut costs, companies
are doing less of their own research and are
instead relying on making deals with smaller
companies or university research divisions
that have already successfully developed
drug candidates or therapeutics, and often
working with contract research organiza-
tions on the continued development of those
products. “The old ‘make what you sell, sell
what you make’ is no longer the preferred
strategy,” says Bill Wiederseim, president
and CEO of PharmaBioSource, a Pennsyl-
vania-based consultancy firm that advises
pharmaceutical companies on finding or
selling facilities, among other matters.
These closures, in addition to often
making hundreds or thousands of workers
jobless, vacate enormous, expensive facili-
ties that few companies need or can afford.
“These sites are over a million square feet
of R&D lab and sometimes manufactur-
ing [spaces] that are really obsolete at
this point in time on that type of scale,”
explains Shawn Straka, who co-directs the
real estate firm Cushman & Wakefield’s
life sciences division in New Jersey.Occasionally, abandoned facilities
attract academic owners, or even other large
pharmaceutical companies, thanks to build-
ing designs specialized for research. For
example, in 2015, two years after Merck &
Co announced it would vacate its headquar-
ters in Summit, New Jersey, biotech Cel-
gene bought up the 1,000,000-square-foot
property as part of a rapid expansion in its
R&D programs. Sometimes, smaller phar-
maceutical companies or contract research
firms looking to upsize will also express
interest in these properties. But such deals
are becoming rare, explains Straka, forcing
pharmaceutical companies or the agencies
that take over their properties to look fur-
ther afield for buyers.
An alternative option that’s becom-
ing increasingly popular is selling sites
to firms that specialize in redeveloping
and parceling old pharma properties out
to smaller life-science companies. This
new real estate ecosystem has given rise
to several science and technology parks
that offer affordable, convenient spaces for
smaller companies that lack the capital to
build their facilities from scratch.A new ecosystem
Just an hour’s drive from Pfizer’s original
headquarters in Brooklyn, New Jersey’s
biotech sector is experiencing a transfor-
mation. Once known as the “medicine chest
of the world,” the state is home to several
massive R&D and manufacturing facilities,
many of which have come on the market
in recent years. Now, these properties are
providing a new home for a multitude of
smaller pharmaceutical firms, biotech
startups, and academic institutions.
One such facility is Swiss drugmaker
Hoffmann-La Roche’s old 116-acre cam-
pus bordering the towns of Nutley and Clif-
ton, New Jersey. In its heyday, the complex
churned out a variety of therapies, includ-Facilities that are old or in
less attrac tive locations can
remain empty for years.
Some are simply torn down
altogether.THE DISCOVERY LABS