Analysis: Today's Pfizer cuts show inevitability of Ann Arbor site's transition
(Update 4:13 p.m.: I just confirmed that today's Pfizer cuts are likely to impact ex-Ann Arbor Pfizer workers who transferred to the company's St. Louis site. Story here.)
Pfizer's massive downsizing announcement today underscores the inevitability of the pharmaceutical giant's recent exodus from its Ann Arbor site and serves as further reminder of the importance of the site's repositioning.
Pfizer, which completed its $68 billion acquisition of pharmaceutical firm Wyeth on Oct. 15, is expected to close six of its 20 research facilities, the Associated Press reported. It will also consolidate other operations, cutting 15 percent of its 13,500 research employees and some 35 percent of its R&D space.
The announcement comes just five months after the University of Michigan completed its $108 million acquisition of Ann Arbor's 174-acre ex-Pfizer site and nearly three years after Pfizer announced it would abandon the site, displacing more than 2,100 workers.
By comparison, Pfizer's January 2007 announcement, which included the shuttering of the Ann Arbor campus, called for a 10 percent reduction in the company's workforce.
The wide-ranging, continuous contraction in the pharmaceutical industry offers constant reminders that any hope of Ann Arbor's 30-building pharma campus being sold to another pharmaceutical company was far-fetched at best.
That much local officials realized early on.
Michael Finney, CEO of economic development organization Ann Arbor SPARK, acknowledged within weeks of Pfizer's original announcement that it was "unlikely" the site would be sold to another pharmaceutical company. Instead, local officials held out hope that major real estate developers would acquire the site and turn it into a multi-tenant facility.
Those hopes, however, became unlikely after the global financial crisis crushed redevelopment hopes and sapped the financing opportunities for all interested parties without deep resources.
Enter U-M. The university understandably pounced on the opportunity to acquire the site, and now President Mary Sue Coleman envisions leveraging the new property to expand the university's annual research budget from $1 billion to $2 billion by 2017.
That, ultimately, explains why the university's acquisition of the site earned AnnArbor.com Business Review's "Deal of the Year" award Friday night.
U-M expects to add 2,000 to 3,000 workers at the ex-Pfizer site over the next 10 years.
Early-stage life sciences research is being shifted toward universities as the pharmaceutical industry seeks to mitigate its exposure to risk.
That, in part, makes it possible for U-M to pursue a major research expansion as corporations strike more research relationships with academia. In fact, the University Research Corridor - a coalition between U-M, Michigan State University and Wayne State University - spent more than $887 million on life sciences research in 2008, according to a study by East Lansing-based Anderson Economic Group.
Meanwhile, pharmaceutical companies are increasingly choosing to outsource services to small contract research organizations - a growing industry for the Ann Arbor region.
Thus, the shifting complexion of the pharmaceutical industry, once Ann Arbor's curse, is ultimately its blessing.