Wall Street smiles when a drug company gets with the program by “restructuring” and “rightsizing”—cutting costs through headline-grabbing layoffs. But for Main Street, the story of hundreds or thousands of sales reps, say, and researchers getting kicked to the curb is quite different.
The two gi-normous mergers that closed in the past month offer Pfizer CEO Jeff Kindler and Merck CEO Richard Clark plenty of opportunities to win kudos from The Street, what with all the synergies and economies of scale rendering whole divisions and layers of employees—many of them highly skilled and in middle age—suddenly redundant. In terms of lost jobs, both firms have set the magic formula at 15 percent of their workforce, or an estimated 19,500 and 16,000 positions, respectively.
Ever since the deals were first announced, towns and cities—not only in New Jersey—have been fretting at the prospect that a local plant or other facility might not make the cut in the Pfizer or Merck integration. Friday’s New York Times had a page one story about one such community, New London, CT, where Pfizer built its $294 million, 750,000-square-foot global R&D headquarters in 2001 at the mouth of the Thames River. Eight years later, this state-of-the art edifice is set to be shuttered by 2012.
What lifts “Pfizer To Leave City That Won Land-Use Case” out of the ordinary woe of pharma job layoffs and plant closings is the sharp sense of betrayal that Pfizer leaves in its wake? However unfairly, the drug giant’s brief encounter with New London is entangled in local memory with a bitter property-rights lawsuit brought by homeowners city officials who had marked their neighborhood for demolition—to be reborn as an “urban village” of high-end hotels and shops, tourism and commerce. Pfizer, while not part of the litigation, was central to this “economic revitalization” scheme: In exchange for erecting its biomedical Xanadu, the firm got 80 percent off its property taxes and other financial incentives.
The battle over eminent domain went all the way to the Supreme Court, which decided in 2005 against the homeowners in Kelo v. City of New London. The old neighborhood was razed to the ground, but the hotels and stores never materialized, and neither did the economic redevelopment.
Pfizer plans to move the remaining 1,400 jobs to its Groton site, just across the river. What the company once hailed as the world’s biggest privately funded biomedical research center has become, in the high keep of 235 E. 42nd St. in Manhattan, merely a piece of redundant real estate. Eventually Pfizer will manage to sell it, but probably for a loss.
The losses for New London are of a different order, as the Times piece makes dramatically evident. No doubt Pfizer brought many benefits to the city during its stay, but the firm may not be remembered very fondly, to say the least.
“Look what they did,” one New Londoner told the Times, pointing at the ragged field where a his neighborhood once stood. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.”