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Pfizer cutting 600 jobs in area
ST. LOUIS POST-DISPATCH
CHESTERFIELD — In recent months, some of the 1,000 scientists and employees at Pfizer's Chesterfield Village Research Center took to examining the tiniest details to divine the future of their jobs. Everything seemed in doubt. Pfizer had acquired another huge drugmaker, Wyeth, in a $68 billion deal. Cost-cutting and lost jobs were sure to follow. So some workers looked for clues on Pfizer's major research campus here. The company had just sunk $250 million into buildings and labs. A ribbon-cutting in April was attended by Pfizer CEO Jeff Kindler, perhaps another good sign. And company parking lots were still being repaved. And flowers were still being planted. But on Monday, Pfizer announced it was slashing 600 of its 1,000 jobs in the St. Louis area — part of a global crackdown on research and development costs in the merged company. The cuts include a 15 percent reduction of the company's overall work force, or 19,000 positions. As part of its reorganization, Pfizer is moving from 20 research labs worldwide to just five main labs and nine specialized units. Chesterfield and its 400 remaining jobs will become a specialized unit focusing on biologic (protein-based) drugs. Work currently done on inflammation (such as arthritis) and immunology will move to Cambridge, Mass., the company said. Also, the company announced plans to sell its still-gleaming campus here — 250 labs, 122 plant growth chambers and two acres of greenhouses — to Creve Coeur-based Monsanto for $435 million. Pfizer, in turn, will remain a tenant. While the loss of 600 jobs is a blow in an already struggling local economy, analysts said Pfizer's decision bears little reflection on the St. Louis region's competitiveness, noting that the company still leaves behind a promising biologics unit. Blame it on Lipitor, the cholesterol-busting superdrug that contributed 25 percent of Pfizer's pre-merger revenue. Lipitor's patent protection — and perhaps half of its sales — is expected to disappear at the end of 2011, said Linda Bannister, health care analyst with Edward Jones & Co. in St. Louis. "What a great drug, but now it's dealing with patent expiration," Bannister said. Pfizer has yet to develop a successor blockbuster drug, which was part of the motivation for acquiring Wyeth. While the merger is expected to deliver new product potential, the deal also created debt and redundancies between the two companies. As a result, Pfizer is now driven by a post-merger strategy to slash costs, said Howard Wall, economist and vice president of the Federal Reserve Bank in St. Louis. "It doesn't have much to do with what St. Louis has to offer." And "unbridled optimist" Dick Fleming, executive director of the St. Louis Regional Chamber and Growth Association, noted other cities that were harder hit by Pfizer's reductions. The drugmaker plans to shutter research and development labs in six U.S. cities, including in Princeton, N.J., and Research Triangle Park, N.C. Data from RCGA economists show the biotech sector employs 16,000 primary workers in the St. Louis area and 185,000 more in supporting roles, Fleming said. Wall, too, tried to put Pfizer's 600 job cuts in context, albeit a dismal one: The St. Louis area has been losing about 4,000 jobs every month during the current recession. Meanwhile, other issues remain unresolved or unclear. In addition to the shake-up in inflammation and biologic units, Pfizer's Indications Discovery unit, which hunts for new uses for older drugs (the most famous example: researchers in England stumbling upon Viagra), will stay in the St. Louis area, the company said. But the unit will not remain at the Chesterfield campus, and a new location has not been selected, said Pfizer spokesman Rick Chambers. Another matter is the status of tax incentives used by Pfizer to build its Chesterfield facilities. Pfizer was granted $7 million in state and county property tax abatements over 10 years, plus it was exempted from sales tax on construction materials. But that savings was contingent on Pfizer keeping at least 1,000 workers in Chesterfield. Officials have no intention on letting the company just walk away from its obligations, said Denny Coleman, president of the St. Louis County Economic Council. "They have clearly not lived up to the 1,000-job commitment they made," Coleman said. "This is something we take very seriously." Chambers, with Pfizer, said the drugmaker is talking with the taxing authorities, but the situation is muddled because Monsanto is buying the campus. Chambers also said the Chesterfield cuts would not alter a five-year, $25-million research agreement signed with Washington University last year. Researchers at the Chesterfield campus have a storied history. They helped develop the blockbuster arthritis drug Celebrex and identified crucial HIV proteins. Pfizer acquired the facility when it bought Pharmacia in 2003, which earlier had merged with Monsanto. In the new Pfizer, Chesterfield researchers will focus on late-stage development of biologic drugs — working on how to move a drug from the lab to commercial applications, Chambers said. Biologics, sometimes called "wonder drugs" because of their ability to target particular cells, are the fastest-growing sector in the drug industry. Examples include the breast cancer drug Herceptin, arthritis drug Enbrel and cancer drug Avastin. Pfizer intends to maintain a presence in Chesterfield, Chambers said. "There is definite value in the people and in this site in Pfizer's R&D network." Steve Giegerich of the Post-Dispatch contributed to this report.
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