December 4, 2015
By Mark Terry, BioSpace.com Breaking News Staff
New York-based Pfizer, Inc. announced it was closing a UK facility and cutting about 120 jobs. It’s not clear if this is a first cut in many more to come as the result of the Pfizer-Allergan merger.
The new closure is of its Granta Park research and development facility located in Cambridge, UK. The change in the company’s division, Neusentis, is part of a shift away from early-stage research-and-development work in pain therapies.
“Scientific research is a complex endeavor, with a lot of inherent risk and failure,” the company said in a statement. “Difficult decisions need to be made even in areas where we had hoped for meaningful progress.”
Pfizer will still have about 2,500 employees in the UK and a second, but smaller, unit in Cambridge that focuses on drug delivery devices, will still remain open.
Pfizer recently sold off 200 acres and more than 2 million square feet of property on its campus in Pearl River, NY, about 20 miles north of Manhattan. The company plans to keep about 500,000 square feet of space and lease back about 1.2 million square feet at that location from Industrial Realty Group, LLC (IRG), the real estate development and investment firm they sold it to. It also plans to keep its research and development facilities at a nearby facility, although it has also indicated it was planning to cut more than 500 jobs at its Pearl River site by 2017.
Job cuts are pretty much a part of every merger because of duplicate services, but there has been some speculation on Brent Saunders’priorities regarding research and development. Saunders is the chief executive officer of Allergan , but will take on the role of chief operating officer of the newly merged companies. In the past, he has said that “The idea that to play in the big leagues you have to do drug discovery is a fallacy.”
He later back-pedaled a bit in an interview with EyeWireToday, saying, “Yes, to be clear, I’ve always embraced innovation. I do believe innovation is the lifeline of our industry and certainly is at the heart of what Allergan is today.”
And Ian Read, Pfizer’s chief executive officer, has said that Pfizer will continue to spend about $9 billion a year on research and development.
Matthew Herper, writing for Forbes, suggests that the Pfizer-Allergan deal won’t lead to many job cuts, primarily because Allergan’s current structure came about from a pretty recent series of mergers, which led to a number of cuts already. He, however, also points out that over the past five years, Pfizer has already cut 50,000 jobs.
“Unlike previous M&A deals,” Herper wrote, “this one won’t create that much in synergies, a scant $2 billion annually. There’s simply not much to cut because those cuts were announced as part of these other deals.”
Still, Pfizer’s acquisition of Hospira, Inc. won’t be completed until the first half of 2016, and its merger with Allergan won’t be completed until the second half of 2016. It seems likely that so much merger activity will require active restructuring that will result in some job losses.
