Pfizer Moves Hurt Life Sciences

May 2, 2003
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GRAND RAPIDS — Pfizer Inc. announced last week that it’s transferring research and development activities from Kalamazoo and Holland as it absorbs Pharmacia Corp. and reorganizes.

The company’s reorganization plan includes moving all former Pharmacia research and development out of Kalamazoo County, where some 1,500 people are estimated to be involved in R&D, moving cancer researchers from Pfizer’s Ann Arbor campus, and closing a Pfizer R&D facility in Holland.

At the same time, Pfizer plans to move its veterinary medicine R&D operations from out of state to Kalamazoo County and intends to shift some Pharmacia research projects to its Ann Arbor facilities and add more researchers on staff as those projects are transferred.

But as Pfizer blends into Pharmacia, how will the reduction in R&D in West Michigan affect the nature and momentum of Michigan’s Life Sciences Corridor?

R&D job losses in both Holland and Kalamazoo subtract a large portion from the corridor’s research activity, said George Erickcek, senior regional analyst with the W.E. Upjohn Institute in Kalamazoo.

“I think in terms of the life corridor, if we want to be more than simply production, if we want to have a strong research element as well, this cannot be taken as good news,” he said. “The research portion of the activity here (Kalamazoo) was kind of the path-breaking research that was feeding what I believe was part of the whole effort of the life corridor.”

Though animal health will be advanced with Pfizer’s veterinary medicine R&D operations, the loss of Pfizer-Pharmacia R&D activities still “kind of changes the flavor” of the corridor’s resources, Erickcek said.

Losing research jobs, whether in Holland or Kalamazoo, impacts the entire region, and The Right Place Inc., the Van Andel Research Institute (VARI) and other institutions along the corridor are trying to find ways to retain Michigan’s R&D talent, said Birgit Klohs, Right Place president.

“In West Michigan — between the Van Andel Institute, Right Place and Southwest Michigan First — we have a strategy of growing new bioscience firms, and Pfizer is the largest bioscience employer in the state. This is a big deal,” Klohs said.

Research is the bedrock upon which life sciences companies are built and that intellectual capital is vital to the area’s regional strategy of growing new life sciences companies, she said.

The Life Sciences Corridor really has a dual problem because the Pfizer layoffs in West Michigan come on top of a $12.5 million cut in state funding to the corridor for this fiscal year. As one of Gov. Jennifer Granholm’s budget balancing measures, state funding for the corridor was reduced from $45 million to $32.5 million for the 2002-03 fiscal year. Originally, the corridor was supposed to receive $50 million a year for 20 years to support the research and commercialization of bioscience products and services.

The state wants to diversify its economy and part of that diversification strategy centers on the life sciences, Klohs pointed out.

“We have to keep fighting for life sciences money and when budget times get better, to get the funding restored,” she said. “We have to pledge collaboration, and we have to look at how we can retain some of that talent in West Michigan, whether it’s at universities or the Van Andel Institute, and assist these people in starting new companies.”

Michigan has been very strong in life sciences research, in part due to major pharmaceutical companies with research programs here, said George Vande Woude, director of VARI. Their presence stimulates universities to design curricula and produce students in the life sciences areas and creates opportunities for the development of businesses that serve the pharmaceutical industry, he added.

Vande Woude said development of the corridor has been truly exciting and noted that other states are looking to Michigan as a model for developing their own program. He doesn’t want to see the corridor lose momentum.

“You can’t start research and restart it again. Those things don’t happen easily,” he said. “We’re just getting going in terms of the collaborative efforts stimulated by the funding for the life sciences. We’ve established collaborations with the universities and a lot with some of the companies.”

Eventually, VARI will establish partnerships with pharmaceutical companies to apply the institute’s discoveries to the development of new anti-cancer drugs and therapies.

“We have to keep optimistic,” Vande Woude said. “We’re going to be strong in biomedical research, and hopefully, the future with Pfizer will grow.”

Jennifer Owens, spokesperson for the Michigan Economic Development Corp. (MEDC), said the MEDC doesn’t know yet what overall impact Pfizer’s reorganization will have on Michigan.

Pfizer had to make some cost-cutting decisions in combining the two companies, but “Pfizer has made it very clear that down the road Michigan is going to be prime for future growth,” she said.

“We are far and away the No. 1 state for Pfizer employees right now and they’re the world’s largest drug maker, so that speaks volumes to the strength of our Life Sciences Corridor.”

The MEDC and Southwest Michigan First are discussing the possibility of creating a regional venture capital fund to encourage R&D workers to stay in Michigan and start their own businesses. Owens said the two economic development organizations are trying to interest Pfizer in contributing to such a fund.

“Certainly the Pfizer employees, I think, would be getting some preferential treatment in terms of getting that financing. If we can offer them an opportunity to start their own company and be their own boss, it’s certainly something they would exercise.”

Erickcek commends the MEDC and Southwest Michigan First for standing ready to assist startups, but he doesn’t think there will be that many takers.

Why? Because he said many R&D people are scientists interested only in the work of science; they’re not interested in developing a business plan or dealing with the headaches of running a company. So they may have to move just to get the resources they need.

“If you think an area is only as good as its resources, the leakage of this wonderful talent from all of southwest Michigan is going to be a loss,” Erickcek said.

“Even if more jobs come into the area, we’ve still lost that component of the entire picture. That does change the nature of our life sciences corridor.”           

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