Pfizer layoffs seen as strategic

Pfizer Inc.'s announcement Tuesday that it is planning to eliminate more than 1,100 local jobs and end the company's long history of drug discovery here is part of a major shift in research strategy within the pharmaceutical giant, industry insiders said.

While Pfizer previously relied on well-compensated scientists at company campuses across the United States, it has slowly been shifting its emphasis toward collaborations with small biotech firms and universities in major research hubs such as Boston and San Francisco, they said. The company also has been busy outsourcing R&D work that can be done more cheaply in places such as China, Singapore and India.

Local officials said Tuesday they are worried about Pfizer's decision to convert its Groton campus from a drug-discovery site to a support center for research and development. They said the downsizing, beyond being an immediate blow to the economy, could clear the way for more layoffs at Pfizer's Groton campus since R&D services are more easily outsourced than drug discovery.

"The trend line is certainly in the wrong direction," said John Markowicz, executive director of the Southeastern Connecticut Enterprise Region, a regional development group based in New London.

Markowicz said he didn't subscribe to the idea that the loss of drug-discovery scientists by itself represents an ominous development, but he said the industry trend has been to build biotech clusters near universities, research hospitals and venture capital, none of which can be found in southeastern Connecticut. Outsourcing of R&D functions to places such as India and China is another long-term trend the Groton campus must face, he said.

"It would be far better to be the headquarters for R&D than to be the support facility for Pfizer research," Markowicz said.

Linda Bannister, a drug-industry analyst for Edward Jones in St. Louis, said she didn't think Pfizer's move would inevitably lead to further job losses locally. "A lot depends on Pfizer's (drug) pipeline," she said. "If new drugs make it to market ... the future of Pfizer and the people who work for Pfizer can change quickly."

The local downsizing - affecting about a quarter of Pfizer's local work force - would leave the New York-based company with nearly 3,400 employees in Groton compared to the 4,900 that Pfizer had in the region last year.

A decade ago, Pfizer had 6,000 working at local campuses. The company said it currently employs about 4,500 people in Groton and New London and would be looking to transfer an unspecified number of those workers to other sites.

"My heart goes out to the employees who lost their jobs," said Gov. Dannel P. Malloy in a statement. "There is no clearer evidence that we need to get our economy moving again than witnessing a large Connecticut employer laying off their workers and moving their business elsewhere."

Kristen Neese, a Pfizer spokeswoman, called the layoffs "difficult decisions."

"Groton will remain the largest of our R&D sites and will be a center of excellence for R&D services," she said.

Pfizer said the Groton neuroscience and cardiovascular research units will be moved to Cambridge, Mass., as part of a new strategy to boost innovation and address productivity issues.

No more than half of local scientists currently working in these research units will be asked to move to Massachusetts, one insider said. Pfizer refused to comment on the number that would be offered moves. Groton's anti-bacterials and infectious disease unit also will be moved, reportedly to Shanghai, China, although Pfizer said the location has not been finalized.

The Groton campus will be Pfizer's sole local site when the company vacates its former world research headquarters in New London by the end of this year. After the research units are moved out of Groton, local scientists will focus on such specialized areas as drug safety, pharmaceutical services, clinical trials, clinical research, drug-target selection, chemistry and the study of how drugs work in the body, the company said. A solid-dose manufacturing facility and animal-testing capabilities also will be retained locally.

"This is not a reflection on the colleagues in Groton," Neese said in a statement. "We are proud of our talented colleagues who have contributed to the development of many important medicines."

Two years ago, the region housed the Pfizer Global Research and Development headquarters in New London. But a restructuring tied to Pfizer's 2009 acquisition of the New Jersey-based Wyeth Pharmaceuticals led to the office complex's sale last year to Electric Boat.

Pfizer's Groton campus will now be known as the Center of Excellence for Discovery and Development Sciences.

The restructuring is part of Pfizer's plan to reduce its R&D expenses from an industry-leading $9.4 billion last year to as little as $6.5 billion this year.

"Drug companies are not earning $1 back for every dollar spent on research-and-development spending," said Bannister, the drug-firm analyst. "If the industry is not going to come up with more blockbusters, you'll see continued outsourcing of R&D."

The announced job reductions came as Pfizer released its latest financial results, which included a near quadrupling of its fourth-quarter profits to $2.9 billion and a 6 percent gain in quarterly revenues, to $17.6 billion.

As part of its downsizing, Pfizer also plans to close its research site in Sandwich, England, which will result in the loss of 2,400 jobs. The Boston area will gain about 350 jobs in the R&D restructuring.

l.howard@theday.com

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