Allergan deal won't likely cut local Pfizer force
Pfizer Inc.'s $160 billion merger with the Irish drugmaker Allergan, officially announced Monday, will not likely result in the turmoil that accompanied the pharmaceutical giant's acquisition of Wyeth in 2009, which led to more than 2,000 job cuts locally and the closure of its research-and-development headquarters in New London.
Analysts said there do not appear to be nearly as many research overlaps between Allergan and Pfizer as there were between the company and Wyeth. If anything, said former Pfizer research chief John LaMattina of Stonington, the Allergan deal could bring more jobs to the region.
"They don't do much discovery work," LaMattina said in a phone interview, referring to Allergan's research on new drugs to treat diseases. "It's entirely possible ... there could be some (clinical-study) experience in Groton that they may want to tap into."
LaMattina said in his regular pharmaceutical blog for Forbes that Allergan, best known for its Botox cosmetic treatment, has a relatively small R&D budget of $1.7 billion, focusing on dermatology and aesthetics, including eye care, central nervous system disorders, women's health, anti-infectives and stomach complaints. Some of these are areas that Pfizer previously exited, he noted.
"A Pfizer-Allergan marriage might have little impact on Pfizer R&D operations," he said in Forbes. "If I were an R&D scientist at Pfizer, I wouldn't be too worried about the Allergan acquisition."
Derek Lowe, who writes the In the Pipeline pharmaceutical blog, agreed.
"I don’t think that the newly merged companies are going to purge the R&D labs," he said in a blog Monday. "But that doesn’t mean that things are necessarily going to be great over there, either. But when was the last time that things were?"
LaMattina noted that Pfizer has gone through a series of megamergers that led to major overhauls of the company's R&D structure. In 2000, it was Warner-Lambert; in 2003, Pharmacia, and, six years later, Wyeth.
"Major corporate mergers have a negative impact on company colleagues, not just in terms of morale, but also in terms of productivity," he said in his blog.
Economists have tied layoffs related to Pfizer's merger with Wyeth to some of the economic struggles New London County has experienced over the past few years. It is one of the hardest-hit economies in the nation in terms of recovering jobs lost during the Great Recession, according to labor statistics that at one time had the region among the bottom 10 nationally.
Pfizer, which once had about 6,000 local employees as well as hundreds of independent contractors, has cut its local workforce to about 3,000, according to the company. Pfizer also outsourced many of its former long-time technical contractors in a cost-cutting move seven years ago, creating a stir by bringing in a large group of workers from overseas on controversial H1-B visas.
At the time of the $67 billion Wyeth merger announcement, which coincided with Pfizer's planned closure of its nearly $300 million research center in the Fort Trumbull area, the company claimed only about 5,000 direct employees in the region.
Pfizer's Groton labs currently are focused on designing and supporting clinical trials, since all of the critical discovery-science tasks once performed locally have either been disbanded or moved to the Boston area. This has caused some worry locally that such work could just as easily be handed off to contract research organizations at significant cost savings, leading to a complete shuttering of Pfizer research in the area.
But LaMattina discounted the possibility, saying the in-house toxicology, pharmaceutical sciences, formulations and organic-synthesis expertise in Groton would be hard to replicate elsewhere.
"It would be tough to do that outside their Groton labs," he said by phone. "They have very good resources here in Groton."
While R&D isn't likely to face severe cuts related to the Allergan deal, Pfizer's manufacturing force might not be so lucky. According to a report in the blog FierceBiotech, Pfizer has about 65 manufacturing plants and Allergan another 40.
"That inevitably leads to the question of what would be in store for such a large network ... (and the possibility) that headcount across the board would be trimmed," according to FierceBiotech.
Pfizer for decades produced drugs on its Groton campus, but closed the facilities in 2008.
According to LaMattina, a wild card in all the discussion about "synergies" between Pfizer and Allergan (which most notably includes the New York-based drug giant's intention to relocate its headquarters to Ireland to reduce tax liability) is the announcement that Allergan chief executive Brent Saunders will stay on with Pfizer as chief operating officer. This would put him in line to succeed Pfizer CEO Ian Read in three years when Read reaches the company's mandatory retirement age of 65.
Saunders is not a fan of discovery science, according to analysts, which has led some to question his long-term commitment to a strong R&D division and worries that he would drastically cut research positions at Pfizer in the future. It didn't help that Saunders once told Forbes, "The idea that to play in the big leagues you have to do drug discovery is a fallacy.”
But Saunders has since backtracked or perhaps expanded on his philosophy, saying that he isn't necessarily against discovery research but it has to be productive and give his company a "comparable advantage" over others in the field.
LaMattina said Saunders appears to be taking a measured approach in response to his expected new position within Pfizer's hierarchy.
And blogger Lowe agreed with LaMattina that Saunders likely wouldn't be touching the Pfizer R&D apparatus.
"I don't think that a company the size of the combined Pfizer/Allergan can just decide that y'know, everyone else can go do that R&D stuff, we'll just sit back and buy them out once the winners become apparent," Lowe said in his blog. "It's too expensive. ... On the Pfizer scale, I just don't see it working at all."
l.howard@theday.com
Twitter: @KingstonLeeHow
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