Pfizer's interest in AstraZeneca worries Maryland

Research labs closed by pharmaceutical giant Pfizer dot the country: Illinois. Michigan. New Jersey. New York. North Carolina.

Maryland officials don't want this state to join that list.


After Pfizer declared its desire to buy AstraZeneca — which employs 3,100 in the state — Gov. Martin O'Malley and six members of Maryland's congressional delegation fired off concerned letters, even though the purchase is by no means a done deal. So far, London-based AstraZeneca has rebuffed its New York suitor.

Yet O'Malley pressed Pfizer for assurances on jobs, noting that the company made some employment promises to the United Kingdom. Pfizer's response: It's too early to determine the state-by-state impact of a proposed purchase that hasn't reached the full negotiation stage.


But the company, which made its case before British leaders Tuesday, did do some wooing in Maryland. In a response to O'Malley, Pfizer CEO Ian Read said he recognizes the state's "significant investment to the biopharmaceutical industry."

"Pfizer values your investment and the important science that is being conducted there," he wrote. "MedImmune, a key biologics arm of AstraZeneca's R&D platform, demonstrates incredible value to patients."

Gaithersburg-based MedImmune — a biotech firm AstraZeneca bought in 2007 — is the state's largest life sciences company. Its products include the nasal-spray flu vaccine FluMist.

Anthony J. Coyle, chief scientific officer of Pfizer's Centers for Therapeutic Innovation in Boston, previously worked at MedImmune and waxed eloquent last week about its work.

"I have huge respect for the people, the talents and the vision of MedImmune," said Coyle, who worked there from 2004 to 2010. "Over the last decade, MedImmune has built a very, very, very exciting pipeline. I think it's of huge value to an organization like Pfizer."

That's because MedImmune's work isn't simply duplicating what Pfizer is doing elsewhere, he said. It's a "very complementary pipeline," he said.

MedImmune's therapies in the works include "immuno-oncology assets that Pfizer lacks," said Damien Conover, director of pharmaceutical research for Morningstar. "It's an area that could really revolutionize cancer treatment."

Pfizer's Coyle said he "absolutely, absolutely" sees a rationale for MedImmune's work to continue in Maryland, given the proximity to the National Institutes of Health in Bethesda and Johns Hopkins Medicine researchers.


Judy Britz was delighted to hear that. She's executive director of the BioMaryland Center, a state-run organization that helps life sciences companies, and she was quick to supply two more assets for Pfizer's list: the Food and Drug Administration, based in Montgomery County, and the Centers for Medicare & Medicaid Services near Baltimore.

"The convenience and relationship that can take place by being in the backyard of the FDA is significant," she said. "And … at the end of the day, MedImmune's products, Pfizer's products — all their pricing and reimbursement will be influenced by CMS."

MedImmune is an anchor institution in an industry O'Malley has prioritized for growth. The state has pledged $1.3 billion in investments over a decade with efforts ranging from a biotech tax credit to an initiative meant to increase the amount of university research turning into products and startups.

In the past four years, according to state estimates, Maryland's life sciences industry has grown from about 400 companies employing 28,000 people to more than 500 companies employing 34,000. Average pay: $90,000-plus.

Some of that growth came after an earlier acquisition — a reminder that deals don't always lead to local cuts.

MedImmune employed 1,700 people in Maryland when AstraZeneca announced plans to buy it for $15.6 billion. Now MedImmune and AstraZeneca employment in the state is up to 3,100, spread between Gaithersburg and a manufacturing facility in Frederick.


But pharma marriages usually are followed by job losses. Pfizer shuttered research labs after major acquisitions in the past 14 years. It's had closures as part of general budget cuts, too.

'Project overlap'

John L. LaMattina, former president of Pfizer's global research and development, said the company had oncology research sites in three states until a 2006 reorganization slimmed the number to one, in California.

"Oncology research for AstraZeneca is at least partially handled at MedImmune," said LaMattina, now senior partner at PureTech, a venture creation firm in Boston. "Will Pfizer decide to keep that group intact … or will they want to consolidate on the West Coast? I don't know. They could decide to keep both groups. But there will be project overlap."

Albert Wertheimer, a pharmacy economics professor at Temple University in Philadelphia, thinks MedImmune would be pretty safe. Its pipeline is a future "cash cow," he said, and Pfizer couldn't continue that work elsewhere easily because leaders there have less experience running a biotech firm.

But Pfizer does have a history of buying companies for the products and laying off much of the workforce, he said. When Pfizer struck a deal to buy Wyeth in 2009, its announced plans to lay off nearly 20,000 workers — 15 percent of the combined workforce.


"Pfizer has been just relentless in taking whatever piece they really want and then just getting rid of the rest," Wertheimer said.

And Pfizer's jobs pledge to the United Kingdom — that 20 percent of its global research and development jobs would be based in that country for at least five years — makes some nervous that the ax will swing more widely in the United States.

"I'm not sitting here saying that we can become more efficient without some reduction in jobs," Read acknowledged to British leaders, according to the Guardian newspaper. "We'll be more efficient by some reduction in jobs. What I can't tell you is how much or how many or where."

Rep. John Delaney, a Democrat whose district includes both AstraZeneca facilities, was among the congressional members who sent a letter to Pfizer on Monday. His staffers have heard from anxious MedImmune employees.

"People are concerned," he said. "MedImmune is an incredibly important company."

He said he's also troubled that the deal is driven in part by Pfizer's desire to reincorporate as a British company and avoid the United States' higher tax rate, a tactic known as inversion. Delaney, a former banker, thinks the deal wouldn't be so attractive to Pfizer if the U.S. didn't require companies to pay the full rate on money earned — and taxed — overseas.


"Pfizer probably has lots of good reasons to buy AstraZeneca from a strategic standpoint, but they'd be using an inversion technique … because our tax code is flawed," he said.

'Affected us in many ways'

At least some closed Pfizer research facilities in other states are seeing reuse. But the replacement doesn't always bring as many jobs as were lost, or the same types of positions. And it can take years.

In South Brunswick, N.J., the 450-employee research center Pfizer shut after its 2009 purchase of Wyeth is being renovated to become a data center.

"It's a lot of high-tech guys managing this, but I think you're only talking 50 to 100 people," said Bernard Hvozdovic, South Brunswick's township manager. "Now they're talking about bringing in a customer-service thing separately; they're talking about more jobs there."

In Chazy, N.Y., local officials saved a former Wyeth research facility from demolition two years ago after it was closed by Pfizer. It too is in renovations now. A container-liner manufacturer agreed to move 22 jobs there, leaving lots of space on the 55-acre property for other companies the town hopes will come.


The 300-employee research lab was the largest employer in the town of 4,300, and its loss sent ripples through the community, said Town Supervisor Mark R. Henry. People moved. The school lost students. Tax collections took a hit.

"It's affected us in many ways," he said.

Ann Arbor, Mich., lost a much bigger operation — Pfizer's 2,100-worker global research facility. The announcement in 2007 came as a shock, said Skip Simms, senior vice president at Ann Arbor SPARK, that region's economic development organization.

The community jumped into action.

Groups helped Pfizer employees start their own companies, connected others with jobs and transformed one of the buildings into a life sciences incubator — now full. The University of Michigan bought the rest of the campus. And Pfizer equipment, donated to Ann Arbor SPARK, is in the hands of local startups.

"We just needed to make lemonade," Simms said. "And we did."


In Maryland, officials would much rather skip the lemons. They want to hold on to the biotech that's a key part of a sector they have such high hopes for.

"Sometimes we feel that the state has invested huge amounts in research but that we've failed to turn those research discoveries into products," BioMaryland's Britz said. "MedImmune is an example of a company where that has occurred."