<br>From: <b class="gmail_sendername">Will Podmore</b> <span dir="ltr"><<a href="mailto:W.Podmore@bso.ac.uk">W.Podmore@bso.ac.uk</a>></span><br><div class="gmail_quote"><span dir="ltr"><br></span></div><div class="gmail_quote">
<span dir="ltr"><p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Last month the
largest pharmaceutical company in the world decided its profits needed a boost
– by closing one of Britain’s
premier research institutes… </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Blow to Britain as Pfizer closes Kent labs </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Workers, March
2011 issue</span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Nothing makes
finance capitalists happier than a good spot of destruction. On 1 February,
shares in Pfizer, the world’s largest pharmaceutical company, soared by 5.5 per
cent. The reason: its announcement that it is to close its giant research and
development site in Sandwich,
Kent, as part
of a reduction in spending to offset expected reductions in revenue. The
decision “should be met with a sigh of relief”, said an analyst for Credit
Suisse.<span style="mso-spacerun:yes"> </span></span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">What if a
company took the opposite point of view? Two days after Pfizer made its
announcement, rival drug company Merck announced a different strategy, one of
investing in research. “I am not blind to what investors want us to do. They
want us to invest in prudent ways, in ways that actually drive return on
investment and productivity,” said its CEO. “But as a company we believe that
the only sustainable strategy in the health-care environment that we’re in is
real innovation that makes a difference to patients and payers.” Its shares
promptly fell by 2.2 per cent. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Pfizer used to
be an innovative pharmaceutical company. But with new products thin on the
ground and patent protection running out on profitable drugs like Lipitor,
which combats cholesterol (sales £427 million in Britain in 2007), it seems to
have decided around a decade ago to buy innovative companies rather than come
up with ideas itself. It started buying, and buying big – using borrowed money.
</span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Last October it
bought King Pharmaceuticals for $3.6 billion – but that was a small purchase in
comparison with what went before. In 2000 it bought Warner-Lambert for $115
billion, following that up three years later with the acquisition of Pharmacia
for $60 billion, and along the way turning itself into Britain’s largest pharmaceutical
company and the largest supplier of drugs to the NHS. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">In 2009 came
another huge purchase, Wyeth, for $68 billion, but to complete it Pfizer
drained its own cash reserves by $22.5 billion and took on bank loans of a
further $22.5 billion, saddling itself with debt (the remaining $23 billion was
financed with a share issue). At the time, one of the prices to be paid was the
loss of 20,000 jobs around the world. Now – surprise, surprise – it needs to
save even more money, and is cutting deep into R&D across the globe. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Between them,
Wyeth and Pfizer spent $11 billion on global R&D in 2008. In 2012, that
figure will be cut by almost 30 per cent, down to $8 billion. Apart from
Sandwich, around 1,000 jobs are to go in Connecticut
as well – though more money is going to Pfizer’s China Research and Development Center
in Shanghai. (China
is a hot destination for pharmaceutical giants. In 2009 Novartis announced $1
billion investment in a biomedical research centre in Shanghai, to be the company’s third largest
R&D institute in the world.) </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Devastation </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Unite, the union,
issued a statement from national officer Linda McCulloch saying, “This is
absolutely devastating news for the local economy.” She also pointed out that
Pfizer is the biggest employer in the area. “The staff at this site are at the
cutting edge of developing life-saving drugs. These are exactly the sort of
jobs we need to keep in this country. Unite will be doing everything possible
to save these jobs and seek alternatives to closure.”</span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">For Sandwich, the closure will be a body blow, with the loss
of 2,400 highly skilled jobs directly and another 2,400 indirectly, in
contractors. The historic town has a population of only 6,800, though of course
many Pfizer staff live outside it. But it is also a body blow for Britain: the Sandwich
laboratories house the greatest concentration of pharmaceutical researchers in
the country. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">The
pharmaceutical industry is essential to the future of Britain. It employed around 72,000
people in 2009, of whom 27,000 worked in R&D (though that figure was 5,000
down on the tally in 2007). But its importance far exceeds the number of the
workforce. It accounts for £14.5 billion in exports, and made up the bulk of a
trade surplus in medicinal products of £9 billion in 2009 – greater than any
other industrial sector. Last year, for example, it accounted for 24.9 per cent
of all British exports to the US,
according to the US Census Bureau. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">In 2007
pharmaceutical companies spent £4.5 billion on R&D in Britain. To put that into context,
that was 28 per cent of all British industry investment in R&D. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">But that figure
must surely be set to fall: AstraZeneca announced on 1 March 2010 that it will close its
Charnwood research centre near Loughborough – after the university the
second-largest employer in the area – with the loss of 1,200 jobs, as well as a
smaller facility in Cambridge.
In February last year, GlaxoSmithKline announced major job losses in Britain as part of a global reduction of 4,000
staff, with hundreds of jobs to go in its plant in Harlow.
</span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">The giant
companies are pinning their hopes on a new paradigm in drug development, known
as “open innovation”. Instead of developing new ideas in-house, they think they
can source innovative new medicines from small biotechnology companies. They
don’t actually know if that strategy will work, but they do know that any
saving on their own R&D costs translates directly into more money – short
term – for shareholders. And the short term is where Pfizer is looking. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Pfizer calls its
strategy “Invest to Win”, allegedly focusing on six disease areas, but
increasingly it is looking as though winning profits is all it is concerned
about. It has still to live down its admission in 2009 that it had illegally
promoted drugs for uses that were not approved by the regulatory authorities.
That resulted in a $2.3 billion fine in the US, described by BBC Online as “the
largest healthcare fraud settlement in the history of the Department of
Justice”. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Protection </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Pfizer’s
presence in Britain
began in 1952 with the opening of a factory in Folkestone, as a direct result
of what is now sneeringly termed “protectionism”. It had several antibiotics it
wanted to sell to the NHS, but government regulations limited the bulk
importation of medical materials and restricted the sale of medicines not made
in Britain.
So Pfizer had to set up a plant here. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Two years later,
Pfizer needed to expand the factory, and found its present site in Sandwich. The Folkestone site was consolidated into
Sandwich in 1960, by which time it employed more than 2,000 workers in Kent. By
the end of 1970s, according to Pfizer’s own information, the Sandwich
laboratory was the largest research facility owned by an American company
operating outside the US.
</span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Success </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">A string of
research successes followed, including: Mansil (for malaria), Feldene (for
rheumatism); the antifungal Diflucan; Cadusa (for hypertension); and most
famously Viagra. These drugs not only improved health but also boosted British
industry and employment. Being developed here, they were also more likely to
come onto the market quicker, benefiting British patients more quickly. Istin,
for example, offering relief from angina and hypertension with a single daily
dose, went on sale in Britain
first. </span></p>
<p class="MsoNormal" style="text-align:justify"></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Naturally, the Sandwich staff affected were the last to know. Among those
who received early warning was the European Commission in Brussels. Pfizer has huge markets in the
European Union, and likes to keep good relations with it. The reaction was
typically vague and useless. Research Commissioner Máire Geoghegan-Quinn said
it was a “wake-up call” for policymakers, adding, “I’m sure I’ll be given lots
of ideas about things to do.” One of her favourite policymakers is actually
based in the Sandwich laboratories. Gill
Samuels, Pfizer’s head of science policy and scientific affairs, sits on the
European Research Area Board, set up by the Commissioner to advise on research
policy. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Business
minister Vince Cable was also vague. He called the decision “extremely
disappointing”, and said he would be having meetings with Pfizer (“as a matter
of urgency”, naturally) to discuss alternative uses for the Sandwich
site. So much for defending British interests! The government has set up a
“task force” to look at possible alternatives. It is set to report early in
March. There is talk that the University
of Kent might open a
Technology Innovation Centre there, but in terms of impact that would be a far
cry from Pfizer’s immensely influential laboratories. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Geoghegan-Quinn
used the announcement to call for increased government investment in R&D.
Nowhere does she mention policy action to force companies to invest – after
all, that would interfere with commercial freedom and the single market. And
yet were it not for postwar policies designed to protect and foster the
pharmaceutical industry, Pfizer wouldn’t be in Sandwich
at all. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">Make it here </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">If our basic
industries are to survive, we need long-term policies to protect them. How
about saying that companies can’t sell in bulk to the NHS unless they research
and manufacture in Britain?
It would break EU law. It would go against everything governments, Labour and
Conservative, have been doing for decades. It would take us back to … well, to
1952, and a Conservative government. But wiser this time – it would be a start
in reversing the industrial abandonment of Britain. </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"> </span></p>
<p class="MsoNormal" style="text-align:justify"><span lang="EN-GB">A week after
Pfizer’s announcement, the Saga Group said it was planning to take on up to
1,000 workers for its ‘healthcare business’, based in East
Kent. Goodbye industry, hello service sector. That’s the trend in Britain
today, but if allowed to continue it is a trend that will wreck the country.</span></p><p class="MsoNormal" style="text-align:justify"><span lang="EN-GB"><br></span></p></span></div>