Pharmaceutical company announced Thursday it had ended sales talks for Building 118, would move forward with plans to tear down Groton complex
Groton - As Pfizer Inc. offered further explanations of its decision to raze a complex of buildings on its campus here, others were trying to understand why the pharmaceutical giant pulled out of an ongoing sales negotiation for what is known as Building 118.
New York-based Pfizer said last week that it would knock down its former research headquarters, breaking off talks with the state and a developer who had been seeking to use the site as a biotech hub. The sudden decision surprised and angered local and state officials, who had seen Building 118 as a key to the region's economic revival, and prompted some to speculate that Pfizer never had been serious about selling the complex.
The company at first would say only that it had not drawn enough interest from potential buyers, but on Friday it offered more details about its decision.
"Unfortunately, we were unable to find a viable re-use that both ensured the security and preserved the integrity of that operation," spokeswoman Joan Campion said in an email. "In addition, options put forth also required significant public and private investment and didn't have the ability to close within the specified time frame."
Paul Pescatello, departing president of Connecticut United for Research Excellence, said he believes Pfizer was earnest about pursuing the sale, arguing that the company had kept the property in top condition. It's just not a good time to sell laboratory sites with animal-research capabilities, he said, given the glut of vivarium space in the Northeast.
It's also possible, Pescatello said, that concerns over the time it would take to close a deal and the ability of a buyer to handle the maintenance and operation of such a massive research site entered into the equation as well.
George Mathanool, a member of the Groton Economic Development Commission who has been pushing another use involving attracting mature international businesses to the site, said Pfizer rightly wants to keep control over companies that it allowed inside its gates.
"You can't sell a whole complex and all its rights to somebody who has the liberty to sublet to whoever it wants," he said.
Pescatello agreed that leasing space to foreign companies could have led to security concerns - both for Pfizer and for the nearby Electric Boat, which manufactures nuclear submarines for the U.S. Navy.
Mathanool has offered an alternate plan that would address the security concerns by giving Pfizer a stake in a nonprofit entity he is calling the Catalyze Foundation, and by granting the company veto power over any businesses brought onto the site.
"That means Pfizer would have a role in deciding how this complex would evolve," he said.
Under Mathanool's plan, Pfizer would give the building to the nonprofit, allowing the pharmaceutical firm to take a tax write-off for the value of the building and its equipment. At the same time, a for-profit group known as Catalyze LLC would seek tenants and try to fill Building 118.
Mathanool is still hopeful that a solution can be found to allow Building 118 to remain, perhaps by taking the complex off the tax rolls for a time.
But former Pfizer scientist Jim O'Malley, founder of the New London biotech firm Myometrics LLC, said Building 118 is not a viable option. Pfizer already has decided that it is going to raze the building as a way of reducing expenses, he said, and there is nothing that will stop them.
"There's been too much focus on buildings and not enough focus on the people who are going to be in them," O'Malley said. "The whole 118 debacle really demonstrates that (the state Department of Economic and Community Development) and the governor have no idea what they're doing."
O'Malley urged the state to invest whatever money would have gone into saving the research center into initiatives undertaken by the SouthEastern Connecticut Enterprise Region, the local economic development agency.
"The governor has got to start paying attention to the businesses around here that have shown success," O'Malley said. "We can formulate a plan that would be much cheaper than buying 118 that would allow businesses the ability to get started."
O'Malley insists that creating an incubator in New London would be the best way to retain the hundreds of local scientists in the region who have been laid off by Pfizer over the past few years. He said incubator space at the University of Connecticut at Avery Point is insufficient and too expensive and that New London's transportation infrastructure makes the city an attractive place to do business.
"The right city to do this in is New London," he said.
O'Malley and others in the scientific community, including Pescatello of CURE, down played one of the theories being bandied about last week to explain why Pfizer bailed out of a possible deal on the Building 118 property - the idea that Pfizer didn't want to create competition for local scientists by harboring a biotech hub on its 160-acre campus.
But one New York-based headhunter, who asked to remain anonymous because he has worked with Pfizer, said the company has a captive labor pool in the region, a group of current and former scientists who want to remain in the area to raise families. Having a biotech park next door would open up new competition for top scientific talent, he said, and could encourage Pfizer employees to spin off new companies of their own.
"Having a biotech park next to Pfizer will give Pfizer employees options to be poached to these new startups," the headhunter said in an email. "Pfizer will have to spend a lot of money replacing top talent brought to Groton cheaply in years past."
The headhunter, in a follow-up phone interview, said it would cost Pfizer triple a typical scientist's salary to recruit and relocate new talent, as opposed to holding on to its current employees.
"Tear(ing) down a building is a protectionist move and a good move by Pfizer," he said. "They've cut so deep that the people left are the best they have. Why give it away for free by giving them options in their local market?"
Others, though, doubted that Pfizer was seeking to avoid creating competition, pointing out that the company had advertised the 750,000-square-foot complex for scientific uses and noting that biotech firms and pharmaceutical companies work side by side in places such as Cambridge, Mass., without causing concern.
"Who do you think you're going to sell a chemistry lab to unless you're going to sell to a competitor?" state Rep. Ted Moukawsher, D-Groton, said.
Local scientists said Pfizer has cut so many jobs over the past few years that worries about a tight labor pool are unfounded.
What's more, said Pescatello of CURE, scientists have a long history of enjoying the proximity of other companies doing similar work.
"I think they would have liked to have other companies nearby," Pescatello said.
Meanwhile, Pfizer said, it continues to incur significant costs for utilities still in place at Building 118.
"By making this decision, we can reinvest that money into research projects at Groton rather than paying to maintain an empty building," Campion, the Pfizer spokeswoman, said.