WLA-PFE merger -- local coverage in Ann Arbor News: aa.mlive.com
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Transition appears acrimony-free
Sunday, September 2, 2001
By SCOTT ANDERSON and DAVID WAHLBERG
NEWS STAFF REPORTERS
Standing at one end of Pfizer's glass-lined lunch room feels a little like being on the 1 yard line of a football field. From the air, the oblong-shaped structure even looks like a football.
The "cafetorium" as it's called - a combination of cafeteria/auditorium - can seat 700 comfortably, about double the old cafeteria at Pfizer's Ann Arbor Laboratories. Although some would argue it's only a place to grab a bite, Pfizer managers see it as much more: a venue for people from different departments to mingle, chat and exchange ideas informally as they might in a much smaller enterprise.
It's one example of what Pfizer hopes to do on a larger scale: Adopt the habits of a small company while wielding the power of a huge corporation.
Just over a year since Pfizer purchased pharmaceutical rival Warner-Lambert, the New York-based firm is making changes of all kinds, both worldwide and at its 3,000-employee Ann Arbor research hub. The most visible change locally is the massive construction project that's swelling Pfizer's campus on the city's north side.
Pre-merger, Pfizer was already on the top of the pharmaceutical game with impotence treatment Viagra and the cardiovascular drug Norvasc. But the merger with Warner-Lambert brought in Lipitor, a locally developed cholesterol-lowering pill that's become the best-selling drug of all time. The New Pfizer is on its way to matching or even topping last year's total revenues of $29.5 billion.
For many, the transition has been without traditional merger acrimony, at least in Ann Arbor. Insiders say the change has been far smoother than the previous merger they lived through, when Warner-Lambert acquired Ann Arbor-based Parke-Davis in 1976.
As of July, Pfizer had eliminated 5,627 of the combined company's nearly 90,000 jobs. But most of the cuts to Warner-Lambert staff have occurred elsewhere, such as in its former headquarters in Morris Plains, N.J. Locally, only a few dozen managers and employees took Pfizer-encouraged severance packages and exited the Parke-Davis campus here.
There are 23 new Pfizer managers locally, either former Parke-Davis people who were promoted or Pfizer employees transferred to Ann Arbor from one of five other research centers.
"We discovered we had a very good bench," said site manager David Canter, who was transferred from Warner-Lambert in France back to Ann Arbor. "The people who stepped up have really have been able to perform."
Despite the managerial shift, the main ongoing change is assimilating Ann Arbor's labs into the Pfizer research fold. Research at Pfizer's Ann Arbor operation has been streamlined and has taken on more of a marketing approach since the merger, company officials say.
Diabetes, previously one of seven research areas, has been dropped. Rezulin, a diabetes drug developed in Ann Arbor before the Pfizer merger, was pulled off the market last year because of liver problems it caused. But Canter said that's not related to the decision to move diabetes research to other Pfizer sites.
That leaves the site with a focus on six research areas: cancer, heart disease, inflammatory diseases (such as arthritis), infectious diseases (such as AIDS), central nervous system disorders (such as Alzheimer's disease and schizophrenia) and anti-bacterial medications.
Of those six, the inflammatory and central nervous areas have been built up the most in the past year.
"We were spreading ourselves too thin," Canter said of shifting diabetes research to Pfizer's labs in Groton, Conn. and La Jolla, Calif. "The other six areas were competing for resources."
No type of research at Pfizer is done exclusively in Ann Arbor. Heart disease studies also are done in Connecticut, for example. And the company's site in France does inflammatory disease work, too.
The only specialty site for research at Pfizer is in Sandwich, England, where sexual function disorders are studied. The drug Viagra was developed there.
At all sites, including Ann Arbor, Pfizer recently has been assigning marketing staff to drug development teams earlier in the process so scientists consider what patients want, said spokeswoman Betsy Raymond. The marketing experts may point out that a drug must be available in pill form, or that weight loss or gain are important side effects, she said.
That has altered the research process somewhat, said Bill Slichenmeyer, who oversees clinical cancer research for Pfizer. "Before, the philosophy was that the science would drive the process," he said.
Slichenmeyer said the merger has greatly helped his area of cancer research. Previously, the Ann Arbor cancer team mostly worked alone. Now, it cooperates with the Connecticut and California sites.
"The three together are starting to flourish and feed off each other," he said.
The three main areas of cancer research at Pfizer are:
--angiogenesis, in which tumor blood supply is cut off;
--cell cycle regulation, or targeting the machinery that makes DNA duplicate;
--oncogene signaling inhibition, or cutting off proteins that send messages to neighboring cells to grow out of control.
Cancer has been a challenging area for Pfizer. It has no cancer drugs on the market and none are awaiting approval. But one compound developed in Ann Arbor has shown promise in early studies. That compound, CI-1033, won't be on the market for at least five years.
The largest question still facing Pfizer is if and when it will expand in Ann Arbor. Construction is nearly complete on its administration office areas, located above the cafetorium. Its technical development building and new drug discovery buildings are slated for completion in June and January 2002, respectively.
The new buildings give Pfizer a combined 700,000 square feet to work with, but don't solve all the space issues. The company also intends to bring about 180 jobs from Morris Plains to Ann Arbor later this fall and winter. Today, there are 750 employees working at other offices throughout Ann Arbor and Plymouth. When those workers are brought back onto the main Pfizer campus, there will be little space for future growth, Canter said.
Given that, Canter said he would like to finalize a decision about where Pfizer will expand within the next year. The University of Michigan owns land to the east, south and west of Pfizer parcels. And although both the university and Pfizer have talked, no deals have been made public.
Despite the $300 million investment building up at Ann Arbor's site, Pfizer has impressed Wall Street with cost savings from the merger. Pfizer expects $1.3 billion in merger-related savings in 2001 and at least $1.6 billion in 2002 from eliminating redundant positions in the work force, increased purchasing power and lower operating costs.
Neil Sweig, a financial analyst with Ryan and Beck Southeast Research, said the merger savings have encouraged investors.
"It's gone about as smooth as anyone could have hoped for," Sweig said. "I think they've handled it in a more equitable manner considering it was pretty much a hostile takeover. ... Not to be heartless about this, but the way you get that is through all types of layoffs."
Sweig said he expects more jobs to be eliminated, but did not speculate as to where they might occur. He said the promotion of Peter Corr, formerly the president to Parke-Davis R&D, to the role of executive vice president for Pfizer Global R&D, likely bodes well for Ann Arbor.
"(Ann Arbor) probably has a friend in Peter Corr, who is now one of the most senior managers in Pfizer research," he added.
When it comes to community involvement, Pfizer may take a different role, and if the first year is any indicator, it could be a more active one. In March, Pfizer employees upped their annual contributions to the United Way campaign by 40 percent to $1.4 million, including the company dollar-for-dollar match on donations.
Canter said Pfizer's corporate philanthropy tends to focus on preventative health care for the poor by providing low- or no-cost drugs. He said the company is interested in working with homeless shelters to extend that program, called "Share the Care," in Ann Arbor." |
