Reality bites: Amgen’s (NASDAQ: [[ticker:AMGN]]) decision to leave Washington state is a serious blow to our local bioscience ecosystem. Those who think that all of those people who got laid off (or choose not to relocate) will be able to find biopharma jobs here in Seattle are kidding themselves. Our community is not large and robust enough that the employees of large companies being acquired or shut down can readily find local re-employment in the biotech arena.
And what about the research these employees were conducting? Budget cuts often have strong negative impacts on research productivity. One day you’re working on an exciting project to develop a new medicine, and the next day the company is closing down your location and your fate is up in the air. This is more than a personal tragedy. Your project may be abandoned for any number of reasons and wind up in a scientific black hole from which escape is quite difficult. Even if you have the entrepreneurial inclination to start a new company by licensing the intellectual property associated with your old project, there’s no guarantee that your former employer will go along with your idea. Think how embarrassed the company might be if you succeeded! Your success could lead to a strong rebuke of the company’s senior management, and to avoid this potential problem, it may simply put your project on the shelf “for future consideration.” The company also avoids the issue of having its “deep pockets” sued if some problems arise in the clinic with a drug it licensed out.
Big Pharma Decisions Are Often Tied to Short Term Economic Considerations
Biopharma companies have some economic advantages that few other industries share. Most notable, of course, is monopoly pricing that is not tied to the cost of goods, but to the perceived benefit they bring. Having said that, those that are publicly traded companies must answer to their shareholders. This leads most of them to take a short-term economic view, and when they change plans it can be devastating to a community. In 2005, the U.S. Supreme Court ruled in a widely criticized decision (Kelo vs. City of New London) that private property could legally be taken by government and turned over to private developers to boost the local economy. In this particular case, developers wanted the land to build amenities (shops, a hotel, condos) to support new laboratory facilities to be built in New London, CT, by Pfizer. Families were evicted, houses were bulldozed, the land was cleared, and then Pfizer decided not to build labs there after all. The area, which used to be a middle class neighborhood, deteriorated and became a dumping ground. The city would have been much better off if Pfizer had never suggested building its labs there.
Amgen announced plans in 2006 to build out the rest of the Seattle Helix campus; this would have potentially doubled the number of employees at the site. Sadly, those plans were abandoned several years later at the start of the great recession in 2008. These examples illustrate that even Big Pharma’s Big Plans can change in a hurry.
Former Immunex employees may have noted the irony in Amgen’s second quarter earnings report that accompanied the news that its Washington state locations were being shut down. Marketed products acquired from Immunex when it was purchased (etanercept, sold as Enbrel) as well as products in the pipeline that were developed at least partly by Immunex employees (panitumumab (Vectibix) and denosumab (Prolia/Xgeva)) contributed a whopping 39 percent of product sales. These drugs also showed some of the largest year over year sales gains: Enbrel was up 7 percent, Vectibix 42 percent, and Prolia/Xgeva 29 percent, while sales for legacy Amgen products Neulasta/Neupogen were down 1 percent and Aranesp/Epogen sales were essentially flat.
What Will Become of the Helix Campus?
The issue of what will happen to the Amgen campus also remains up in the air. A number of suggestions have been put forward, including making it the site of a new university (e.g. the Washington Institute of Technology). Amazon could reconfigure the space as a stealth lab where Jeff Bezos and company can work on their skunk work projects. Novo Nordisk has just announced that it is going to assemble a new obesity group. The Helix site would
