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Tax Incentives Help Pfizer Decide to Build Research Facility

Posted on: Thursday, 13 October 2005, 00:00 CDT

By Rachel Melcer, St. Louis Post-Dispatch

Oct. 13--Despite a companywide effort to cut billions of dollars in costs, Pfizer Inc. is spending nearly $200 million to build a research facility in Chesterfield.

The project got the green light, in part because of a tax-incentive package offered by St. Louis County and Missouri, said Dan Getman, a vice president of research and development as well as director of Pfizer's St. Louis area laboratories.

The project will not bring any new jobs to the area, but it will contribute to the local organization's success within Pfizer, the world's largest drugmaker. It will unite researchers now working in Chesterfield, Creve Coeur, Town and Country and at the Washington University Medical School with their colleagues in Chesterfield. They will be able to collaborate and spark 'ah-ha!' moments that lead to new drugs, Getman said.

The company had announced plans for the building in April 2004. At that time, it was expected to cost in excess of $100 million. Tax incentives were not said to be part of the project.

But these are tough times for Pfizer. It pulled Bextra from the market this spring after the arthritis drug was linked to increased risk of heart attack and stroke. Sales of a related blockbuster drug, Celebrex, have slumped as a result. Both drugs were developed in Chesterfield.

Two other Pfizer drugs, Dynastat and Oporia, recently were turned down for approval by the Food and Drug Administration. And the entire pharmaceutical industry is under intense pressure.

While the company is working to cut $4 billion in annual costs by 2008, including job cuts and facility closures, construction crews will be laying bricks in Chesterfield. It is one of the largest capital expenditures under way in Pfizer's research and development group.

Yet, without a solid business case for the expansion, the site's fate could have gone the other way. So, Getman and his team asked local governments for incentives.

"This is ensuring that we're retaining these jobs for the future. This is making us more competitive and more able to do the job that we're being asked to do in delivering medicines, . . . which ultimately contributes to the success of the site, the success of Pfizer and how we'll fare in the future," Getman said.

Chesterfield is one of six major drug-development sites within Pfizer. It also is the company's global center for work on cutting-edge biologic, or injectable protein-based drugs.

County officials believe that if they had not offered tax incentives, the operation eventually could have moved elsewhere, said Executive Charlie A. Dooley.

"We had to put some things on the table. Because . . . with these Fortune 500 companies there is a lot at stake. Everybody is trying to woo these companies to their areas," he said. "If they don't stay here, we get absolutely nothing -- and we lose what we do have."

The county is providing so-called Chapter 100 financing for the project. In essence, the county will own the building and lease it back to Pfizer for 10 years, allowing the company to waive property taxes. That will save Pfizer up to half of its construction costs, Dooley said.

The state is giving Pfizer a break on up to half of its withholding tax on 1,000 or more jobs over five years -- an incentive worth $500,000 each year, said Paul Sloca, spokesman for the Department of Economic Development. It falls under the new Missouri Quality Jobs Act, under a clause meant to retain jobs that otherwise might leave the state.

"The governor (Matt Blunt) is very pleased that Pfizer is making this kind of significant investment in Missouri . . . that provides high-quality, high-paying jobs that support scientific research," he said.

The project not only was saved, but was refined in a more positive way, Getman said. The increase in cost, to nearly $200 million from more than $100 million, in part reflects a more reasonable price tag for high-tech laboratory construction. It also includes a new component that Getman said he could not yet discuss because it has not been revealed to employees.

The result will be positive for Pfizer and the region, as well as for the company's ability to develop useful and lifesaving drugs. "It's a huge win for us to be able to do this," he said.

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Copyright (c) 2005, St. Louis Post-Dispatch

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PFE,

Source: St. Louis Post-Dispatch

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