Pharmaceutical-Biotech Industry to Pull Plug on 30 North American Sites in 2013

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--In a case of bad news being not quite as bad as it could be, the Pharmaceutical-Biotech Industry is forecast to shed 30 sites across North America during 2013. Eighteen already have closed, and the remainder are targeted to end operations by the end of December.

Click on the image at right for a graph detailing the number of industry plants closed and pending closure in 2013, as well as the number of affected employees in each region.

What makes this not as bad as it might seem is the fact that this figure represents a huge drop in the rate of sites being closed when compared to previous years. In 2010, the industry was in the wild throes of early extreme reorganization, with every plant a possible target for closure. As a result of that instability and other factors, an astonishing 74 plants and research centers vanished, along with an estimated 13,000 jobs.

The numbers remained sky high in 2011, as another 60 sites went off the grid. The number of jobs affected then was nearly 10,000. The activity spiked again in 2012, with 78 locations closing and 17,000 employees in jeopardy.

Why the drop in 2013? Most obviously, there are not that many left to close, as there are a finite number of plants and labs, and the industry needs them to develop and produce products. Other locations will continue to find themselves on the chopping block, but indications are that the relentless tsunami of closures has abated.

The painful and seemingly ruthless slashing of facilities across North America was necessary to align with the new focus of the industry on running leaner and more strategically. The flood of mega-industry mergers and acquisitions revealed far too many redundancies in manufacturing and lab sites. Some would simply have to go.

Not all of the sites closed remain that way. As discussed in the December 11, 2012, article "Repurposing Big Pharma's Castoffs: Protein Sciences Takes Slice of Pfizer's Pearl River Plant," many of the shed facilities are finding new life with new companies moving in. After spending billions to build these sites with an almost carefree abandon in the early years, some can be had for literally pennies on the dollar, or for a dollar.

Yes, a dollar. In 2008, MPI Research (Mattawan, Michigan) bought two laboratory buildings totaling 500,000 square feet in Kalamazoo, Michigan, from Pfizer Incorporated (NYSE:PFE) for $1 each. At the time, Pfizer had estimated their worth to be $40 million.

So, the takeaway would be that while a loss of only 30 sites is better than losing twice that many, the impact cannot be underestimated. For the 30 in question for 2013, it represents a potential 8,000-plus being out of work. A look at the historical capital spending at these sites over the years reveals more than 75 projects carrying a total investment value of more than half a billion dollars. That can be a bitter pill to swallow for any local economy.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.