Pfizer, the top company in pharmaceutical sales worldwide, recently submitted a bid to purchase its competitor Wyeth for $68 billion.

That should surprise you, considering that Pfizer pulled out of Michigan for good in 2008, citing the need to save money. The company’s Ann Arbor campus alone — a two million-square-foot space — employed 3,600 people, mostly for research and development. The site was the worldwide capital of the company’s research and development. Now, a third of its employees have been relocated, another third found pharmaceutical jobs outside of Michigan and the rest were left to fend for themselves.

In vacating our city, Pfizer left behind an economic crater. The ripple not only affects the businesses on the north side but has shaken the rest of the city as well. Pfizer brought enormous tax revenue to Ann Arbor that the city has been hard-pressed to make up for elsewhere. In 2008, the total taxable value of Pfizer’s Ann Arbor properties alone was just under $150 million. Ann Arbor’s Pfizer site gave away millions to philanthropic organizations every year — money that the nonprofits are struggling without. The United Way, a dedicated community service partner, will especially feel the loss; Pfizer gave about a million dollars per year to the United Way’s Washtenaw County branch.

Pfizer’s pullout came as a surprise, even considering the limping economy. It was difficult for people here to imagine why a global company would sever its primary research and development site.

It takes tens of millions of dollars and about a decade to stumble upon and test a useful drug. Even then, the company only has exclusive rights to the formula for about ten years, which drives the prices through the roof until the patent is opened up for generic brands to copy. Even with the patents, internet and foreign sales pose a serious challenge to American pharmaceutical sales.

To save time, large corporations like Pfizer are able to buy promising drugs by acquiring companies that are too small to do major safety and clinical testing themselves. It’s a business model that Pfizer has used before: originally, the Ann Arbor location was opened by drug company Parke Davis, who stumbled on the wildly-popular, cholesterol-lowering drug Lipitor before Pfizer gobbled it up.

One of the major challenges that Pfizer experienced in 2006 was the unexpected failure of the drugs acquired in its buyout of competitor Pharmacia, which put the company in a difficult position. But pulling out of Michigan was an executive decision, not a team play. Whatever financial woes that worried the heads of Pfizer were forgotten as soon as they skipped town. In fact, Pfizer’s future must look pretty good to the creditors who are financing its $68 billion dollar bid to Wyeth, especially when credit is apparently this tight.

So why did Pfizer leave? The idea that Michigan’s legislators created an inhospitable climate for the drug company has been rumored, but Pfizer claims that politics weren’t the cause of its departure. Only one thing is certain: Michigan’s leaders didn’t throw their arms across the door when Pfizer asked to leave. Our leaders should have done everything they could to keep such highly-skilled, science-based jobs in this state. Instead, they let their money and our talent walk away.

We may not recognize it here on campus, but the University was the buyer of last resort for the Pfizer property (all 174 acres of it). Although the city breathed a collective sigh of relief when the University stepped up to claim the empty space, our local hero can’t give the city what we really need. The University doesn’t pay the city taxes, nor can it pay the kind of salaries the drug company was able to support.

It is difficult to say right now what kind of impact the University’s purchase of the site will have on the school itself. But Ann Arbor residents and students should both be concerned about the loss of Pfizer and the unrealized opportunity for another hearty company to diversify the city’s economy and widen its tax base.

In this difficult economy, you can be sure that other important industries will have trouble. And although we have so few titans left to fall, we need to be wary and protective of all of our businesses. For students to stay in Michigan after they graduate, they need to have access to jobs of their caliber. For that reason and so many more, I hope Michigan will think twice before it lets the next Pfizer waltz its billions of dollars out the door.

Meg Young can be reached at megyoung@umich.edu.

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