Regret more than anger as losses seen as inevitable

ANALYSIS:Hope remains for 510 of the affected workers as attempted facility sales or a long wind-down process offers respite

THE ANNOUNCEMENT of 785 job losses at Pfizer yesterday, while a blow to those directly affected, is not unexpected. Pfizer had stated at the time of its $68 billion (€55.68 billion) bid for Wyeth in January 2009 that it expected to reduce staff numbers across the organisation by 15 per cent.

In the event, Ireland fared slightly better than the company workforce as a whole. Just over 15 per cent of the enlarged company’s 5,000-strong Irish workforce faces an uncertain future. Across the group as a whole, the number is 18 per cent.

Pfizer is holding out the prospect that some of those jobs may yet be saved. The three plants it has earmarked for closure will be put on the market. Given that Pfizer’s statement yesterday does not expect to wind down these operations for the next three years at least, there remains a window of hope for the 510 employees involved.

The general sense yesterday was one of regret more than anger. The cuts were seen as inevitable, even by the workforce. At the former Wyeth Medica plant in Newbridge, in particular, there was relief that the plant would remain and continue to employ 770 people in the Kildare town.

Pfizer has a long history in Ireland. The company was the first major pharmaceutical player to establish an operation here when it opened a bulk ingredients plant in Ringaskiddy, Co Cork, back in 1969. At that time, its business was food chemicals, particularly citric acid.

Since then the plant has grown significantly, and so has the range of active ingredients it produces, including, most famously, sildenafil citrate – the active ingredient in Viagra.

More than 40 years on, Pfizer and the companies it has acquired have invested $7 billion directly into the Irish economy in areas as diverse as animal vaccines, child nutrition and biologics.

Much of that expansion has come through the acquisition of rival businesses – a common feature of the pharma sector, where pursuit of pipeline and blockbuster drugs are the lifeblood of the industry.

In 2000, Pfizer acquired the business of Warner Lambert in what remains the largest single deal in the sector – an $89 billion deal – after a battle with rival American Home Products. The target for both was Lipitor, a cholesterol-lowering drug developed by Warner Lambert.

The Little Island plant – one of those earmarked for closure yesterday – came with the deal, having been acquired three years earlier by Warner Lambert as part of its expansion of manufacturing capacity for Lipitor. The Dún Laoghaire plant, which produces sterile injectables and which is also slated for closure, was a Warner Lambert operation too.

The second transformational deal for Pfizer, at least in Ireland, was last year’s acquisition of Wyeth. Where Warner Lambert offered a blockbuster, the Wyeth deal was very much about pipeline. Lipitor, the mainstay for Pfizer in recent years, comes off patent in 2011, and the company’s pipeline offered little prospect of replacing that lost revenue. In any case, traditional pharmaceutical approaches are coming to the end of their life-cycle. The future is seen as lying in biopharmaceuticals, an area in which Wyeth has become a leading player.

An early arrival in the Irish market itself, its first operation at Askeaton in Limerick back in 1974 is still producing powdered milk and other child nutritionals. Over the 20 years after that beginning it opened the Fort Dodge Labs animal health business in Sligo and the Wyeth Medica plant in Newbridge before investing €1.8 billion in a state-of-the-art biopharma campus at Grange Castle in Clondalkin.

By the time Pfizer swooped, Wyeth was the largest pharmaceutical investor in Ireland.

Given the overlapping global footprint of the two companies, consolidation was always on the cards. The decline of Lipitor and the multiplicity of solid dose (tablet) plants meant overcapacity was going to be an issue for the enlarged company.

On the biologics side, Pfizer’s tentative steps in this area were overshadowed in Ireland by Grange Castle, and it makes sense for Pfizer to centralise the biologics work currently done at Dún Laoghaire and Shanbally at the larger Dublin plant.

On the upside, IDA Ireland is optimistic about the prospects of finding new owners for some of the plants earmarked for closure yesterday.

The Shanbally plant was opened only last year, in a €190 million investment by Pfizer, to carry out the final stages of clinical trial processes and to conduct research on the later stages of the development of new medicines.

At Dún Laoghaire, €240 million has been invested in a major upgrade that has seen 200 jobs added over the past five years.

These investments set the plants apart from many older, less viable operations on the global market, an IDA Ireland spokesman said last night. With a three- to four-year lead-in time and plants pitched at one of the global pharma sector’s major growth areas, he said the State agency was hopeful of getting a good result out of yesterday’s bad news.

Pfizer remains positive about its future in Ireland. In its statement yesterday, the company said it was planning further capital investment and new jobs in its biotechnology operations in Ireland.

That may provide little solace for workers facing job-loss, but it is a sign that Ireland continues to be attractive to a sector which has been a major player in the economy over recent years and which is delivering the knowledge economy jobs which the Government sees as the basis of recovery.