Pfizer cutting 1,500 area jobs
Skokie, Mt. Prospect, Elk Grove Village hit

By Bruce Japsen, Tribune staff reporter. Tribune staff reporter Susan Kuczka contributed to this story
Published April 30, 2003

In a major blow to the Chicago area's high-tech job market, the world's largest drugmaker said Tuesday it will eliminate about 1,500 jobs by shuttering the former G.D. Searle & Co. operations over the next 18 months.

The operations include facilities in Skokie, Mt. Prospect and Elk Grove Village.

The move by Pfizer Inc. comes less than two weeks after the New York-based drug giant took control of the former Searle operation from Pharmacia Corp. On April 16, Pfizer completed its nearly $60 billion purchase of Pharmacia Corp., causing workers around the world to brace for changes under new ownership.

In Skokie and surrounding suburbs where the workers live, the decision to shutter operations came as a surprise, particularly because one of Pfizer's top-selling drugs--the blockbuster arthritis pill Celebrex--was developed locally.

Many of the workers at the soon-to-be-closed research buildings will be offered jobs outside of Illinois.

The decision affects hundreds of highly skilled laboratory technicians as well as drug researchers, many of whom have doctoral degrees and annual salaries topping $100,000.

"I'm shocked," said Skokie Mayor George Van Dusen. "I had been hopeful we would escape [the closure] because of the value of the research laboratory here."

Indeed, Celebrex generates nearly $3 billion in annual sales for Pfizer, and researchers at local operations have been involved in next-generation treatments that could have more promise, industry analysts say.

In the more than 90 years that Searle has been based in the Chicago area, important drug discoveries have taken place and pharmaceutical careers have been made. Searle scientists developed the motion sickness drug Dramamine and the low-calorie sweetener NutraSweet.

The company was once run by U.S. Secretary of Defense Donald Rumsfeld.

In recent years, however, the former Searle operations have been scaled back under a series of ownership changes. Searle was acquired by St. Louis-based Monsanto Co. in 1985 and in 2000 by New Jersey-based Pharmacia, which reduced the employee count from its peak of 3,000 in 1999.

Under the Pharmacia ownership, the Searle name was stripped from the main building in Skokie.

But Pfizer said the legacy of Searle will live on elsewhere because "many" employees will be offered jobs throughout the worldwide operation.

Pfizer is projected to spend $7 billion worldwide this year on drug research.

"We are shutting down the facilities but the productivity remains with the people," said Pfizer spokeswoman Mariann Caprino. "These are highly educated and extremely valuable workers. We are doing everything we can to retain this talent as much as we can."

The company said it needs to consolidate its 25 research and development facilities around the world. It counts the buildings in the Chicago area as one facility.

"It is just too geographically dispersed to allow the company to be efficient and productive in the long run," Caprino said.

The closest Pfizer operation to Chicago is in Kalamazoo, Mich., where the company is also restructuring operations.

Research and development will leave that city, but Pfizer plans to establish new centers that will focus on drug safety evaluation and pharmaceutical sciences, the company said.

It is unclear how many of the 6,300 Kalamazoo employees--including 2,000 involved in research--will be affected.

Following the merger with Pharmacia, Pfizer has about 140,000 employees worldwide in about 100 countries. The company sells some of the world's best known and top-selling brand-name drugs including the cholesterol treatment Lipitor, the antidepressant Zoloft and the impotency pill Viagra.

Yet a larger Pfizer will be under intense pressure to cut expenses and meet Wall Street's aggressive expectations for earnings. Pfizer is projected to generate nearly $50 billion in sales this year and needs to cut $2.5 billion in costs over the next three years to meet its earnings targets, analysts say.

"Whatever the margin is, Pfizer has to improve it to make sure the economics of the deal work out," said drug industry analyst Kenneth Abramowitz, managing director of The Carlyle Group in New York.

It is unclear just how much Pfizer expects to save by consolidating its Chicago-area operations, but analysts say the reduction in salaries and benefits could easily top $100 million by the time the company has completed its local restructuring.

"The senior people could be making $200,000 and a lab tech could be making $40,000," Abramowitz said. "The opportunities for them in Chicago are modest, but in the rest of the country they are fine."

Still, Chicago is an emerging and active biotechnology center, increasingly attracting venture capital and start-up companies. The area is also home to such established companies as Abbott Laboratories and Baxter International Inc., which are always recruiting research talent.

"This area in general has large life sciences-based companies and top-tier research institutions," said James Tyree, chairman of the Illinois Biotechnology Industry Organization and vice president of pharmaceutical business development at Abbott Laboratories.

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