AstraZeneca Gobbles Alexion

It's hard to imagine that it's a good thing for New Haveners or patients when Big Pharma grows ever bigger.

From your linked story on the CEO's "firing" (with a golden handshake):
David Brennan, a current Alexion board member and former AstraZeneca (AZO) - Get Report CEO, takes over as interim CEO immediately, the company said.

"The release makes no mention of New Haven."

Not exactly. The presentation slides by AstraZeneca's CEO are part of the release. They say the HQ is Boston and R&D is in New Haven. In the webinar, the CEO says "there's one headquarters and one research center in the Northeast United States," implying New Haven is the research center. There's potential for that to grow significantly in New Haven, even if the business leaders need to be in Boston because they need access to an airport.

On the Alexion website, there are currently 56 job openings in Boston, 52 job openings in New Haven, and about 100 openings in other countries all over the world.

This makes a good argument for expansion of service at Tweed with major airport hubs destinations included and an overseas route to an international airport in Europe. If New Haven is to be the center of research and development in the biotech, medicine, technology, science fields and to have a world class neuroscience hospital which will draw patients from all over the world, we will need an airport nearby to accommodate travel to major international airports for all the people involved in those industries. One of the reasons cited for major companies relocating to Boston, NYC, Atlanta, etc is the airport and transportation issues. The way to retain current companies and draw new industry here is to have an airport within a 15 minute commute of New Haven that can take you where the other centers of industry are. if we had a regular shuttle service matching the airport service hours to connect you to the train lines and bus lines, we would all benefit and not lose those companies to other municipalities with better transportation choices and more convenient airports with international service. If the companies that have left as they expanded or thought about relocating here and then decided they are unwilling to use Bradley in the Hartford area, we need to admit that fact, and expand service at Tweed to attract and retain the science/tech/medical field companies that are locating here, but then leaving due to the airport issue.

nero: On the contrary, "bug Pharma" pays very well, and offers much more stable employment than small pharma. The model for small pharma is (a) have an idea; (b) raise venture capital based on that idea; (c) burn through the capital seeing if the idea can become a marketable product; (d) if one does get a marketable product, sell the company, whose value is the intellectual property, to Big Pharma to market and manufacture, or, if no marketable product is produced, tell the venture capitalists, "Oh, well." Miles Labs in West Haven, UpJohn in North Haven, Bristol-Myers in Wallingford all offered great jobs with good long-term prospects for many years. Covidien/Medtronics continues to offer good jobs in North Haven, although the headquarters is in Ireland for tax purposes. Connecticut residents and politicians are amazingly unaware of which side their bread is buttered on, attacking Big Pharma, health insurance, defense, and Yale.

Having a biopharmaceuticals company specializing in rare diseases is a good thing for New Haven. This is a growth market that's recession proof. An acquisition by big pharma could be a problem if Astra Zeneca decides to consolidate New Haven research facilities with Boston HQ, but that's unlikely given the costs of labor and real estate in Boston. And last I heard Alexion had manufacturing in Rhode Island. This New England spoke and wheel is probably safe for the time being, and likely to expand further.

Heather C - really, talk to any company, small or large, in the area between Westport and New London. The lack of an airport with more than one connection is a major factor for every company in our area.

Currently, many companies located in this area have to hold their meetings and events in New York or Boston.

Many CEOs have testified in front of the state legislature about this, and Alexion isn't the only company that has relocated its CEO suite recently.

If you are a retiree, then going to Bradley or JFK a few times per year for a 6am or a mid-day flight isn't such a big deal. However, if you run a business or are trying to bring people to New Haven for any sort of event (other than an event for high school kids or maybe for certain academic types who don't get out of their laboratories much), most of the time you simply can't.

Really, nobody who travels often wants to come to an event in New Haven if it's going to take them two hours to get here sitting in a taxi during rush hour traffic on I-91 or coming from a NYC airport.

The state's failure to invest in Tweed has cost many thousands of jobs.

Even if Tweed had just one or two more carriers, you could hold your events in New Haven, and that would add at least a couple hundred jobs overnight.

I hope you folks are correct, and the Wall Street Journal is wrong about the deal:

"It would also improve profit margins by eliminating expenses over three years, by reducing infrastructure costs such as office space and distribution centers."

Heather C.: Tweed is never going to support international routes, except possibly Toronto. Bradley has had a few overseas scheduled flights (Dublin, I think), but they are subsidized by the state. For International flights, there are few airports better than Newark and JFK. More frequent rail connections to EWR would help (Amtrak is nice, but trains are infrequent), and a rail tunnel from Hunt's Point to LGA and on to JFK is my fantasy. Even within NYC, it's ridiculous that there is no direct rail connection from the airports to downtown & Midtown, although PATH is building a connection from EWR to Penn station. In contrast, subways run from Logan to Boston, from LHR to London, both Midway & OHare to Chicago, and commuter rail runs from Paris to CDG.

The view from across the pond:
https://www.ft.com/content/f23045bd-e9c7-40b2-80b3-b4c45f69f7b3
Note, three free articles/month on the FT if you register.

Let's get real:

• Consolidation of the company in Boston is very likely. Alexion almost moved its entire operation there a few years ago and AstraZeneca has no reason to build a foothold in our small city for its multi-billion-dollar business... especially when the most important city in the healthcare industry is right around the corner.
  
  
• Global companies are embracing work-from-home and making big changes in their supply chain operations due to the pandemic. As the WSJ article about this acquisition notes, this means AstraZeneca will be shrinking its physical footprint not expanding it. There's no motivation to keep a mostly-empty building in New Haven open and, at the very least, they won't be moving more employees here.
  
  
• Sporadic business travel of execs from a single company is not enough justification for an entire airport's operations (sorry Tweed boosters flooding the comments section).

Simply put;is New Haven destined to be the Silicon Valley of biopharma or will the larger companies buy out not only Alexion but Biohaven as well and use their considerable coffers to move the newly merged companies out of a high tax state? What incentive do they have to keep their business in CT? MASSACHUSETTS taxes are much lower. I am hoping they see the talent we have here but from a business standpoint we are an underdog

Sean, in case you haven't noticed, there are hundreds of companies in the area that conduct business outside of Connecticut. Within the biotech sector alone, BioHaven and Arvinas are each among the 50 most rapidly-growing biotech companies in the entire world. Who should we listen to about this - Sean, or the CEOs of the area businesses who have given detailed testimony to the legislature on how badly their businesses are hurt by not having good access to a few flight options?

Boston is where it's at.

It's got great culture, great learning institutions, great talent, great transportation, and great housing.... everything which today's young folks who are driven to succeed desire, and companies - especially BIG companies - like that combination very very very much.

Hey everyone on the airport issue- companies who have considered CT have told the officials time and time again about the airport and mass transit issues. There is a world class neuroscience hospital that is being built on the St Raphael's campus. It will draw thousands of patients, their families, medical and science professionals from all over the world to New Haven. Biotech and other science, medical and technology companies are relocating or starting up here. The hotel builders are building hotels right and left. The residential developers are snatching up properties and building and remodeling "market rate" and luxury amenities buildings all over town. New Haven is being positioned to be the next Silicon Valley. Post pandemic more people won't need to go into the office every day, which means they can live anywhere but will still need to travel for work on a regular basis. High speed trains won't happen with our current track system setup, but we can make mass transit to the airports more convenient, and increase our airline service lines at Tweed. New Haven and the Shoreline from NY to RI is the desired location that everyone is buying homes in and locating businesses in. Well heeled NYC residents fled to Fairfield County, Litchfield and New Haven and all along the shoreline towns, but almost nobody went to Hartford or the NorthEast corner of the state. We need to realize that the airport demand will be increasing, our city is changing, and we need to benefit from those changes.

Heather, you're right. Case in point, New Haven-based Arvinas, one of the fastest-growing biotech companies in the world, doubled again in value today after finding another cancer treatment.

Now that they are worth many billions of dollars do you think they want to deal with the 2-hour traffic jams to Hartford or JFK every time they have to fly to meet colleagues or investors? Do you think those colleagues and Board Members want to schlep to New Haven for meetings? No they don't. Bring just three or four connecting flights to Tweed or even to Sikorsky, and companies and events like these could stay in New Haven. As it is now they definitely won't.

Unfortunately, Connecticut's fiscal condition and, more importantly, decades of bad economic policies (including regressive taxation) have done permanent damage to our state's competitiveness - even compared to neighboring high-tax states. It took a global pandemic to get people moving back here from NY, primarily because of the abundant space in many of our suburbs compared to their cities - although I am not sure if that space equals safety even on a regional scale.

Some economists believe that if you discount the "dot com" era, Connecticut has not had true organic growth (in any industry) since 1994; others say 2004. Some say that Connecticut will become a wasteland even if we lost a couple of major defense contractors. Can you imagine New Haven without Yale University and YNHS?

Our state is contractually obligated to pay ~ $120+ Billion over the next 30-40 years but we have very little to show for it. Large businesses know that Connecticut has only a few choices, 1) default on their obligations 2) refinance large amounts of debt to buy time (but at significant cost and percentage of annual budgets - it will soon be 50%), or 3) raise taxes.

So if you are a large employer would you come to Connecticut, knowing that the state's structural problems still exist and are actually getting worse. Who do you think they will raise taxes on? Large businesses seek a balance between the risk \ reward ratio of an acceptable ROI. Managers seek to maximize profit but also to mitigate and control risk. Connecticut's fiscal condition is a major risk that they can't control.

Most major CEOs have very little confidence in the politicians we elect to fix our fiscal issue and for good reason. Many times the same people are elected that have already failed to fix the issues, in fact, some of them created the bad economic policies in the first place.

Good news about the research jobs in New Haven: you can't do your lab work from home. The HQ jobs may move to "work from home" but most biotech research jobs require being in the lab, a lot.

Paul, Sean, et al., it is likely that the economic effects of the acquisition will be mixed. It will reinforce the downward pressure on office demand. But while many employees (in pharma and other sectors) will choose to work from home, you can't put a lab in your basement. The recent purchase of 55 Church Street indicates that there is strong demand for lab space, even after Alexion moved its headquarters to Boston. The acquisition will increase the amount of capital that Alexion can access and the amount of research it can conduct.

1644, big Pharma has a real impact on the local economy. But its pricing policies mean that Americans pay far more for prescription drugs than residents of other advanced economies. You can simultaneously recognize the former and criticize the latter.

"But its pricing policies mean that Americans pay far more for prescription drugs than residents of other advanced economies."

This is due to U.S. laws and regulations, not because the companies charge more here. Companies will charge what they can. Change U.S. law, have single payer, allow negotiation on price, etc., and we'd pay a similar amount. (Other advanced economies also pay a lot for prescription drugs btw, just not quite as much, especially for certain types of drugs)

1644, might big Pharma have something to do with those laws and regulations? If you believe they do not, I have a bridge you might want to buy.

I'm not optimistic we will have single payer anytime soon (or the German and Swiss model, which also works well). Allowing the federal government to negotiate drug prices is more likely.

@ 1644 on December 13, 2020 2:46pm Heather C.: Tweed is never going to support international routes, except possibly Toronto. Bradley has had a few overseas scheduled flights (Dublin, I think), but they are subsidized by the state." Many good points, Bradley is international by name only. JFK is the best on the east coast, many airlines and many non-stops to dozens of cities in Europe, Boston also has a large number of flights across the pond. Tweed will never have flights to Europe, the market is too small and even Bradley has found out that it cannot support flights to Europe without state subsidies. Years back Northwest airlines had service to Amsterdam from Bradley and when the states money ran out, so did Northwest. Connecticut does not have a large enough market to support a real international airport and both JFK and Boston Logan airport are closer than Bradley for most residents.
Tweed could be a good regional airport and was doing good till the virus hit. American's numbers were steadily climbing and larger planes were added to meet the demand. I feel another airline will take American's place but first the virus needs to be beaten and that will take time.