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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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June 26, 2012

Roche Closes Nutley, Once Its US R&D Home

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Posted by Derek

Big news, and unfortunate news for the New Jersey end of the pharma business: Roche is closing down their entire site in Nutley. That's a loss of 1000 jobs, and an end to a research site that's been going since the 1930s and which was once a huge presence in the R&D world. The research is going to be picked up by Roche sites in Germany and Switzerland. The company says that it's going to open a smaller translational research center, though:

A location is being identified on the East Coast to focus on translational clinical research to support Roche US-based clinical trials and early development programs, support and maintain Roche interactions with the U.S. Food and Drug Administration (FDA), and enhance Roche's collaborations with US based partners, such as academic institutions and biotech companies. This new center is expected to host around 240 employees.

That sounds like a Boston/Cambridge deal to me, but we'll see. For now, we have a very large closing indeed.

Comments (54) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Malthus on June 26, 2012 12:24 PM writes...

So what are Switzerland and Germany doing right?

Possibly their politicians are not owned by foreign conglomerates? This is the death knell for chemistry in America.

The US corporate business plan seems to be to have academia do your research for you then have China do the manufacturing.

I wonder how the ACS will spin this as 'good for US chemists'?

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2. heretic on June 26, 2012 12:41 PM writes...

Germany is legacy Boeringer Mannheim, Basel is motherland, Genentech was the love child of J. Drews.
Hope everyone lands on their feet

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3. Jersey Tomato on June 26, 2012 12:42 PM writes...

For many years, New Jersey was a cost-competitive place to do business. For the last twenty years or so, taxes, regulations, etc., have been increasing at a steady, rapid pace. Now that New Jersey is at least as expensive as Cambridge and other places with more prestigious reputations, the only people who are surprised that companies build elsewhere or move out of the state entirely are New Jersey politicians and the editors at newspapers like the Star Ledger.

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4. Nick K on June 26, 2012 12:44 PM writes...

The Nutley site was tremendously creative and productive in Chemistry over the years. This is a great loss.

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5. David Formerly Known as a Chemist on June 26, 2012 12:56 PM writes...

Unfortunately these types of announcements aren't even shocking or surprising anymore. Look how far (down) the western aspect of the pharma industry has come the past 10 years. Very sad indeed.

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6. Hap on June 26, 2012 1:13 PM writes...

Prestige doesn't pay the bills though - drugs do. If all those academic interactions can help you develop more, cool, but I wouldn't hold my breath waiting for them.

If you're interested in biotech, the biotech industry is supposed to be spread down the East Coast. Since pharma has been pushing into biotech more and more, I don't know that the distance helps you make more drugs.

Finally, everyone wants cheaper places to work, but no one wants to fess up for the infrastructure to make those places useful. Supposedly we've gotten more jobs in OH by whacking taxes (sending the spending to municipalities), but if municipalities cut spending, too, then someone's going to pay for that infrastructure. Unless the economic activity rises a lot (more than 50%?), you won't get enough from lowered business taxes to sustain it. Since (in general) the pay isn't as high here, you'd have to tax individuals more in lower-cost areas to pay for their infrastructure (even with the lower project costs, I would guess). Not sure how that will work.

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7. psl on June 26, 2012 1:23 PM writes...

I asked chemjobber this, but I'll ask people here. Does anyone have a graph showing total Chemistry (ideally broken down into BS/PhD) jobs in pharma vs year? I'd like to illustrate to colleagues how grim it is in the US.

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8. schnyber on June 26, 2012 1:25 PM writes...

5 Down (SP, Wyeth, Sanofi, Novartis, Roche) 2 to go (Merck, BMS) in NJ

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9. Ted on June 26, 2012 1:27 PM writes...

Hi:

My condolences to the many folks in Nutley. I wish you all the best in finding new careers.

@1: There are German companies closing pharma operations as well.

-t

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10. Sili on June 26, 2012 1:58 PM writes...

For many years, New Jersey was a cost-competitive place to do business. For the last twenty years or so, taxes, regulations, etc., have been increasing at a steady, rapid pace.
Indeed. If only corporations could do as they please, everything would be honky-dory. Permalink to Comment

11. Jersey Tomato on June 26, 2012 2:08 PM writes...

@6 - If only the growth in local spending was due to infrastructure! It's been due to gold-plated retirement benefits for government employees and patronage-driven pet projects. My fifty year old neighbor just retired from his municipal job and is moving to Florida to go fishing. I'm the chump who is staying in town and paying for his new boat with my property taxes.

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12. Jersey Tomato on June 26, 2012 2:19 PM writes...

@10 - I must have missed the part where someone said that "If only corporations could do as they please, everything would be honky-dory." No one is saying that there should be no taxes or no regulations, so please stop building straw men. To pretend that the relative costs and benefits of doing business in one place vs another aren't major drivers of where companies choose to grow or to shrink is simply ignorant. If the cost of doing business in a place like Nutley (or Madison, or Hanover, etc.) gets within shouting distance of doing business in a place like Basel or Cambridge, the positive case for staying in Nutley gets pretty slim, pretty fast.

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13. Anonalso on June 26, 2012 2:41 PM writes...

@12 -- What I do not understand is why companies flock to the same sites. Does any one really believe that Cambridge or Basel is any cheaper to do business than New Jersey? Remember, Mass just passed a law recently restricting the transportation of hazardous material during normal working hours. Think about how that impacts cost of waste disposal that has to take place during third shift.

If I were a company, I would be moving Texas (no tax) or the Midwest (not Chicago) where I could find land on the cheap and get all kinds of tax discounts. In addition, when my employees find out they can get twice the house for half the money I think most would be ready to go.

Just my 2cents.

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14. milkshake on June 26, 2012 2:46 PM writes...

which R&D groups were located in Nutley apart from the medchem and biology, pharmacology? The Roche process development - is it done in Switzerland?

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15. Markie on June 26, 2012 2:58 PM writes...

Anonalso.

I worked in the Chicago area in biotech. It was difficult to recruit top talent to the middle of the country. If your job did not work out it was a guaranteed trip back to one of the coasts.

Personally I much prefer living in my small MA house. YMMV.

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16. Hap on June 26, 2012 2:59 PM writes...

1) Damn, I hadn't realized the bennies were so good - must be why OH has the 8th biggest local tax burden, even after trying (and failing) to hose our employees. Of course, the average person in OH makes what the average person here made thirty years ago. I'm glad someone's making out well.

The other thing about benefits is that they were generally given to replace higher pay. However, since the politicians running cities and states didn't actually want to pay for them, they lowered taxes and conveniently forgot to put away enough to deliver what they promised, because they wouldn't be around when the bill came due. Since the state has nowhere to go, and the employees can actually strike, when the bill comes due, someone's stuck with it. Blaming the unions and city and state employees for that bill isn't entirely honest.

2) They'll be happy to buy more house with less money. They'll likely be less happy, though, with the schools and roads and other things that money (doesn't) fund. States winning the race to the bottom are still at the bottom.

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17. Brian on June 26, 2012 4:53 PM writes...

@15

I think in this job market, people will go where the jobs are. Just look at the shale gas in ND of all places (although that is a different sampling of the job market). In most cases, I don't see geographic preference based on personal tastes wins out against long-term unemployment.

I do understand people may be hesistant to uproot and move to a place with more limited opportunities, especially if it is for a job with a fixed duration or in a particularly unstable field. This is a self-sustainng feature of the high local concentrations of employers on the coasts.

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18. Roger on June 26, 2012 5:44 PM writes...

So what? Unemployment for US chemists is only 3.8%!

Chemistry positions are obviously being created by the thousands to counter any losses.

It's no different than any equilibrium dynamic. Distort the equilibrium and gradually the jobs 'appear' to balance the reactants (unemployed) with the products (employed).

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19. Hap on June 26, 2012 5:56 PM writes...

17: If job security is the ability to get another job, and the main recommendations for unemployed people revolve around lots of networking, then working in a place with limited alternatives and few other people doing what you do could be a ticket for future long-term unemployment.

The nature of the coastal markets is not only driven by fear of job loss and the perceived facility of finding a new job, but also by the availability of funding (so that new businesses can start) and of copious infrastructure built by lots of (tax) money. Schools also help a lot, both for potential education, networking, and ideas. The race to the bottom assumes that these are nonfactors, but I don't think that that is correct.

The two-body problem is also likely to rear its ugly head, since if job instability is endemic, two people having jobs (where you can at least sustain yourselves on one job if necessary) is an important tactic to avoiding financial problems.

I understand that you made some of these caveats, but for a lot of people they are likely to be deal-breakers.

Pharma seems to be going all in for the "let other people find your drugs for you" model. I know if you can wager all you have on a single hand, lose, and walk away, you'll have the world and all that's in it, but I wonder what Kipling thought the benefits of betting all of someone else's things on a single hand would be.

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20. Hap on June 26, 2012 6:04 PM writes...

I grew up in NJ, and seeing the chemical plants and jobs there was part of the reason I wanted to be a chemist. Considering the BASF plant just off the NJ Turnpike just went away and most of pharma seems to have gone committed suicide, I'm wondering where more chemists are going to come from.

Maybe more "we need science and technology workers" speeches will solve the problem. Right?

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21. Roche Colleague on June 26, 2012 8:37 PM writes...

Truly saddening news. I've interacted with some very talented colleagues from Nutley, and feel for them during this time. I also feel for the Palo Alto colleagues who relocated to Nutley and are now flung into this situation.

I hope everyone gets through this tough time intact, and wish everyone at Nutley the best.

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22. Thomas McEntee on June 26, 2012 9:27 PM writes...

@20: I too grew up in NJ, in the 50s and early 60s and yes, the chemical companies in northern NJ made a boy's eyes wide with wonder. Riding in my parent's car on the NJ Turnpike just north of Newark Airport, wafting through the open garbage burning in Secaucus, you could smell the sweet odor of coal tar chemistry still being run by small companies like Trubek Chemicals, just east of the Turnpike. My first real job in the chemical industry was with the Berkeley Chemical Company (Berkeley Heights, NJ) in the early 1960s, a division of Millmaster Chemicals. We produced intermediates for the blockbuster drug, Miltown (meprobamate). But up the road, on Rt 3, a new class of psychotropics had hit the street. Our days were numbered and we knew it. Sad to see this happen.

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23. mad on June 26, 2012 10:13 PM writes...

And they just overhauled a bunch of labs and built a fancy bridge there...internal politics?

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24. Hap on June 26, 2012 10:23 PM writes...

I liked all the roads and industry north of Exit 9, and particularly north of 11. (My grandma's house was off of the Parkway, so we didn't go further north than 11 on the Turnpike all that often until I went to college and had to go to Newark Airport). The smells didn't bother me, and I like(d) the oil refineries. I think we might have gone by Roche, even (when we were with my grandparents from Orange).

Somehow driving by 12 Oxford Street or the BC chemistry building doesn't have the same attraction to me. I know the chemical industry did a lot to make its bed, and that neat chemistry goes on in schools, but seeing actual big chemical plants and useful things coming from them tells people what all that chemistry is good for, and that there is something to that stuff they saw in high school, and maybe in college.

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25. experienced chemist on June 27, 2012 12:30 AM writes...

This is just a wake up call for all the researches in pharmaceutical industry, especially for the medicinal chemist. There is no mercy when the investors are chasing for return. When people put money on you, you shold fully understand what they expect from you: return. Nobody on earth want to give you free money for a long period of time without the assurance of big return. How much money will be saved? The annual cost for 1000 people is not small. At least 300 millions could be saved. Using this amount of money, how many phase I compds could be in licensed? As far as I konw, this site hasn't been produced anything lately. All the top managers are playing politics. Now the end is coming. They all realized that politics is important, but not all. You have to deliver good results. I am sure there are lots of early stage compds from this site. probably all of them will be trashes because there is no real value from the long term. My heart goes with the people affected. What I am trying to say is not to play a blame game. As an experienced chemist, I have seen enough. In big pharms, there is really no productivity. Most of the chemists don't understand what they are making. If there is a breakthrough coming out, then at least four or five other companies will jump on the same scaffold. Then many many chemists will duplicat their efforts to make the same compds but from different competitors. Sometimes they coudl spend months just figuring out what is the competitor's lead compd. Then they will resynthesize it and do lots of test. Who doesn't think this is a big waste for our society. Why waste money to duplicate the same thing. This is a big problem. Many big pharms are running out of novel targets. The majority is following literature with the hope to hit the jackpot. The chance to find something new is slim.
All the investors have realized this before we know it. The investors' eyes are not blinded. They know what is going on in the big pharms. I have no answers on how to increase the productivity. I feel there will be bad news.

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26. Nadine on June 27, 2012 4:35 AM writes...

Swiss newspapers say (http://www.tagesanzeiger.ch/wirtschaft/unternehmen-und-konjunktur/Roche-verlagert-Stellen-in-die-Schweiz/story/22712713) they gonna open up 35 new jobs in Switzerland and 15 in Germany. Don't know how that can cover up for the 1000 jobs in the US. I think they just wanted to have the press release sound less bad.

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27. okemist on June 27, 2012 8:20 AM writes...

A labmate of mine worked at Nutley in the early 80s and said he left because the new CEO had been there 5 yrs and no NCE's were produced, he feared they would have large layoffs soon. It turned out after he left, they just got a new CEO. What a different time it was then!

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