(This story has been posted on The Wall Street Journal Online's Health Blog at blogs.wsj.com/health.)
Posted by Jonathan D. Rockoff
Now we know what will happen to Pfizer's (PFE) research center in Ann Arbor, Mich. The University of Michigan plans to buy the 174-acre site for $108 million and use it for its own biomedical research.
Once upon a time, the storied labs helped create the world's most successful drug, Lipitor, and employed thousands. Its closing became a sad metaphor for the drug industry.
The university, with its substantial endowment, became the buyer of last resort as financial gloom descended on Michigan and turned "most other commercial players - including real estate developers - into non-players," wrote Nathan Bomey in the Ann Arbor Business Review. "In this environment, how would you drum up enough credit to buy a major life sciences complex in the state with the worst economy in the nation?"
As a result, the university got a bargain. The $108 million to be paid for the complex represented a "shockingly cheap price," Bomey wrote, noting the university gets "the entire campus for hundreds of millions less than Pfizer invested in the property in the last few years."
The university said in a statement it expects to complete the purchase in June.
While U of M is expected to hire a couple of thousand researchers and support staff over the next 10 years, Ann Arbor will take a tax hit as a result of the takeover by the university. Mayor John Hieftje told a reporter from the Ann Arbor News that the city would have preferred "a private entity, tax-paying entity" buy the site. The tax loss smarts all the more because Pfizer, as it leaves the area, has sought a 50% reduction in its tax bill.
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