July 7, 2009
It's Biotechnology Hub Interruptus As Pfizer Pulls Out Of Mission Bay
"New York drug giant Pfizer has pulled the plug on plans to open a biotech research center [at 455 Mission Bay Boulevard South] near UCSF's Mission Bay Campus, a move that deals a blow to San Francisco's hope of becoming a major biotechnology hub."
∙ Pfizer drops planned biotech research center [SFGate]
∙ Pfizer setting up key unit in Mission Bay (Not) [San Francisco Business Times 8/08]
Bio Blow To Mission Bay Development: Alexandria Delays Two [SocketSite 11/08]
First Published: July 7, 2009 7:15 AM
Comments from "Plugged In" Readers
Posted by: nottimhawko at July 7, 2009 8:13 AM
I think, together with Goodman's departure a few months ago, this has more to do with the Wyeth acquisition than anything about SF.
Posted by: wisc at July 7, 2009 8:33 AM
Both California's GDP and net physical growth (housing, roads, buildings) have peaked. I doubt we'll ever see those levels again. If we do, it will take at last 5 years.
Posted by: Gregor at July 7, 2009 8:56 AM
When Bush was in office, SF had an extra appeal to biotech because of California's and SF's defiance of the Federal funding boycott of stem cell research. Now that we have a new administration, perhaps SF has lost that advantage.
Posted by: The Milkshake of Despair at July 7, 2009 9:09 AM
Too tough to compete in a down economy when you locate facilities in high cost areas.
At 10% unemployment and rising, you locate the business in lower cost areas and tell job seekers to move. In a good economy, they don't. In the economy of the next 5 years, they do.
This is going to start happening more and more with existing companies. They know they can pay new employees way less than the current ones, so they really don't care too much about retaining their workforce like they did years ago. They'll pick up and move to the east bay or move half their jobs to Texas or Arizona. If half the people quit, well, no big deal, their replacements will cost 30% less.
The balance of power has shifted to the employers, and those who take advantage of it will outperform their competitors. Those who don't will go out of business. So either way, you'll start to see an exodous from the high cost bay area as leases come up for renewal, until the costs here get closer to costs elsewhere. If the companies refuse to move, they'll be acquired and forced to move.
Posted by: tipster at July 7, 2009 9:13 AM
The Wyeth purchase + Goodman's departure + no hospital as of yet = this story. Tipster, you know Wyeth is in South San Francisco, right? A much, much lower cost area, surely. This site has changed a lot recently. The other perspectives are gone. Too bad.
Posted by: anonn at July 7, 2009 9:26 AM
Mission Bay was always a flawed concept: locate a bunch of companies with suburban locational preferences in a high cost area with limited land. Instead of chasing trendy industries like biotech and "green" businesses to boost Gavin's political prospects, the City would be much better off focusing on businesses that it typically ignores - those that are already here and provide a hell of a lot of local employment and tax revenue.
Posted by: SF biz owner at July 7, 2009 9:36 AM
Wyeth and Pfizer are east coast companies. They have facilities all over the world. The facility in SSF is tiny. They clearly are not looking to expand here at this time.
The name of the game in that industry is now low costs. From the WSJ today:
"Mr. Rodriguez is part of a strategic shift in the $770 billion pharmaceutical industry to target the working poor in the developing world. For the first time in a half-century, sales of prescription drugs are forecast to decline this year in the U.S., historically the industry's biggest and most profitable market. The Obama administration and Congress's attempt to pass legislation overhauling the health-care system, including provisions that could lower the cost of medicine, could put drug makers' U.S. businesses under further pressure."
Posted by: tipster at July 7, 2009 9:37 AM
I tired of you linking to diparate news sources, blogs, wiki, and the like a very long time ago. If you think I read that you are mistaken. Wyeth's 100 strong research wing stays in South City versus Pfizer inserting one here, and that's your jumpoff for your usual stuff.
Posted by: anonn at July 7, 2009 9:50 AM
What will this pfizer decision affect house price in mission bay and soma? Any expectation?
Posted by: FHB at July 7, 2009 9:52 AM
The land pirates were counting on biotech as the next bubble. There will be no new bubble. Deflation will continue apace until all real estate and rent arrive at their historical trends, adjusted for inflation year-over-year from when the bubble began (after temporarily overshooting to the downside -- the sweetspot!!).
Posted by: two beers at July 7, 2009 10:07 AM
anonn, what's wrong with linking to other sites when they're directly relevant to the discussion??
SF's biotech isn't even out of the gate yet and already it's hitting a rough spot. The next few years are going to be interesting!
Posted by: Sb at July 7, 2009 10:13 AM
I wouldn't say that Pfizer pulling out is indicative of problems with Mission Bay. Pfizer is a company under huge stress who just acquired another large company (Wyeth). Pfizer has recently laid off between 10-15% of its workforce and is under intense pressure to lower costs further.
Both Pfizer and Wyeth are New York area based companies (NY, NJ). Thus, clearly Pfizer/Wyeth will retrench and likely will reduce the number of employees at ancillary sites.
given all that, it makes no sense for them to expand into Mission Bay.
That said, I do agree with the point brought up by others: SF's high costs make it unattractive in terms of doing business during a massive recession. sf has many plusses as well (for example educated workforce, etc) and thus it remains to be seen which is more important...
regardless, this is one reason why SF being "special" does not insulate it from the goings-on in the rest of the country. As costs drop elsewhere they must eventually also drop in SF to keep SF competitive. Likewise, costs in the US must drop to keep us competitive worldwide.
Posted by: ex SF-er at July 7, 2009 10:13 AM
@two beers bubbles aside, how much further do we go before things are at historical trend level? it seems like guesswork to me at this point.
Posted by: nottimhawko at July 7, 2009 10:18 AM
It's not even out of the gate yet is right. Again, there is as of yet no hospital. However, linking to items that are actually not directly related to the discussion, but are rather tangential, while simultaneously ignoring more positive viewpoints from biotech figures actually interviewed within the root story is disingenuous. That's what Tipster engages in on this website daily.
I actually lunched down there yesterday. The place is really alive. No seats at the Bakar pub at 1:30!
Posted by: anonn at July 7, 2009 10:28 AM
This is less about SF/Mission Bay than it first appears. It's also not really about the fact Pfizer is HQ'ed on the E. coast.
I know people at Pfizer who were impacted by this, and the decision was primarily the result of the Wyeth acquisition, which in part led to Goodman's departure. Also, I heard than many of the Rinat employees currently in SSF preferred to stay in SSF b/c most of them live on the peninsula. Without Goodman there to really push the move to Mission Bay and with the rank and file employees at Rinat generally preferring to stay put, it's not surprising that the move lost momentum and they decided to stay put. Even if the move operationally was a wash once completed (and I have no idea what the operating cost difference would have been), there's substantial cost in just moving.
Posted by: anon at July 7, 2009 10:34 AM
nottimhawko - How should I know? I'm not an expert, but I play on the internet!
But the analysts I pay attention to are the ones who called the bubble right from the start, people like like Roubini, Yves, Mish, CR, and many others who were laughed at for years (why would anyone listen to the cheerleaders, who have been wrong about everything?). Some of those who've predicted correctly up to now think the skid might slow down in a few years; others think we're in for a correction which will make the Great Depression look like a blip.
Consider that there's somewhere in the neighborhood of $500 trillion (yes, you read correctly) in credit default swaps that need to be resolved, and I humbly submit that we will not see a sustained upturn for decades. Consider the implications of $500 trillion in relation to the GDP of planet earth, and the fact that the bankers WILL be made whole, standard of living for the rest of us be damned.
Posted by: two beers at July 7, 2009 10:38 AM
"I actually lunched down there yesterday. The place is really alive. No seats at the Bakar pub at 1:30! "
So lunch seats are more relevant than Tipster's link to the Wall Street Journal. Really "Annon", can't you do better than that?
Posted by: onewholikeslinks at July 7, 2009 10:52 AM
This is anon@13:34 here with one other point - I don't think Pfizer had any real plans to create a whole new bio-tech facility in Mission Bay. This was primarily about moving the Rinat group from SSF to Mission Bay. Notice that Pfizer only had plans to occupy one building in Mission Bay. The Rinat group currently occupy one building in SSF, and just from eye-balling it, the sq. footage of the current building in SSF looks similar to the building under construction in Mission Bay.
As I said before, I think this is primarily about the internal workings within Pfizer. It doesn't really say too much on the viability of Mission Bay as a research center other than it wasn't a big enough carrot to get the company to incur the cost to move a division 10 miles up the road.
Posted by: anon at July 7, 2009 11:09 AM
No seats at the Bakar pub at 1:30!
I had the same reaction when I went to visit a friend in the Marina in 2001. Every place was PACKED! I thought, wow, what a happening place. Figured I'd ask people where they worked, that they could take such long lunches.
Methinks you should have investigated more...
Posted by: tipster at July 7, 2009 11:22 AM
So lunch seats are more relevant than Tipster's link to the Wall Street Journal. Really "Annon", can't you do better than that
No, onewholikeslinks, how about you first explain to me how Tipster's link and quote pertain?
My point was not that "It's all good. I was down there yesterday and lunch was rad, bro."
My point was: This is still in its infancy. Whether or not one 100 person office is housed there has very little to nothing whatsoever to do with what Tipster said, quoted, or linked to.
That lunch thing was an aside, just an anecdote meant to show that the area is far from dead. Develop some reading comprenension prior to your next direct address toward me. But before then, an assignment. Explain the relevancy of Tipster's take, link, and quote with regard to whether or not Pfizer houses a small wing in Mission Bay or not.
Posted by: anonn at July 7, 2009 11:29 AM
Don't read too much into one deal. Too bad S.F. has missed a key deal. But these thing happens all the time. I doubt cost is much of an issue. The size R&D center is miniscule within the corporate giant. When you do R&D work you need the brightest minds. They want to be here because the brightest minds are concentrated here. There are plenty of cheap land all around the country. But it is no good if the talent you need don't want to go there.
Posted by: Wai Yip Tung at July 7, 2009 11:44 AM
"Methinks you should have investigated more..."
It's a school facility, buddy. People were talking science everywhere within my not very attuned earshot. LOL. SOrry for not eavesdropping.
Posted by: anonn at July 7, 2009 11:50 AM
Wai, nice to hear a new voice.
Posted by: fred at July 7, 2009 12:33 PM
When you do R&D work you need the brightest minds. They want to be here because the brightest minds are concentrated here. There are plenty of cheap land all around the country. But it is no good if the talent you need don't want to go there.
This is true. Stanford and Berkely are both in SF, and many top grads from around the country move here. But SF is not unique in this and may not even rank #1 in this area (I'd guess Boston would be #1 in many people's minds with Harvard and MIT right there as well as Boston College and all the Ivies that are just a quick carride away). There are other concentrations of "the brightest minds" across the nation and the world. SF must stay competitive with those other areas.
Some other areas of education-concentration are places like Boston (arguably the best knowledge concentration in the country), NYC, Chicago, Madison, Grand Rapids Michigan, DC, Austin Texas, the Twin Cities, Boulder Colorado, the Research Triangle in NC, Seattle, and a whole bunch of other areas I've forgotten.
There are also other competitors that have high numbers if not concentrations of high knowledge employees like LA, San Diego, Philadelphia.
many people would consider relocating to the cities listed above (they are quite desireable). they all have good R&D capabilities although in different areas. (and only some of them do biotech)
As I've said before on socketsite, I used to research stem cells and cutting edge transplantation years ago. I left SF because it didn't make sense to stay there. And I pulled others away from SF as well. Researchers in general do not get paid well given their education/drive/work IMO. Many great ones can be lured to lower cost areas, especially in hard economic times and especially as they age. (they're more willing to do the 1 BR condo thing when they're young, and more interested in the slower life 4Br 2kids and a dog thing as they age)
SF will always hold a premium to most other locales. But it still must compete with other knowledge centers for the knowledge employees... and if those other places get cheaper it does put pressure on SF itself as well.
Posted by: ex SF-er at July 7, 2009 12:55 PM
"When Bush was in office, SF had an extra appeal to biotech because of California's and SF's defiance of the Federal funding boycott of stem cell research. Now that we have a new administration, perhaps SF has lost that advantage.
Posted by: The Milkshake of Despair at July 7, 2009 9:09 AM"
about 0.05% of biotech has to do with stem cells, so this was a nonfactor. Biotechnology was founded in South San Francisco and SSF has been the largest biotech location for 25+ yrs. THat is what made SF appealing. it's only a hop skip and jump away from SF.
But biotech is faltering everywhere, even in much cheaper SSF. I am a 15 yr biotech veteran. The state of the industry report produced in Jan predicted than more than 50% of public biotech companies would either go bankrup or be absorbed within 12 months. 90% of the industry is unprofitable and it is hard to stay in business when venture capital is not flowing.
Goodman leaving PFE and PFE leaving Mission Bay is not a good sign for biotech in SF proper.
"The Wyeth purchase + Goodman's departure + no hospital as of yet = this story. Tipster, you know Wyeth is in South San Francisco, right? A much, much lower cost area, surely. This site has changed a lot recently. The other perspectives are gone. Too bad."
Wyeth is not in SSF. they are in PA. not even a small office in SSF.
maybe a boon for SSF (but not SF) is that JnJ just brokered a joint venture with Elan and a newly formed company will be sprouting up soon.
Several of the true biotech companies that are now located in mission bay have a good chance of not making it through the year.
Posted by: spencer at July 7, 2009 1:04 PM
I'm with ex-SFer above. Most of the scientists I know have left SF due to cost of living. There are other knowldege centers and science hubs that they can go to. Boston, San Diego, DC, RTP, NJ and PA all have huge Pharma/biotech infrastructures and are much cheaper.
Most of the companies based here work on a more virtual level where only upper mgmt and execs exist here and the brunt of the work is outsourced to Contract Research Organizations located in much cheaper aresas of the US or ROW.
Posted by: spencer at July 7, 2009 1:14 PM
Wow...so much for the home prices in Protero hill.
Opinions on how much the prices will fall?
Posted by: homeboy at July 7, 2009 1:46 PM
@spencer: Do you think Genentech employment will be affected by Roche?
Posted by: dub dub at July 7, 2009 1:56 PM
Boston, San Diego, New Jersey, and DC are much cheaper than here? I've lived in DC and Boston, there ain't much of a difference in cost of living or cost of doing business in those two. Now...if you're comparing the Boston area or DC area to just SF, maybe, but comparing DC proper (or other prime areas like Bethesda), Boston proper (or other prime areas like Cambridge), and SF proper (or other prime areas like Emeryville and SSF), the three are basically equal. Ditto if you compare larger metro wide swaths of the three. San Diego is probably a little cheaper than the three, but not as much as people seem to think - it mostly looks that way (for residential, lab space, or office) because SD proper covers so much suburban land.
Posted by: anon at July 7, 2009 2:04 PM
Say what you will, but it appears more affordable housing will soon be available in the immediate area. For example Unit #530 (2bed, 1,338sq.ft.) at The Beacon (250 King) was just taken back by the bank on June 16 for $516,360. Tax assessed value was $905,148.
Posted by: EBGuy at July 7, 2009 2:10 PM
OK, Pfizer, not Wyeth. The story states that the Wyeth purchase made the need to move the Pfizer employees up here irrelevant. Apologies for conflating the 100 employees actual employer.
But prices in Potrero Hill are definitely going to get decimated by Pfizer's 100 employees not moving up here, that's for sure. I would estimate about 1 percent per employee, or roughly 100 percent.
Posted by: anonn at July 7, 2009 2:17 PM
Develop some reading comprenension prior to your next direct address toward me. annon
Boy, flujikins is wearing the ass sombrero today.
Posted by: non at July 7, 2009 2:37 PM
Look at a chart of annual property appreciation over the last ten years. Hell, the last twenty years. Maybe even longer...(gulp). Do you see a hockey stick? Ignore it! Hockey sticks are bubbles! Extrapolate a line forward from the flatter part of the chart. Now, look at a chart of depreciation from today. Extrapolate a line forward. See where those lines meet. Bingo. And, yes, this means Depression II.
Okay, I just made this up (I think), but it's probably not that far off...Prices will be at least 50% off peak, District 2, 8, 11, wherever.
The only question (and really, the main suspense)...is how far the overshoot will be. Because corrections ALWAYS overshoot.
Posted by: two beers at July 7, 2009 2:41 PM
quoting anonn not annon, if they exist
Posted by: non at July 7, 2009 2:42 PM
Develop some reading comprenension prior to your next direct address toward me. annon
Don't you want to know what I ordered for lunch? and why I know from that salmon fillet precisely how Potrero Hill will tank? So I flipped the two names around, so what? LOL. Nothing a preview button wouldn't have fixed.
Posted by: anonn at July 7, 2009 2:59 PM
as long as the fish wasn't riding a bicycle
Posted by: non at July 7, 2009 3:05 PM
The reason the pub was crammed is that if you work on campus at MB and didn't bring a lunch, the other options for dining are Subway, Unpleasant Pies, the little cafe in Genentech hall, or the coffee shop next to Subway.
Posted by: DavidQ at July 7, 2009 3:22 PM
What is the 16th street facing building with the second story eating area patio? Is that the outside area for Genentech Hall? Because it was seemingly packed too.
Posted by: anonn at July 7, 2009 3:27 PM
Great insider's perspective! I was just responding to the conventional wisdom that the high cost of doing biz in SF is THE reason that drive company out. My point is you won't want relocate you business to places like Detroit even if they exempt all taxes and give you free office rental because the talents are not there. But what about other research center that also have a lot of talent and but with cheaper cost of living? Well I guess SF will just have to compete with them then. And looking at the high concentration of biotech company in Northern California, it is very much in the game.
I'm in the IT industry. This kind of doom and gloom news I have seen them all. "X company, citing high cost of running business, is moving out of California." Actually for everything company X that's moving out, there is a company Y that moves in, not to mention the many startups being born here. Wikipedia just moved from Florida to SF. You bet they don't do this because SF is cheaper.
As of people leaving for greener pasture, I wish them well and I will miss them. As long as the net flow of people is somewhat in balance I think it is just healthy circulation and not a sign of concern. I see them more as the alumni of SF. I think the name "ex SF-er" is really saying something, you left a bit of your heart in San Francisco don't you?
Posted by: Wai Yip Tung at July 7, 2009 3:37 PM
Boston, San Diego, New Jersey, and DC are much cheaper than here?
1) My list consisted of more than those areas, and others on that list are much cheaper than SF (like the research triangle region of NC).
2) Boston, NJ, DC, SD are getting cheaper due to the fallout of the worldwide credit bubble. as they fall, they become more competitive due to their cheaper cost structure.
3) there are 2 separate ideas in my post of cities
-the first is that SF is not the only place that has a highly educated workforce as Wai Yip Tung seemed to indicate to me
-the second point was that some of those areas (not all) are lower cost than SF.
4) overall, I would say that yes SF is more expensive than Boston, SD, DC and NJ. Although I'm not sure I'd say it is "much" cheaper in those other cities the difference is significant.
I know SD pricing well (as an ex SD-er as well). it is significantly cheaper than SF overall IMO. You can get a nice home (SFH, not condo, 3-4 BR, 2-3 bath, about 2k sq ft) in a very nice centrally located neighborhood (Mission Hills which is right next to Hillcrest and very close to downtown and the airport) for $1M. Hard to do that in SF.
Rents are much cheaper in SD.
Posted by: ex SF-er at July 7, 2009 3:49 PM
I think the name "ex SF-er" is really saying something, you left a bit of your heart in San Francisco don't you?
(smile) People bring this up from time to time.
Yes, although I doubt I'll move back to the city any time soon if ever, it's a great city and SF will always be my hometown. I always love visiting.
welcome to Socketsite Wai Yip Tung. it's (usually) a fun place.
Posted by: ex SF-er at July 7, 2009 3:56 PM
ex-SF-er, I agree with your overall points. I was more responding to spencer - in general, Boston and DC (especially) are not in any way enough cheaper to convince a company to move to one of those places over SF, nor enough cheaper to eliminate SF as a possibility when comparing the three. Research Triangle certainly is, but there are plenty of negatives there too.
In general, I do believe that the Bay Area's COL needs to come down, but find spencer's and tipster's take to be hyperbolic at best.
Posted by: anon at July 7, 2009 3:56 PM
The second-story patio is part of the Genentech coffee shop. Those areas can get packed, but it's a captive audience of post-docs, students, faculty, and staff.
Posted by: DavidQ at July 7, 2009 5:20 PM
Hey ex SF-er, thanks for including Madison in your list!
And Wai, an apt choice of locations to use in your post -- Detroit. Detroit (and Michigan) used to have a pharmaceutical industry. Parke-Davis and Searle/Pharmacia come to mind. What happened to those guys? Pfizer bought them. Which brings us to the real issue at hand, the "synergism" of the Wyeth/Pfizer deal. I haven't heard numbers bandied about much lately, but 19K layoffs was talked about in January. So 100 people not moving to Mission Bay, well it hurts, but small potatoes.
So much for those those
500K per year researchers!
Posted by: Badger Stu at July 7, 2009 5:46 PM
Badger Stu, THAT is a SS Classic Thread, including the now nostalgic names of Fluj and Satchel. It is now one year later, and people are still claiming that those "100 jobs" are proof that San Francisco is some robust dynamo of economic might. Can you imagine how insane this discussion would sound to someone reading this from N.Y., Chicago or London?
Posted by: astonished at July 7, 2009 6:57 PM
Can you imagine how insane this discussion would sound to someone reading this from N.Y., Chicago or London?
These statements always crack me up. Those places are several times the size of SF. It would be like someone in Santa Rosa saying, "Imagine what someone in SF would think of reading this?"
Posted by: anon at July 7, 2009 7:39 PM
True, this is not a big city. I guess in a smaller city like San Francisco, 100 jobs is a big deal. But can 100 jobs really be a justification for overpriced condos? The "logic" on the other thread about the "100 jobs" is quite bizarre, and true realtor boosterism in its most extreme.
Posted by: astonished at July 8, 2009 10:57 AM
Hyperbole (or not?)
More than 300 of the nation's most noted scientists from all 10 University of California campuses have warned Gov. Arnold Schwarzenegger that proposed cuts in the UC budget would endanger the future of science and technology in California and threaten the state's economy.
The impact on young UC faculty members with mortgages "is likely to be particularly devastating," the letter to the governor said. "These future scientific leaders can and will move elsewhere. This will produce a huge brain drain from California."
Posted by: EBGuy at July 8, 2009 1:31 PM
What a RELIEF !
Why is everyone talking sooo sadly about this like someone died ?
Last thing we needed was a Bio-Chemical Lab in the heart of the City. Most of these Labs have slack safety standards. It would've been only a matter of time before some bio hazmat or some chemical leaked and killed all of us.
Think I am paraniod ? Remember what Union Carbide did to 15,000 innocent people in India in 1984. They killed all 15,000 of them in their sleep !
Posted by: Chad at July 8, 2009 2:26 PM
I hope you're joking and that my humor detection meter is off today. However, in case you're not joking, I'd like to point out that there's a bit of a difference between a pesticide factory that produces pesticides and a bio-tech research lab that doesn't actually manufacture anything.
Posted by: anon at July 8, 2009 3:19 PM
Just to correct some misperceptions: SSF is not appreciable cheaper than SF for lab space etc. The San Francisco Bay Area is the leading area for biotechnology research in the world and is likely to remain so for awhile. Yes the SFBA is more expensive than other locations but the talent that is here (both managerial and scientific) is a tremendous asset and for cutting edge companies and is worth paying for. The loss of Pfizer does not doom Mission Bay, but there was a certain prestige factor related to having the biotechology research center of the largest pharma company in the world located in Mission Bay. The change in those plans (along with Goodman's departure) are the result of the merger and don't reflect on Mission Bay's overall attractiveness to biotechs.
Posted by: NoeNeighbor at July 8, 2009 10:49 PM