Pharma’s Ghost Labs Find New Life
Pharma’s Ghost Labs Find New Life

Pharma’s Ghost Labs Find New Life

Finding new tenants for former drug development sites isn’t always easy. But a new, thriving industry has materialized to do just that.

Nov 1, 2019
Katarina Zimmer

ABOVE: MODIFIED FROM © ISTOCK.com, 3ddi3

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he hallways of Pfizer’s first-ever facility once swarmed with more than 1,000 workers tasked with making some of the most popular drugs of our time, including the erectile dysfunction treatment Viagra and the antibiotic Zithromax. Nowadays, the building in Brooklyn, New York, carries scents of chocolate, baked goods, beer, and a lingering waft of construction.

Pfizer began to wind down its production of drugs here decades ago, and the last of the company’s Brooklyn employees had to leave in 2008 when the pharmaceutical giant closed down the site as part of a wave of modernizing changes. But Pfizer’s birthplace has since become a much sought-after space in one of Brooklyn’s most cramped neighborhoods, with about 1,600 people now working in the building. 

The eighth floor, which used to be reserved for the offices of Pfizer’s chief executives, now hosts counterterrorism training run by New York City’s Police Department for its officers. A vast space on the fifth floor, where half a dozen nine-foot-tall stainless steel mixers used to churn pulp that would be pressed into a variety of pills, spent much of the summer filled with construction debris—a result of the area’s transformation into a soundproof recording studio for the Blue Man Group. Many of the building’s old research labs are now used by local artisans to make a variety of food products, and in a spacious tent in the parking lot, acrobats train on a 40-foot structure built by the Trapeze School of New York.

Facilities that are old or in less attrac­tive locations can remain empty for years. Some are simply torn down altogether.

“You can see how this [transformation] is adapting, reusing space, that was used by Pfizer fifty, sixty years ago,” explains Jeff Rosenblum of Acumen Capital Partners, a real estate firm specializing in repurposing industrial buildings, which bought the property in 2011 for $26 million. Still the building’s owner, the company now has an office there on the sixth floor. 

The Pfizer site is not the only pharmaceutical facility to get a makeover in recent years. Dozens of giant drug-manufacturing and research facilities in the US and elsewhere have been abandoned by their parent companies. Some continue their stories in other realms of life science, some sit empty and unused, while others—like Pfizer’s old facility—find new purpose in entirely different industries.

A change in how Big Pharma operates

Pfizer was founded in Brooklyn’s Williamsburg neighborhood in 1849 by German cousins Charles Pfizer and Charles Erhart. The company headquarters stayed there for well over a century as Pfizer grew into the pharmaceutical behemoth it is today. But when several of the company’s best-selling drugs began to lose patent protection just over a decade ago, compounding difficulties the company was already facing in managing worldwide drug production, Pfizer launched a global push to cut its workforce and operating costs. That decision included letting go of its Brooklyn birthplace and the 600 or more jobs associated with it. 

The move reflects a pattern of closures in the pharmaceutical industry since the late 1990s that has left empty hundreds of facilities once dedicated to drug manufacturing and research and development (R&D). Some of the earlier closures were prompted by changes in regional tax laws or other regulations. But now, most are likely driven by two key shifts in the industry over the last couple of decades, says biomedical industry expert Erik Gordon of the University of Michigan’s Ross School of Business. 

One is the increasing frequency of mergers and acquisitions among pharma companies. “The corporate management feels a lot of pressure to show that combining two companies gives you a company that is better and more efficient,” says Gordon. Consolidation often means closing manufacturing or R&D facilities, as Pfizer did with 13 more of its sites after it acquired Pennsylvania-based Wyeth in 2009. 

Big Pharma has also changed how it conducts R&D. To cut costs, companies are doing less of their own research and are instead relying on making deals with smaller companies or university research divisions that have already successfully developed drug candidates or therapeutics, and often working with contract research organizations on the continued development of those products. “The old ‘make what you sell, sell what you make’ is no longer the preferred strategy,” says Bill Wiederseim, president and CEO of PharmaBioSource, a Pennsylvania-based consultancy firm that advises pharmaceutical companies on finding or selling facilities, among other matters.

A NEW LOOK: An old GlaxoSmithKline campus in Upper Merion Township, Pennsylvania (photograph, top), is currently being transformed into what its developers, The Discovery Labs, call “the largest ‘coworking’ ecosystem for healthcare, life sciences and technology-enabled companies in the country” (artist’s rendition, bottom).
THE DISCOVERY LABS 

These closures, in addition to often making hundreds or thousands of workers jobless, vacate enormous, expensive facilities that few companies need or can afford. “These sites are over a million square feet of R&D lab and sometimes manufacturing [spaces] that are really obsolete at this point in time on that type of scale,” explains Shawn Straka, who co-directs the real estate firm Cushman & Wakefield’s life sciences division in New Jersey. 

Occasionally, abandoned facilities attract academic owners, or even other large pharmaceutical companies, thanks to building designs specialized for research. For example, in 2015, two years after Merck & Co announced it would vacate its headquarters in Summit, New Jersey, biotech Celgene bought up the 1,000,000-square-foot property as part of a rapid expansion in its R&D programs. Sometimes, smaller pharmaceutical companies or contract research firms looking to upsize will also express interest in these properties. But such deals are becoming rare, explains Straka, forcing pharmaceutical companies or the agencies that take over their properties to look further afield for buyers. 

An alternative option that’s becoming increasingly popular is selling sites to firms that specialize in redeveloping and parceling old pharma properties out to smaller life-science companies. This new real estate ecosystem has given rise to several science and technology parks that offer affordable, convenient spaces for smaller companies that lack the capital to build their facilities from scratch. 

Pharma facilities repurposed for new scientific projects

Just an hour’s drive from Pfizer’s original headquarters in Brooklyn, New Jersey’s biotech sector is experiencing a transformation. Once known as the “medicine chest of the world,” the state is home to several massive R&D and manufacturing facilities, many of which have come on the market in recent years. Now, these properties are providing a new home for a multitude of smaller pharmaceutical firms, biotech startups, and academic institutions. 

Pfizer’s birthplace has become a much sought-
after space in one of Brooklyn’s most cramped neigh­borhoods.

One such facility is Swiss drugmaker Hoffmann-La Roche’s old 116-acre campus bordering the towns of Nutley and Clifton, New Jersey. In its heyday, the complex churned out a variety of therapies, including the anxiety treatment Valium and the melanoma drug Zelboraf—until the company decided to move its US headquarters to San Francisco as part of its takeover of Genentech. In 2012, Hoffmann-La Roche announced the closure of its New Jersey site, and four years later, New Jersey-based real estate developer Prism Capital Partners bought the campus for a reported $88.5 million, according to real estate news outlet The Real Deal , after noticing the proliferation of smaller and mid-size biotech companies in the state. “We saw the R&D money flowing back in and recognized that there’d be opportunity,” says Prism Capital Partners founder, Eugene Diaz.

It didn’t take the agency long to find tenants from various fields of life science to occupy parts of the campus, Diaz says. The Hackensack Meridian Health System is creating a health sciences–focused research campus there, and recently finished redeveloping an existing building into what is now the Hackensack Meridian School of Medicine. The former pharma complex, named On3 after the connecting state highway Route 3, will also house several of Seton Hall University’s graduate health sciences programs, plus a number of other life science facilities with focuses ranging from manufacturing biomaterials to developing diagnostic tools for disease. 

Other real estate companies or developers are attempting to reposition former pharmaceutical sites as biotech incubator spaces with the potential to fuel the next generation of biologics-based therapeutics. For instance, The Discovery Labs, a company launched by real estate investor MLP Ventures, is currently redeveloping a former GlaxoSmithKline campus in the Pennsylvania township of Upper Merion. When it sold the property in 2018 to MLP Ventures, Glaxo-SmithKline decided to lease one building as a cleanroom for developing one of its therapeutics. The rest will be taken up by a range of life science–focused tenants, including the Children’s Hospital of Philadelphia and laboratory materials supplier Tosoh Bioscience. Unite IQ, The Discovery Labs’s own biotech incubator, is to form the heart of the site, explains Audrey Greenberg, the company’s cofounder and managing director. 

KITCHEN FITTING: Many of Pfizer’s old laboratories at 630 Flushing Avenue in Brooklyn, some of which boast a view of Manhattan’s skyline, have been converted into workspaces for local food manufacturers.
KATARINA ZIMMER

Greenberg envisions the repopulated campus as a collaborative workspace that could help accelerate the development of new therapeutics by building a community of tenants, each of which specializes in a different aspect of the drug development pipeline. “Whether it be getting a viral vector, getting a plasmid, getting [contract manufacturing organizations] to work with them on research development and outsourcing . . . intellectual property attorneys,” says Greenberg—“[they’re] all housed under one roof.”

Such transitions don’t come without challenges. For instance, in several buildings on Hoffmann-La Roche’s former campus in New Jersey, each floor had a 3:1 ratio of lab to office space—considered a good split when the property was built during the 20th century. However, today’s companies prefer a 1:1 allocation to allow more space for the computational equipment and personnel involved in research, Diaz says. Because the buildings had been built with unmovable block walls, they couldn’t be adapted to a new ratio—one of the reasons why Roche and Prism eventually had them torn down. 

Some of Wiederseim’s clients also need tweaks to the laboratories to make them suitable for biologics-based research. For instance, fume hoods, designed to protect researchers working with potent reagents and chemicals, may need replacing with biosafety cabinets, which protect the integrity of the biological entity, such as cells or DNA. These challenges are often surmountable, however, and Diaz notes that several vacant pharmaceutical sites in the US have now successfully been redeveloped into life-science parks.

Life outside the pharma industry

For sites that fail to find a purpose in new scientific projects, the future is far less certain. Facilities that are old or in less attractive locations can remain empty for years, Gordon says. Some are simply torn down altogether. For instance, after Schering-Plough closed its R&D facility in Bloomfield, New Jersey, in the 1990s, “no other company (large or small) wanted it,” science journalist Derek Lowe wrote in a 2014 blog post in Science. Eventually, the buildings were razed and the land sold. Since 1997, a Home Depot store has stood in its place.  

Others get demolished “because they’re contaminated and they’re hard to repurpose,” says Wiederseim, who says he and his colleagues have recommended the demolition of 20 pharma-related buildings in the last decade. Facilities that used to manufacture antibiotics such as penicillin and cephalosporins are particularly likely to meet this fate: without complete decontamination, there’s a risk that antibiotic remnants could contaminate any future products made in such a building, posing a risk to customers allergic to these compounds. Testing for contamination is expensive, and drug companies are required by law to finance this, so “most Western companies choose to demolish and build anew,” Wiederseim says. 

But some facilities, such as Pfizer’s Brooklyn building, find new lives outside of pharma. In 2006, biofuel company Xethanol Corporation decided to purchase a manufacturing plant owned by Pfizer in Augusta, Georgia, and retrofit the site with equipment to produce ethanol from biomass waste streams from industries in the surrounding area. And in 2011, Florida-based Caribbean rum maker Club Caribe bought an old GlaxoSmithKline plant in Cidra, Puerto Rico, to use as a distillery. Wiederseim also has several clients looking to repurpose pharma facilities into ones that specialize in cannabidiol processing. However, such extreme repurposing is still unusual, Wiederseim stresses. Because pharmaceutical facilities were built for very specialized purposes, “they make very poor Walmarts.” 

Back in Brooklyn, the Pfizer plant is reaching the end of its transformation into a modern hub for local food manufacturers, performance artists, and small companies—a community that Acumen’s Rosenblum says reflects the diversity of the surrounding neighborhood. The construction debris and ancient steel pulp-mixers were finally removed from the fifth floor in August—a difficult feat, as construction workers had to blast through the formerly windowless brick walls to get some of them out—and the Blue Man Group moved into the space in September.

While overseeing the building’s transition, Rosenblum has salvaged several trinkets in remembrance of Pfizer’s legacy. A doormat bearing the company’s logo is visible as one enters Acumen’s office on the sixth floor. Near Rosenblum’s desk sits a flattened, two-foot-wide ring of stainless steel—once part of a submarine-like hatch used to open up the pulp-mixers if anyone needed to go inside for cleaning, he explains. In an industry undergoing such rapid changes to the way it treats property, these are pieces of history. 

Katarina Zimmer is a New York–based freelance journalist. Find her on Twitter @katarinazimmer.