New Bax BioScience - moving to Boston

Discussion in 'Baxter' started by Anonymous, Aug 28, 2014 at 3:49 PM.

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  1. Anonymous

    Anonymous Guest

    http://www.bizjournals.com/boston/real_estate/2014/08/project-tiger-update-its-baxter.html?page=all

    Project Tiger update: It's Baxter

    Presently headquartered in Deerfield, Ill., Baxter (NYSE: BAX) is in the early stages of an aggressive plan to split itself into two companies, one specializing in biopharmaceuticals and the other focused on the sale of medical products. The effort is expected to be finalized by mid-2015, a timeline that corresponds with the initial space requirements established by Project Tiger’s local brokerage team at Transwestern|RBJ in Boston, according to people familiar with the matter.

    As first reported by the Boston Business Journal in May, Transwestern|RBJ was hired to find 150,000 to 200,000 square feet of office space for its out-of-state client, with the expectation of adding another 200,000 square feet of research and laboratory space once its primary move is complete. Sources familiar with the search in Cambridge's tight commercial real estate market say it is ongoing and that the ultimate footprint sought by Baxter remains undetermined.

    Transwestern|RBJ declined to comment.

    In an Aug. 18 email exchange with the BBJ, Deborah Spak, the head of Baxter’s global communications, said the company’s scale and strategy have triggered a steady drumbeat of speculation concerning its future moves. She declined an interview request and did not respond to questions about Baxter’s potential move to the Bay State.

    “Given Baxter’s size and scope, as well as our many partnerships and collaborations, it seems that there are always rumors floating around. As a matter of course, we do not comment on rumors or speculation,” Spak wrote.

    Baxter’s reasons for relocating from Illinois to Cambridge are varied, sources say, although a primary driver is the company’s desire to be close to the research talent and resources within the city’s life sciences cluster. It is an aspiration that’s triggered similar searches for other large blocks of space in Kendall Square by the likes of Amgen Inc. and Bristol-Myers Squibb, among others.

    But Baxter is different. Unlike Bristol-Myers and Amgen, which are seeking between 150,000 and 200,000 square feet of space but still intend to maintain their headquarters outside Massachusetts, Baxter’s search promises to consolidate hundreds, if not thousands, of jobs as well as the company’s senior executive team into a new U.S. home in Kendall Square. From an employment as well as philanthropic perspective, the deal would position Baxter as one of the most prominent players in what is arguably becoming the most prominent biotechnology and life sciences market on the planet.

    A lot will depend on which half of Baxter — the biopharma division, or medical products division — ultimately settles in Cambridge, assuming a deal is reached. Given Cambridge’s frothy research and drug-development infrastructure, Baxter’s biopharma unit would appear to be the logical choice.

    During a conference call in March, Baxter CEO Robert Parkinson Jr. said the corporate split is designed to “enhance Baxter’s prospects for growth” and is likely to result in a stand-alone biopharma company worth $65 billion and a medical products company valued at $50 billion. In 2013, Baxter’s consolidated operating units generated $15.3 billion in sales, with its biosience division accounting for around $6.6 billion of that amount. The company is a major player in a variety of biotech and medical-product fields including hemophilia and intravenous technologies and medicines.

    As of Dec. 31, the company employed 61,000 people at around 70 facilities, not including 60 plasma-collection facilities throughout the United States. The company’s website said roughly 16,000 of its employees are in the United States, with 5,400 at its Deerfield headquarters and other nearby locations in Illinois. In an email, Baxter’s Spak said the company also employs around 100 people in Milford as part of its 2013 acquisition of a hemophilia compound from Inspiration BioPharmaceuticals Inc., which filed for bankruptcy protection the prior year.

    Taxes and local services are also part of the equation, although fewer and fewer corporate relocations appear to be driven by tax factors these days, said Karl Fryzel, a tax partner with Edwards Wildman in Boston. The state's 8 percent corporate income rate compares favorably to the combined corporate rate charged in Illinois, which levies a 7 percent income tax and 2.5 percent "replacement tax" on businesses. Concerns over Illinois' state finances and the potential for additional levies or cuts in local services also have prompted relocation searches among some of its other larger employers in recent years.

    Unlike domestic companies seeking tax shelter through so-called corporate inversions overseas, Fryzel said moves within the United States offer little advantage for companies, at least from a tax standpoint, as levies are more or less calculated by formulas applied to a given business' in-state sales. He said access to an educated labor force and collaborative resources are more often than not the driving factors behind such a move.

    "Tax rates are not playing a big part in those decisions," he said.

    Financial filings indicate Baxter owns its current headquarters as well as most of its other operating properties. The company lists 13 properties within its bioscience division, of which only three are in the United States, all in California.

    With around $35 million in cash and in-kind donations made by the company as well as The Baxter International Foundation, Baxter would rank as one of the largest charitable contributors in the state, assuming much of its giving would transition to the commonwealth along with its corporate headquarters. In 2012, the Baxter foundation donated around $3 million to various charitable causes, an amount that has traditionally been dwarfed by direct contributions by Baxter’s various business units ($14.7 million in 2010) and product donations ($20 million in 2010), according to Baxter’s web site.
     

  2. Anonymous

    Anonymous Guest

    wicked pissa
     
  3. Anonymous

    Anonymous Guest

    Good Bax Hunting

    Bob: Do you like apples?
    Ludwig: Yes...
    Bob: Well, we're moving to Cambridge, how do like them apples?...
     
  4. Anonymous

    Anonymous Guest

    This was expected for New Bio. It will impact many jobs for Deerfield employees. This has been built into the Project Gemini plan.
     
  5. Anonymous

    Anonymous Guest

    Ah yes, project Gemini, Libra, Taurus, Sagittarius and any other ridiculous Horoscope names they can come up with. Embarrassing.
     
  6. Anonymous

    Anonymous Guest

    In a related story, scientists report that the sun is yellow.
     
  7. Anonymous

    Anonymous Guest

    And Bax scientists report that socks in Boston are red......
     
  8. Anonymous

    Anonymous Guest

    It is far from happening. The state of Illinois is now coming to Baxter with matching incentives. The move will be too expensive for the company. The cost of real estate in Cambridge far exceeds the existing cost structures in Deerfield and there is absolutely no space/ one large building that can fit everything together. Baxter would have to break the company across multiple buildings across multiple areas of Cambridge (Kendal Square for 2-3 buildings, and then 2 miles down the road in another building near Central square and 5 miles away for another building) just to house everyone.

    Couple things to note:

    1. Companies use the threat of moving to Boston/Cambridge as a negotiating tool to squeeze out more state and city grant money for employment and tax breaks/tax credits. Much like NFL teams always use Los Angeles as their "threat to move to LA" in order to get a new stadium, Pharma does the same with Boston/Cambridge. I live in the area, and they have had so many false starts on thinking big names are going to move to MA, but they bail once they get what they wanted - a steep economic incentive package from their home state.

    2. The Governor of MA, Deval Patrick is considering running for President in 2016. His term ends in Jan, and he is a close friend of Obama. Most of Obama's sloganeering of "Yes we can" or "Hope and change" was test marketed with Patrick's run for Governor in 2006, and David Alexrod was his top advisor for that campaign. It is long rumored that Patrick is the secret choice they want as the nominee in 2016 while having Elizabeth Warren split the female vote with Clinton - Patrick sneaks in by default. Patrick is doing everything he can to tout his economic prowess and pulling a Rick Perry of stealing companies from other states to come to MA and brining with them thousands of new jobs. Even if he ultimately does not win Baxter, it is already being played up big time in the local press (think how impact southern NH) and is all over the liberal blogs at how "successful" of a model Patrick has been implementing in MA. Why else would a story about a semi-larger pharma company moving jobs from one blue state to another warrant coverage on all the far-lefty blogs???

    3. You cannot take the Boston Business Journal seriously about anything related to Pharma/Biotech news. They breathlessly report any bit of good news of this sector without any larger context, almost like they are paid publicists for the industry. Actually in fact, a state funded consortium called MassBio is one of their largest advertisers and they push for the endless good news from everything related to pharma. What the BBJ NEVER reports is how the area has outsourced thousands upon thousands of jobs in development to CROs who are out of state, but yet in most cases still count the FTE's as part of their reported headcount. They also never report the industry trend of only having Director level employees and up as direct hires to the company, and anyone below director level works for FSP companies like Inventiv or PRA or Ranstad, often times for below market level salaries and zero job security.

    4. With a VPN network, smart companies are realizing that you do not need to be a short walk away from a large research university any longer. The appeal of being near Harvard or MIT is not what it used to be. Maybe Baxter is a little slow to this, but we have been seeing a bit of a mass exodus from the Cambridge area and out to the Suburbs over the last few years. The savings in real estate cost and having to reimburse for employee's commuter passes on the T is immense. Companies are moving to Lexington, Waltham and now Needham more than ever. It is is the slow return of the old Route 128 for those of us old enough to remember when Route 128 was synonymous with high tech. The field grows up in Cambridge, dependent on government grant money, free university (Harvard and MIT) use of equipment and resources and when they ultimately can walk on their own, they abandon the area. The types that want to stay in Cambridge are the elitist types that would much rather spend their days cafes having talks about theory and new drug discovery, rather than hard at work in the office or lab actually delivering on something.

    5. Baxter is going to see how feasible it will be to move most of their 5K plus employees in Deerfield out to MA. Moving and relocation costs alone, for those that are not aware, you will be bleeding yourself dry to live here in MA. The cost of living is extremely expensive the closer you are to the city. It is more affordable in other areas further out of Boston, but your commute will be Hell.
     
  9. Anonymous

    Anonymous Guest

    most cogent cafepharma post ever.
     
  10. Anonymous

    Anonymous Guest

    Wow cogent is the most impressive adjective ever used on here. On a roll?
     
  11. Anonymous

    Anonymous Guest

    It just isn't economically feasible to shift most of the Deerfield employees to an extremely high cost area, you are right. Moving and relocation costs alone for anyplace, but out to MA, it will be ridiculous. Also have to place a multitude of buildings scattered about will also raise the costs beyond anything reasonable. Only start-ups and non-HQ based companies stay in Cambridge out there. Eventually, once they mature, they all move out to the 'burbs.

    I think that poster is completely right. Using the NFL analogy, Baxter is looking for Illinois to match incentives with a gun to the head of the state. Already being reported that Illinois is going to try to match. I hear the word "talent" being thrown around a lot, but what good does a move do? All of development gets outsourced to CROs based in NC anyway. Same with Lab work nowadays. That argument doesn't make sense, unless Baxter is stuck in the year 2002.

    With the costs associated with a move like this and the inability to house all employees in 1 location, it could only logically mean, in my opinion, that the Baxter execs are feeling a bit left out of the glitzy pharma scene over there in Boston. If they want to be part of that scene so badly, let them leave their job and get a top position over at Biogen or Genzyme or Vertex or Novartis. The pharma execs are treated like royalty over there. Dinners, fundraisers for charities, dedications and groundbreakings, politicians all swarming to your beck and call...
     
  12. Anonymous

    Anonymous Guest

    Thank you poster #8!

    You need to get your post in the newspaper -- perhaps as a letter to the editor so it will have a wider audience.
     
  13. Anonymous

    Anonymous Guest

    Poster #8 is dead-on. I did some digging and everything he/she says checks out on every point.

    Look at this Boston Globe story about all the jobs in biotech moving to MA, no mention of outsourcing to CROs, Contractor roles and their only source in the story is the president of MassBio, which is a state-run cheerleader to make the Governor look good.

    http://www.bostonglobe.com/business/2014/08/24/biopharma-companies-shrinking-their-research-footprint-elsewhere-growing-massachusetts/4pkZz773y7DmqMinObgPSL/story.html?p1=ArticleTab_Article_

    Unbelievable. These are all paid shills to make the state look good and prep their Governor to run for President in 2015
     
  14. Anonymous

    Anonymous Guest

    I've been through this before. If they are looking to rent 200,00 sf (as has been reported) this translates to about 500-600 people at office jobs, not 5,000. Less if there is an R&D component and lab space.
    Clearly they would not attempt to move 500 people. The probably have agreements out to about 50 to move them, and the rest can either move on their own or find a new job. About 10% of the people will move, and the rest will be hired from the Boston area.
     
  15. Anonymous

    Anonymous Guest

    Isn't bioscience global in Vienna Austria?
     
  16. Anonymous

    Anonymous Guest

    Confirmed today. Bioscience R&D moving to Cambridge, MA. Rnd Deerfield, Vienna, WLV....
     
  17. Anonymous

    Anonymous Guest

    Please refrain from ever posting on this site or any other site EVER. 90% of what you posted above is completely inaccurate or complete opinion and provides 0 value. Horrible just horrible.
     
  18. Anonymous

    Anonymous Guest

    EVER ? Well, OK. If you say so.
     
  19. Anonymous

    Anonymous Guest

    A year from now all of Baxalta will be told they need to move to Boston or leave the company. Do NOT take a job with Baxalta HQ in Illinois unless you want to move to Boston or a temporary job.


    Baxalta is clearly not committed to Illinois.