U-M to buy Pfizer’s former Ann Arbor property

December 20, 2008

ANN ARBOR—In a move that will directly create at least 2,000 jobs during the next decade and accelerate expansion of the University of Michigan’s research activities critical to the state’s economic development, the U-M Board of Regents today approved the purchase of the Ann Arbor property of pharmaceutical firm Pfizer Inc.

In time, U-M anticipates replacing?and even exceeding?the number of high-quality jobs once located at the site.

The nearly 174-acre site, which includes almost 2 million square feet of laboratory and administrative space in 30 buildings, is ideal for the University’s growing research activities in health, biomedical sciences and other disciplines.

“This purchase is an investment in the future of the University of Michigan and of our state,” said U-M President Mary Sue Coleman. “These facilities will help attract more research funding to the area, allowing us not only to broaden our contributions as one of the nation’s premier research universities, but also to strengthen the region’s ability to stimulate new business.”

U-M expects to close on the Pfizer property in June after successful due diligence and compliance with any state and regulatory requirements. The purchase price of $108 million will be drawn almost entirely from U-M Health System reserves?funds set aside from the System’s operations over the years to meet emerging strategic needs. The University’s investment proceeds will fund the rest of the purchase of the property, located along Plymouth Road in northeastern Ann Arbor next to the University’s North Campus.

In addition to accommodating the needs of its growing research enterprise, the state-of-the art facilities will help the University recruit scientists to Ann Arbor. The U-M anticipates hiring 2,000 researchers and the staff supporting research during the next 10 years with the new expansion possibilities through the Pfizer property purchase.

The expanded campus also will provide the opportunity to partner with businesses in the private sector whose missions align with activities that will occur on the site. These collaborations with industry could be broad-ranging, and include pharmaceutical, biotech, energy, nanotechnology and myriad other types of research activity. Likewise, existing businesses wishing to locate there, and startup companies that spring from ideas hatched in U-M labs and elsewhere, could potentially situate on the site.

Beefing up the research enterprise naturally will result in expanded research opportunities for U-M students in a variety of disciplines.

While the specific uses for each of the buildings will be set after careful deliberations during the next year, U-M leaders know the facilities are well-suited for a growing research enterprise, says Dr. Robert Kelch, the University’s executive vice president for medical affairs and CEO of the U-M Health System.

“We have been building and renovating across our campus to meet the need, but we have struggled to keep pace with the incredible productivity of our faculty and staff,” Kelch said. “This new space presents an unprecedented opportunity to fulfill their needs now and in the future, to recruit new faculty and their teams to our institution, and to develop our region’s power as a magnet for high-skill workers. At the same time, expanding our research capabilities will ultimately translate into development of better treatments for our patients. An investment such as this is essential to remaining a world-class health care institution.”

Cementing U-M’s national research position

Even as national competition for federal research dollars has tightened in recent years, especially in the medical field as the budget for the National Institutes of Health has remained flat, U-M has held its own. Coleman and other university leaders expect the University’s annual research budget to top $1 billion within the next five years.

According to National Science Foundation statistics, U-M is the nation’s fifth-largest research university. In fiscal 2008, U-M research volume reached nearly $876 million, a 6.4-percent increase over the previous year and an all-time high. That number includes $342 million in grants won by Medical School scientists and physicians each year, putting the school consistently in the top ranks of America’s research-based medical schools.

Still, growth of the U-M research community is hampered by limitations on available research space, and by the years of planning and construction needed to build new laboratory buildings. The Pfizer space will hasten planned growth. The purchase will increase U-M’s research space by 10 percent.

“This investment unleashes a tremendous opportunity to work even more closely with the private sector. It will help the U-M research community build upon the momentum we’ve developed during the past decade in working with industry to commercialize innovations, and to be even more competitive with other nationally prominent research universities for federal, foundation and philanthropic funding,” said Stephen Forrest, vice president for research. “It sends a powerful signal to the business community about our desire for partnerships and collaborative research that can translate laboratory findings into practical uses.”

Looking back?and ahead

The purchase of the Pfizer property is the largest since 1950, when U-M bought 300 acres to develop what is today North Campus. The Pfizer campus has been vacant for many months after the January 2007 decision by the company to consolidate its research operations in other locations.

The purchase completes an historical circle. U-M originally owned the majority of the land. Some was sold to the Parke-Davis pharmaceutical company in 1957. Parke-Davis became part of Pfizer in 2000, and U-M sold the additional land to Pfizer in 2002, with a right to purchase that parcel if Pfizer ever decided to sell it.

“Pfizer is pleased that the University of Michigan, a world-renowned research university, intends to take ownership of our Ann Arbor site,” said Jeff Kindler, chairman and chief executive officer of Pfizer Inc. “We’re confident the scientific enterprise that grows from this state-of-the-art campus will benefit the Ann Arbor region, the state of Michigan and everyone who stands to gain from innovative science.”

Once the transition is finalized, a campus-wide committee headed by U-M Medical School’s dean, Dr. James O. Woolliscroft, will work over the coming year to determine how best to integrate existing and newly arriving researchers whose interests are complementary.

“This new campus will greatly enhance our ability to recruit not only top faculty in all areas of laboratory research, but new leaders for the Medical School departments now engaged in national searches,” Woolliscroft said. “But we will not rush to fill the space. This is a unique opportunity to rethink how we bring teams of investigators from across campus together in ways that will enhance discovery and collaboration.”

Woolliscroft also notes that although the laboratories left by Pfizer are nearly in the configuration and condition needed for U-M researchers to use, some renovations will be needed. Planning is also needed to determine how to link the new campus with the rest of U-M through transit and technology.

U-M’s investment in the new campus parallels similar moves by other universities around the country. For example, Yale University and the University of California, San Francisco have recently developed “satellite” research campuses. For more information, visit: www.umich.edu/