ADVERTISEMENT

http://www.hartfordbusiness.com

CT tells relocating Alexion to give back $26M in incentives

BY Patricia Daddona

9/12/2017
PHOTO | Contributed
PHOTO | Contributed
The building at 100 College St. in New Haven is headquarters for Alexion Pharmaceuticals.
In the wake of Alexion Pharmaceutical's announcement that it will move its New Haven headquarters to Boston, state officials said Tuesday they want back more than $26 million in incentives Alexion received from Gov. Dannel P. Malloy's First Five Plus economic incentive program.

The incentives included a $20 million loan and $6 million grant. The loan was used to establish the rare disease drugmaker's current location in New Haven, instead of Cheshire. The grant enabled lab construction there.

"Alexion's decision to move its headquarters out of the state is very disappointing, especially in light of how supportive the state has been to the company over the years as it has grown into what it is today," said Catherine Smith, commissioner of Connecticut's Department of Economic and Community Development.

Even though Alexion will keep 450 employees in New Haven while moving 400 to Boston, Smith said the agreement calls for repayment of the loan and grant. She also reinforced the state's commitment to supporting business growth, saying, "Setbacks like this, though unfortunate, do not deter the department from pursuing smart policies and ventures with growing companies in our state."​

David Cadden, professor of entrepreneurship and strategy emeritus at Quinnipiac University, called the company's relocation announcement "a body blow to the state's image of being unfriendly to business. In this case, that reputation is totally undeserved."

In an emailed response, Alexion reiterated that the move to Boston will "position the company for greater growth" while preserving research and other jobs at the New Haven site, which will be renamed the "Center of Excellence." The company also said it will repay its loans and grants to the state of Connecticut.

"Alexion is committed to the New Haven community and to contributing to New Haven being a vibrant and engaging place to work for our employees," the company said.

In a conference call Tuesday morning following stories leaked to some Connecticut news media, Alexion CEO Ludwig N. Hantson more fully addressed the changes.

Hantson said during the conference call that the restructuring will include a 20 percent reduction in its global workforce, relocating to Boston by mid-2018, and closing a site in Rhode Island that is limited to manufacturing only one drug at a time.

"While difficult, these changes were necessary to enable the company to deliver sustainable long-term performance to support our ability to continue to develop and deliver life-changing therapies for patients," Hantson said.

He also said the move to Boston will put Alexion "in an ecosystem where biotech is front and center" and increase access to the talent pool needed to support the development and manufacture of applications for its drug Soliris and other new drugs.

The troubled company said it expects to save $250 million as a result of the restructuring and re-invest $100 million of that in the business over time. Some $440 million in expenses include up to $60 million to relocate; up to $90 million to lay off workers; up to $210 million to close facilities and up to $80 million in other costs, the company said.

Within the past year, the company's C-suite realignment followed an in internal probe of sales practices of its Soliris drug, which has since been resolved. But in July, Alexion became the focus of a probe by the U.S. Department of Health and Human Services' Office of Inspector General in connection with an earlier federal investigation involving its support for charities that aid Medicare patients. That probe is ongoing.