Kalamazoo, MPI Deal a Potential Home Run, But Not a Game-Ender

The prospective deal under which life-sciences company MPI Research would occupy two downtown Kalamazoo buildings that were vacated last year by Pfizer would no doubt be a huge boost for the southwestern Michigan city. But a pharma industry observer cautions that bioscience is probably a long way from being a force that will revitalize Rust Belt cities in Michigan or across the Midwest.  MPI Research, which is based in Mattawan, Mich., just outside Kalamazoo, has begun negotiations with the City of Kalamazoo about taking over two laboratory buildings that were left vacant after Pfizer, a successor to Kalamazoo-based Upjohn, closed research facilities in Kalamazoo and Ann Arbor. Pfizer announced two days ago that it’s donating the buildings to the city. If the deal goes through, MPI anticipates eventually creating 400 jobs in Kalamazoo.  The move is potentially part of a larger expansion by MPI, the third-largest preclinical drug-testing company in the United States, as the company plans to expand in Mattawan as well. The company envisions putting $330 million into capital investment in the Kalamazoo area over the next five years.  In addition, Pfizer reportedly plans to invest $50 million to upgrade its one remaining office and research facility in downtown Kalamazoo.  Patrick Clinton, editor of Pharmaceutical Executive magazine, told CPN that many economic development authorities across the nation have tried to establish biotech corridors as a way of attracting life-sciences companies. These efforts typically compete with each other, however, he noted, and the small companies that do emerge from such corridors are likelier to fail than to thrive.  “Everybody thinks the life sciences are going to be the salvation of different areas,” Clinton said, but no one has yet established an economic development strategy that can reliably attract, retain and grow such companies.  A more strategic problem, he notes, lies within the pharmaceutical industry itself, because over the next five or six years, patents on major drugs are projected to expire faster than new products can be brought to market, likely putting big pharma into a cash crunch.  That said, Clinton commented, companies like MPI, which handle services that the big pharmaceutical companies have increasingly outsourced, are doing very well right now.  A bill just signed by Michigan Gov. Jennifer Granholm will create a special redevelopment zone for the two buildings in downtown Kalamazoo, abating MPI’s property taxes there for 15 years.  In addition, the city has proposed leasing the buildings to MPI for $1 a year for five years. Under the proposal, if MPI has met its job creation obligations, it can buy the buildings for $1 after five years.