Roche will close Nutley plant, shed nearly 1,000 jobs

Frances Micklow/The Star-LedgerHoffman LaRoche officials announced they will be closing their campus in Nutley.

By Susan Todd and Stacy Jones/The Star-Ledger

NUTLEY — For years, Roche's Nutley campus contributed to the state's reputation as the nation's medicine chest, turning out such powerful drugs as Valium and, more recently, Zelboraf, a new treatment for melanoma.

But three years ago, the company began shrinking operations on the 127-acre campus. It moved top U.S. executives as well as its sales and marketing operations to South San Francisco, the home of its giant biotechnology company, Genentech. Nearly 1,500 jobs were lost in the shuffle.

Tuesday, Roche, a venerable cornerstone of New Jersey’s pharmaceutical industry, announced it will close its Nutley campus and shed nearly 1,000 jobs by the end of next year as part of a plan to consolidate its research efforts.

The giant Swiss drug maker, which located its U.S. corporate headquarters in Nutley more than 80 years ago, intends to remediate the property and then sell it by the end of 2015. Roche, which many people know as Hoffman-LaRoche, will continue to employ 400 people at its diagnostics facility in Branchburg.

At its peak, the Nutley plant, which straddles the Clifton border, employed 10,000 people.

"By far the toughest aspect of this restructuring is the decision to close our U.S. site in Nutley, which is not only an important company location, but a part of our history," Roche Chief Executive Officer Severin Schwan said in an e-mail Tuesday to employees around the world. "But given the challenging environment we face and our own growth prospects, we need to free up resources that we can invest in the most promising projects with the highest likelihood of success.’’

Matt Rainey/The Star-Ledger Hoffman-La Roche Inc. Pharmaceuticals in Nutley.

For New Jersey, the announcement was another painful contraction of an industry that once dominated the state’s economy. In 2009, a wave of consolidation erased two other major drug makers, Wyeth and Schering-Plough and hundreds of high-paying pharmaceutical jobs.

James Hughes, dean of Rutgers University’s Bloustein School of Planning and Public Policy, said Roche’s departure looks like a slight diminishment of the industry, but combined with the recent decision by Sanofi Aventis to close its Bridgewater campus and move operations to Massachusetts, the impact on the state is "worrisome."

"We’re still a player, but we’re not the dominant player," Hughes said.

In Nutley, local officials called an emergency meeting to discuss the departure of the community’s largest taxpayer — and its impact on the township’s finances. The drug maker pays $9 million in annual property taxes, which represents roughly 9 percent of what Nutley collects, Mayor Alphonse Petracco said.

"We’re disappointed,’’ Petracco said. "Roche has been a great neighbor for years and for them to just pick up and leave in the twelfth hour is sad.’’ The drug maker employed fewer than 100 residents, he said.

LONG HISTORY

Hoffmann-La Roche and Nutley/Clifton have had a long history:

1929: Roche starts building it U.S. headquarters there

1940s: The Swiss drug-maker moves much of its corporate hierarchy to the U.S. during WW2

1996: Roche opens a 250,000-square-foot building to house
900 workers from the global drug development and marketing and sales divisions

2001: Roche announces it is laying off 3,000 workers worldwide, 300 of them in Nutley

2009: Roche moves its U.S. headquarters to South San Francisco as part of its takeover of Genentech

2012: Roche announces closure of Nutley/Clifton campus after more than 80 years there

Source: Star-Ledger archives

Schwan, Roche’s CEO, said in his e-mail to employees that management decided to leave Nutley after evaluating the prospects for a number of early-stage drugs, especially new medicines for inflammation, that were being developed on the campus. He also cited the high costs of running a small research facility on the oversized campus as a factor.

"Although tremendous efforts have been made to cut costs, it was not enough," Schwan said.

As part of its announcement Tuesday, the company said Jean-Jacques Garaud, head of Roche’s early development research, would leave at the end of the month. Mike Burgess will become acting head of the early development efforts.

While Schwan’s e-mail described assessments and cost-cutting efforts, local officials and other observers said that after the Genentech integration, there was constant speculation over the company’s eventual plans.

"The writing was sort of on the wall,’’ Hughes said. "Once the top management leaves and you know Genentech is where the important research is taking place, the future becomes questionable.’’

Roche said the discovery research in virology and oncology that was carried out in New Jersey would be spread out among sites in Penzberg, Germany, and in Switzerland, where the company has facilities in Basel and Schlieren. The drug maker will end its efforts to find new medicines for inflammation.

The company notified employees at the start of the day that there would be a late-morning meeting to discuss the state of the site. Assembled in the company’s cafeterias and an auditorium, the employees received boxed lunches along with the news that the campus would be shut down.

"It’s a big shock,’’one scientist said as he left work yesterday afternoon. The employee, who did not want to be identified, said there was still a lot workers didn’t know. Another scientist, who also did not want to be identified, said the company is supposed to start meeting with employees next month to discuss "what groups will be moved first.’’

Tom Lyon, head of the Nutley site, said employees will be provided with a range of support options and services to assist them during the transition.

Meanwhile, the company will start searching the East Coast for a site to locate a new clinical research center. The center is expected to support U.S.-based clinical trials and to help maintain relations with federal drug regulators and the company’s drug development partners, including biotech companies and academic institutions.

The proposed center, which is expected to be open by early next year, will employ 240 people, many of whom could come from the Nutley site, according to Roche.

Hughes, the dean of the Bloustein School, said Roche was probably going to focus its search in Massachusetts, which is known for having a hub of hospitals and universities that carry out clinical trials.

Related coverage:

• Roche to close, sell venerable campus in Nutley