Alexion Pharmaceuticals became the latest company to pick Boston’s buzzing Seaport District as its new home, instantly joining the ranks of the state’s biggest biotechs. But it also faces a number of challenges as it prepares for the move.
The company Tuesday said it would relocate its headquarters from New Haven as part of a painful consolidation under new chief executive Ludwig Hantson. Brought in in March after a scandal involving sales practices, Hanston is wrestling with pressures to cut costs while the company is under federal investigation.
The company unveiled plans to cut about 20 percent of its global workforce, or about 600 jobs, to save at least $250 million a year, following an trim of about 200 jobs in the spring.
Among the casualties: a manufacturing plant in Smithfield, R.I., where about 250 people work. Several other offices will close, including one in Lexington that Alexion acquired when it bought Synageva BioPharma in 2015.
Still, this move represents a net gain for Boston: The maker of rare disease treatments will employ about 400 people at its new, 150,000-square-foot headquarters at 121 Seaport Boulevard beginning in June. An Alexion spokeswoman said many of those workers will come from Lexington. Alexion currently has a market capitalization of more than $30 billion, which would make it among the highest valued biotech companies in Massachusetts.
Alexion’s main drug Soliris accounts for about 90 percent of its annual revenue, an estimated $3.5 billion this year, and ranks among the most expensive drugs in the United States. Used now to treat two rare blood disorders, Morningstar stock analyst Kelsey Tsai said Soliris is a versatile treatment, and investors are banking on Alexion receiving approvals to broaden its use.
The Alexion spokeswoman said the company will not get any state or city incentives to make the move to Boston, but might apply for them at a later date. Instead, the company was attracted to the Boston area for its deep talent in the life sciences sector, its innovation ecosystem, and the proximity to Logan Airport.
“It’s important that we are in an ecosystem where biotech is front and center,” Hantson, who previously led Baxalta through to its merger with Shire last year, said on a conference call. “Needless to say, we will have a larger talent pool of people who have biotech experience [in Boston].”
The relocation is another win for Skanska, the development and construction firm building 121 Seaport. Last week, software firm PTC Inc. announced it will move its headquarters from Needham to the Seaport building, bringing 1,000 jobs. Skanska said Tuesday the office space in the building is now fully leased, with those two tenants.
But for Connecticut, Alexion’s departure is another psychological blow following the loss of General Electric Co. to Boston, and Aetna Inc.’s pending headquarters relocation to New York.
“Having three headquarters operations choose to relocate in a short period of time is a serious concern,” said Joe Brennan, chief executive at the Connecticut Business & Industry Association.
Connecticut officials invested heavily in Alexion’s success, awarding a package valued at up to $51 million over time, to entice the company to open a new headquarters in New Haven less than two years ago. Alexion intends to keep 450 jobs in New Haven.
The company has indicated to state officials that it will repay a $20 million loan and a $6 million grant — representing most of the state money it has already received — because of the Boston move.
Travis McCready, head of the quasi-public Massachusetts Life Sciences Center, said Alexion has recently expressed interest in the incentives available here, and had discussed a possible move, too.
“There is no better place to engage in rare disease research,” McCready said. “I’m pretty confident that they will be here for the long haul.”
One of the key attractions to the Boston area, industry experts said, is its wealth of biotech startups. Alexion, like many other big drug companies, will likely look to partner with or acquire some of these firms to supplement its drug pipeline.
“It’s a target rich environment,” said John Hallinan, chief business officer of the Massachusetts Biotechnology Council. “If you’re a large pharmaceutical company ... the innovation is largely happening outside of their four walls.”
Corporate lawyer Jeannette McLaughlin suggested Alexion will be more cautious on deals after its $8.4 billion purchase of Synageva, widely considered to be too rich a price.
“That probably created some waves in the company [because] it didn’t go as smoothly as they would have hoped,” said McLaughlin, a partner at Posternak Blankstein & Lund in Boston.
Tsai, the Morningstar analyst, said she wasn’t surprised by the latest shakeup at Alexion. The moves had all the marks of a new CEO trying to reset the clock after the company was plagued by accusations of a high-pressure sales environment, including a federal investigation into the company’s support for certain charities that help Medicare patients.
“They’re really trying to have this cultural shift,” Tsai said.