Markets

Sanofi, Sepracor Keep Local Politicians in Thrall Over Taxes

By Jim Edwards

Updated on: March 30, 2009 / 3:29 PM EDT / MoneyWatch

Two separate moves, by Sanofi-Aventis and Sepracor, illustrate the power that drug companies can have over the taxes of towns they base their headquarters in.

Sanofi backed out of a deal in Pennsylvania that would have saved it 10 years of taxes in order to cut its relocation expenses, after a bidding war between towns offering tax deals to attract a new Sanofi office.
Sepracor struck a deal in Massachusetts that gave it $3.9 million in tax incentives for promising to create 250 new jobs -- and then laid off 940 of its workers weeks afterward.

The Sanofi deal went down like this: The company extracted a pact from Upper Saucon, Pa., in which it would pay the town $200,000 in return for not paying taxes for the next 10 years. The move would merely have relocated Sanofi's existing vaccine HQ staff from Swiftwater, Pa., and not created any new jobs.

But, with the deal in hand, Sanofi then shrugged and said, "Uh, maybe not." Sanofi now wants to save itself the moving costs and consolidate where it already is. The Morning Call:

After careful consideration, Sanofi Pasteur has decided to explore office space solutions at its current site and within closer proximity to its Swiftwater campus. -- Sanofi spokeswoman Ellyn Schindler

Something even stranger occured in Marlborough, Mass., where Sepracor is located. The company obtained a tax incentive program to save it $3.9 million in exchange for constructing a second building on Waterford Drive, which is now 95 percent complete. Sepracor has about 613 employees, according to the MetroWest Daily News, and had promised to add 250 employees if it got the tax cut.

With deal in hand, however, Sepracor promptly announced that 940 workers were getting the ax. What did the burghers of Marlborough do? They changed the date on the tax break, moving it from 2009 to 2010. The MWDN:

The council is not amending the agreement because of the recent layoff announcement from Sepracor, [Council President Arthur] Vigeant said. ...

If there are future cuts, the agreement will hopefully prevent layoffs in Marlborough, councilors said.