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Takeda Pharmaceuticals announced Sept. 10 plans to close its U.S. headquarters in Deerfield, Illinois and continue consolidating its operations in Boston, according to Crain’s Chicago Business. The Deerfield office houses around 1,000 employees.
The biopharma company’s decision to shutter its Illinois-based headquarters comes despite having enjoyed one of the most lucrative tax credit arrangements in the state, calling into the question the efficacy of Illinois’ Economic Development for a Growing Economy, or EDGE, tax credit program.
From 2003 to 2013, Illinois issued more than $60 million in EDGE tax credits to Takeda via two separate agreements, according to documents obtained from the Illinois Department of Commerce and Economic Opportunity. In exchange, the company promised to create 566 new jobs.
No other company in the state received more EDGE tax credits over that time.
…Adding… From Austin Berg at the Institute…
Hey Rich, worth noting that the second Takeda EDGE agreement extended beyond 2013, so they have very likely received even more than $60 million in credits. According to the most recent report from DCEO, Illinois also issued EDGE credits to them in 2014, 2015 and 2016, though it does not disclose the amount.
We published what we knew for sure according to the most recent FOIA data we had on hand from DCEO, which followed the EDGE program from 2001-2013
* More on why the company is leaving from John Pletz at Crain’s…
The move is not entirely unexpected. Its parent company, based in Tokyo, is in the process of buying Irish drugmaker Shire for $62 billion as the drug industry continues to consolidate.
Takeda has been shrinking its workforce in Deerfield, shifting some R&D resources from Chicago to Cambridge, Mass., where it acquired two companies in the past decade. […]
Takeda, which set up operations in the Chicago area in 1977, has been reducing operations in Deerfield for several years. When it announced the proposed deal with Shire, Takeda said it expected to reduce R&D costs by about $600 million a year and trim overall expenses by $1.4 billion. Management expects to reduce the companies’ combined workforce about 7 percent.
But Takeda’s latest move heralds more than consolidation. The health care industry is moving away from traditional drug compounds toward biologics and gene-based treatments. Boston, like San Francisco and San Diego, is a major hub for such research. Although Chicago has some of this capability—at AbbVie, in local universities and in some emerging companies, such as AveXis—it doesn’t have the same scale as Boston.
* From one of Dan Proft’s papers…
Takeda Pharmaceuticals, shuttering its Lake County U.S. headquarters and moving 1,000 jobs to Boston, saw its property tax bill rise 66 percent over the last decade, from $1.37 million in 2008 to $2.28 million last year, according to the Lake County Treasurer’s office.
That’s down from a high of $2.7 million in 2012.
In all, the company has paid more than $22 million in property taxes on his since 2008 on its 380,000 square foot tower that straddles Lake Cook Road and Interstate 294 in Deerfield.
It was the fourth highest corporate property taxpayer in Lake County, after Abbott Laboratories ($9.2 million), Gurnee Mills Shopping Center ($4.8 million) and Vista Medical Center East in Waukegan ($2.9 million).
posted by Rich Miller
Wednesday, Sep 12, 18 @ 2:43 pm
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Bruce Rauner failed again…
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 2:52 pm
So it’s an industry-related move and tax credits didn’t keep the company here? I’m shocked. I thought tax incentives/cuts are the be-all of economic growth.
Boston is a beauty. Massachusetts is a top-ranked state economically, including having almost 100% health insurance coverage. Once recreational MJ legalization rolls out, boy will that be a great addition.
Comment by Grandson of Man Wednesday, Sep 12, 18 @ 2:55 pm
Tax credits between 2003-2013. Remind us again what party controlled the guv seat.
Comment by Pick a Name Wednesday, Sep 12, 18 @ 3:00 pm
===Tax credits between 2003-2013. Remind us again what party controlled the guv seat.===
Takeda Pharmaceuticals is leaving now.
“Who” is governor now?
You’re welcome.
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 3:03 pm
“Takeda Pharmaceuticals is leaving now.”
What’s the incentive to stay in Illinois? Wait for higher income taxes for your executives, higher property taxes on their homes?
Comment by Downstate Wednesday, Sep 12, 18 @ 3:14 pm
So let me understand this - $60 million in EDGE Tax Credits to create 566 jobs over a 10 year period, but, according to Proft, they are leaving because the paid $22 million over a 10 year period in property taxes?
What am I missing?
I have my strong opinions about the EDGE tax credits and the way they have been administered, but Willy is absolutely correct - “Who” is governor now?
Comment by illini Wednesday, Sep 12, 18 @ 3:17 pm
–The health care industry is moving away from traditional drug compounds toward biologics and gene-based treatments. Boston, like San Francisco and San Diego, is a major hub for such research. Although Chicago has some of this capability—at AbbVie, in local universities and in some emerging companies, such as AveXis—it doesn’t have the same scale as Boston.–
The only thing I see you can pin Rauner or past administrations for is not being on top of this shift and getting more money for UIC’s molecular genetics research (i.e., Tekada’s move isn’t because of a generalized weakening of the university system - this is ultra-high tech), but I’m presuming Abbott gets some of these same tax incentives. Are there any proposals for attracting/growing more of this research? Are we too far behind and better off focusing on other emergency technologies?
Comment by lake county democrat Wednesday, Sep 12, 18 @ 3:17 pm
===What’s the incentive to stay in Illinois? Wait for higher income taxes for your executives, higher property taxes on their homes?===
Rauner DID sign a budget, with NO reforms that had a 32% tax increase to pay for the budget…
Boy is Rauner a failure.
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 3:17 pm
Google tells me Massachusetts has a 5.1% flat personal income tax. Maybe we should raise ours to that and they’ll stay?
Comment by Lefty Lefty Wednesday, Sep 12, 18 @ 3:19 pm
Per Crains, this is about ultra-high tech research. Does Abbott get some of these EDGE tax credits? If so, removing them risks deepening the hole. I’m not sure what could have been done here - maybe target more money to UIC’s molecular genetics program - but it’s dangerous to overgeneralize to fit either party’s narrative.
Comment by lake county democrat Wednesday, Sep 12, 18 @ 3:19 pm
Did Rauner do anything to try and keep them? Did he even know they were considering leaving? Did anyone at DCEO or Intersect Illinois do anything to try and keep them here or is this just a big surprise to everyone?
One of Rauner’s greatest failings as governor is his inability and unwillingness to sell our state to employers. And no, that’s not because Illinois is a basket case. Rahm has very successfully sold Chicago to countless employers over the years despite rising crime and a fiscal calamity. Rauner hasn’t even bothered to try. In other words, what kind of Rauner failure is this or is it just industry consolidation and he bears no blame?
Comment by Chicago Cynic Wednesday, Sep 12, 18 @ 3:20 pm
If only we had term limits.
Comment by Skeptic Wednesday, Sep 12, 18 @ 4:04 pm
It’s about the acquisitions and the skilled labor pool in Boston. Those are much bigger drivers than taxes.
Comment by Interested Bystander Wednesday, Sep 12, 18 @ 4:06 pm
I would have thought Six Flags property tax bill would have made the top 4.
Comment by The Captain Wednesday, Sep 12, 18 @ 4:06 pm
TiF and edge tax credits. Capitalism at its finest. Love to hear republicans talk about free market principles.
Comment by BlueDogDem Wednesday, Sep 12, 18 @ 4:17 pm
the parent company is spending 62 Billion on the purchase of another company, Danny boy why are you talking 2 -3 million dollars on propert taxes? By your methodology the richer you are the less you should pay and you certainly should not pay what your property is worth. Again if you want to cut taxes tell us what jobs your going to cut and what YOU think we should pay cops, fireman, and teachers and specify, don’t just say cut!!
Comment by Popeye Wednesday, Sep 12, 18 @ 4:17 pm
–Wait for higher income taxes for your executives, higher property taxes on their homes?–
LOL, yeah the cost of living in Boston is nothing compared to Deerfield.
Comment by wordslinger Wednesday, Sep 12, 18 @ 4:20 pm
>calling into the question the efficacy of Illinois’ Economic Development for a Growing Economy, or EDGE, tax credit program
Why question, just go look at the actual data, people. Oh, wait… /s
Comment by Earnest Wednesday, Sep 12, 18 @ 4:26 pm
=What’s the incentive to stay in Illinois? Wait for higher income taxes for your executives, higher property taxes on their homes?=
Spent any time near or in Boston? My best friend just moved to suburban Boston. Taxes are high, home prices and the price of everything else is astronomical.
So instead of waiting, Takeda decided to move to a locale that is already far more expensive than Illinois.
Comment by JS Mill Wednesday, Sep 12, 18 @ 4:35 pm
After hearing Rauner bad-mouth the state for 2 years, Rauner finally convinced them to leave.
Comment by DuPage Wednesday, Sep 12, 18 @ 4:36 pm
Any clawback provisions in those EDGE credits?
Comment by SAP Wednesday, Sep 12, 18 @ 4:51 pm
@Wordslinger and @JSMill - My niece is in the process of trying to determine where she will apply to do her residency next year. In her field, Boston and SF are top choices given the specialties she is considering. But she has also considered her stipend and has looked at the cost of living for those areas.
So, in spite of her desire to get out of the Midwest to further her specialty and career, she may end up at Chicago or Northwestern. Not second tier by any means but not Johns Hopkins, UCSF or several in the Boston area. But she does not have a corporate giant making the decisions for her.
Comment by illini Wednesday, Sep 12, 18 @ 4:58 pm
Hey OW-our son bought a condominium in Boston in 2014 and recently sold it for an 80 percent profit in order to move into a house. Can’t do those numbers in Chicago - not even close. Boston found a way to exploit its universities over the last 10 plus years to build the best biotech industry in the Country. It’s called political leadership which unfortunately has been sorely lacking in Illinois for a long long time
Comment by Sue Wednesday, Sep 12, 18 @ 5:39 pm
===Can’t do those numbers in Chicago===
Are you saying it’s cheaper in Chicago?
80% in 5 years. Nice. Congratulations.
Chicago still isn’t Detroit.
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 5:50 pm
you wonder what’s up with all of those political contributions by Takeda to state legislators-if it is leaving
Comment by just saying Wednesday, Sep 12, 18 @ 5:51 pm
===Boston found a way to exploit its universities over the last 10 plus years to build the best biotech industry in the Country. It’s called political leadership===
Yep.
Rauner starving state universities, it only hurts Illinois.
Rauner failing us again.
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 5:51 pm
Yeah Sue, those Boston Democrats are a spurious, specious and conniving group of individuals who fooled, or found a way to “exploit” the prestigious Universities in the Boston area. They obviously succeeded in some respects.
But what has our Governor done to retain what we have and to attract new high tech and medical related research businesses?
Comment by illini Wednesday, Sep 12, 18 @ 6:28 pm
Next stop after Boston is China. Read the book China Rx:Exposing the Risks of America’s Dependence on China for Medicine.
Comment by Yu2 Wednesday, Sep 12, 18 @ 6:53 pm
Their leaving cause they know their tax credits are going to disappear under a new governor. Rauners on his way out and they know it lol
Comment by Shrek Wednesday, Sep 12, 18 @ 7:35 pm
You Rauner haters are truly dumb. The Boston revitalization has been ongoing for 15 years and guess what- MA has had R governors as well as Dems. What they don’t have is a Madigan like Machime which is only interested in self perpetuation and promoting public Unions. Illinois’ long decline be has been going on for decades. Only one thing has been a constant Mike Madigan
Comment by Sue Wednesday, Sep 12, 18 @ 7:51 pm
===MA has had R governors as well as Dems.===
Rauner is neither.
Rauner is a Raunerite, who refused to fully fund higher education.
===What they don’t have is a Madigan like Machime which is only interested in self perpetuation and promoting public Unions.===
… and yet, it was Madigan and a bipartisan legislature that finally funded higher ed, over a Rauner veto. Keep up.
===Illinois’ long decline be has been going on for decades. Only one thing has been a constant Mike Madiga.===
Rauner IS the status quo now. A failure. An utter failure, while trying to passively close universities.
I guess you like that type of governor. Even Massachusetts wouldn’t tolerate Rauner.
No other state would.
Comment by Oswego Willy Wednesday, Sep 12, 18 @ 7:56 pm
Takeda isn’t leaving because of Rauner. They could care less who the governor is right now. This is a mega merger, and the thousand people in Illinois are a drop in the bucket. Roll it all into cost of centralizing, take a restructuring charge and it doesn’t impact the way the street looks at your earnings.
Comment by SSL Wednesday, Sep 12, 18 @ 8:13 pm
– MA has had R governors as well as Dems. What they don’t have is a Madigan like Machime…–
LOL, that would be news to Billy Bulger, his predecessors and successors.
We all can’t be so super-smart and a great writer like you, Sue. But, fact is, Democrats have controlled both chambers of the Massachusetts legislature since 1959.
Keep your shoes on, I’ll do the math for you: that’s 59 years.
The current breakdown: Senate, 33 D, 7 R; House, 125 D, 25 R.
Comment by wordslinger Wednesday, Sep 12, 18 @ 8:41 pm
Cue the Steve Miller Band. Go on, take the money and run.
Comment by Generic Drone Wednesday, Sep 12, 18 @ 10:29 pm