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Pfizer will cut 10,000 workers
World Business News |
2007/01/23 04:45
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Pfizer Inc. announced Monday that it will cut 10,000 jobs, or 10 percent of its global workforce, as the world's largest drugmaker seeks to slash its annual costs by as much as $2 billion by 2008 amid fierce competition from generic drugs.
The company said it will close three research sites in Michigan and two manufacturing plants in New York and Nebraska. It also might sell another manufacturing site in Germany and close research sites in Japan and France.
The sites in Michigan employ about 2,400 people. The Ann Arbor facility has about 2,100 employees, while there are approximately 250 workers in downtown Kalamazoo and 60 in western Wayne County's Plymouth Township. Pfizer said many of the Michigan workers will be offered jobs elsewhere in the company.
It's the second time in two years that Pfizer has announced a major cost-reduction plan to combat the loss of about $14 billion in revenue this year because of expiring patents on key drugs. The company is at risk of losing 41 percent of its sales to generic competition between 2010 and 2012, according to one analyst.
The latest layoffs include the elimination of 2,200 jobs from the U.S. sales force, which Pfizer announced late last year. The company said Monday that it will cut 20 percent of its European sales force.
Analysts are skeptical that Pfizer's crop of current and pipeline products can generate enough sales to compensate for the lost revenue. Pressure on Pfizer has intensified since safety issues forced it to halt development of the star drug in its pipeline, which was slated to replace Pfizer's best-selling product, cholesterol drug Lipitor, as it loses patent protection as early as 2010.
"You can't cost-cut your way to prosperity," said Les Funtleyder, an analyst at Miller Tabak & Co.
Pfizer's fourth-quarter earnings report, issued earlier Monday, illustrated the company's woes. Excluding an after-tax gain of $7.9 billion related to the sale of its consumer health-care business last month, earnings fell nearly 35 percent, to $1.5 billion, or 21 cents a share, from $2.6 billion, or 35 cents a share, a year earlier.
Revenue was flat, at $12.6 billion. U.S. sales of Lipitor slipped 6 percent, to $1.95 billion. Last summer, Zocor, a rival cholesterol treatment made by Merck & Co., lost patent protection, and insurers have been pushing the cheaper versions of that drug over Lipitor when appropriate.
Pfizer's struggle with patent expirations comes as insurers and the government are pressuring drugmakers to keep prices down and refusing to pay for new treatments that are essentially the same as those they are intended to replace.
That means drugmakers are taking bigger risks to find new types of medicines. But their attempts can fail. Last year, safety issues forced Pfizer to scrap its drug torcetrapib, a novel cholesterol treatment, after spending $800 million on its development.
Pfizer stock dropped 27 cents Monday on the New York Stock Exchange, to close at $26.95 a share. |
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