Pharmaceutical Giant Pfizer Announces Job Cuts, Plant Closures

Last month Pfizer announced that it was planning to cut its American sales force by 20%, resulting in over 2000 layoffs. Yesterday the company announced more grim news for Pfizer employees, saying that it is going to cut 7,800 more workers in all parts of the company around the world, thereby eliminating about 10% of Pfizer’s global workforce. The company will also close several research and manufacturing sites across the country, including the 600-employee manufacturing plant in Brooklyn where Pfizer began operations in 1849 as a chemical maker.

Pfizer’s plans to overhaul its business practices are in part an effort to combat declining sales that have come as cheaper generic drugs have become available. The patents are expiring for some of the most profitable drugs introduced by Pfizer in the 1990s, and generic manufacturers have jumped in to offer competition to the big sellers. But as the patents were slowly expiring, Pfizer and other large pharmaceutical companies have not been developing new products quickly enough to offset the sharp decline in sales. So now many of them are having to backtrack to reorganize from the ground up.

"Incremental evolution is not enough," said Jeffrey B. Kindler, Pfizer’s new chief executive. "Fundamental change is imperative, and it must happen now." Kindler, a lawyer who is relatively new to the pharmaceutical industry, was hired by Pfizer just five years ago as general counsel after working for General Electric and McDonald’s. Last July he was named chief executive to replace Hank McKinnell, who was forced into early retirement. Upon being appointed CEO, Kindler pledged to perform a thorough review of all Pfizer’s operations with fresh eyes and see what changes needed to be made.

The two heaviest hitters that have hurt Pfizer the most in the last two years were the loss of patent protection for the antibiotic Zithromax and the antidepressant Zoloft, both of which saw sales plummet more than 70% in the fourth quarter of 2006. This year the blood pressure drug Norvasc, which earned nearly $5 billion for the company last year, will begin to lose its patent protection. But the biggest looming drop in profits might come in just three or four years when Pfizer’s anti-cholesterol drug Lipitor—the biggest-selling drug in the world—begins to lose its patent.

Safety concerns over product development have also hurt Pfizer in recent years, with the most recent being in December when the company was forced to stop development operations on the drug torcetrapib, which was being considered as a successor to Lipitor because of its promising performance in experimental trials.

Pfizer’s announcement did not include any mention of changes in upper level management, but at least one high-level executive will be moving on to other things. Peter C. Brandt, who has headed the U.S. pharmaceutical operations of Pfizer, will be retiring because his job is being eliminated as part of the company’s overhaul of their sales operations. Brandt, 49, had been given extra responsibilities in the company as recently as August.

Ian Read, Pfizer’s president of worldwide pharmaceutical operations, said that the company is exploring new ways to restructure its sales department. "We need to listen and work differently," he said. Overall, Pfizer said that the changes they are planning will save up to $2 billion in yearly expenses, in addition to the goal of $4 billion in reductions the company had previously said it hopes to achieve by 2008.