Pfizer cutbacks may set trend
PFIZER Inc’s plan to eliminate 10,000 jobs, or 10 percent of its workforce, may ripple through the pharmaceutical industry and prompt similar cuts from rivals such as GlaxoSmithKline Plc and Sanofi-Aventis SA.
Pfizer, the world’s biggest drug maker, said yesterday it would close two US factories, consider selling one in Germany, shut down five research centers in the US, Japan and France, and reduce its European sales force by 20 percent, according to Bloomberg News. The plan will slash annual spending by US$500 million to US$1 billion.
Chief Executive Officer Jeffrey Kindler is deepening cuts after Pfizer reported a 43 percent drop in fourth-quarter profit and generic copies of top-selling drugs began eating into revenue. Glaxo, Sanofi and other drug makers facing competition from cheaper copies would benefit by following New York-based Pfizer’s staff reductions and site closings.
“In the face of stalling sales with limited new-product flow and significant generic competition for a lot of the big brands, it does make sense that the industry unilaterally disarms” after a 15-year expansion, said Deutsche Bank analyst Barbara Ryan yesterday in an interview. “Pfizer is the 800-pound gorilla.”
Drugs generating a combined US$23 billion in annual sales, or almost 10 percent of the US market, lost patent protection last year, according to health research firm IMS Health Inc. Cheaper copies can drive prices down as much as 80 percent.
Alice Hunt, a spokeswoman for London-based Glaxo, and Steve Brown, a spokesman for London-based AstraZeneca Plc, declined to comment on how Pfizer’s plan would affect their need for sales staff. Jean-Marc Podvin, spokesman for Paris-based Sanofi, declined to comment before the company’s February 13 earnings release and press conference.
At Pfizer, fourth-quarter revenue rose less than a percent to US$12.6 billion as generic competition weighed on sales of the antidepressant Zoloft, Pfizer’s third-biggest drug. The company repeated a forecast that revenue won’t grow this year and next year above last year’s US$48.4 billion.
Pfizer’s sales will plummet after 2011 when it loses patent protection for its Lipitor cholesterol pill, which accounts for almost half of profit, analysts predicted. In the fourth quarter, revenue from the drug declined to US$3.34 billion from US$3.36 billion a year earlier. The product’s sales for 2006 rose six percent to US$12.9 billion, missing the company’s goal of US$13 billion.
Pfizer shares gained nine percent in the New York Stock Exchange in the past 12 months, underperforming a 13 percent rise in the 14-member Standard & Poor’s 500 Pharmaceutical Index.