Pfizer to cut 10% of workforce

Pfizer to cut 10% of workforce
By Andrew Jack in London
Copyright The Financial Times Limited 2007
Published: January 22 2007 13:23 | Last updated: January 22 2007 21:01


Pfizer, the world’s biggest pharmaceuticals company, is to cut 10,000 jobs to reduce costs by $2bn in an attempt to maintain earnings growth in spite of stagnating sales in the face of fierce competition from generic drugs.

In a wide-ranging announcement on Monday after a sharp fall in underlying fourth-quarter profits, Pfizer revealed plans to shut three factories, close three research sites and cut its global workforce by 10 per cent.

The group said it would reduce its European workforce by 20 per cent.

Jeffrey Kindler, the chairman and chief executive appointed last July to replace Hank McKinnell and reverse the fortunes of the US group, also pledged up to $10bn in share buybacks this year and more dividend increases.

The company said it would boost research with the aim of launching two externally sourced drugs a year by 2010 and four internally developed ones a year by 2011, but would pull out of two areas – gastroenterology and dermatology. The plans came after Pfizer published fourth-quarter earnings down 15 per cent to $3bn on revenues almost unchanged at $12.6bn, ahead of one-off gains from the sale of its consumer health business.

Generic competition sharply eroded sales of Zithromax, an antibiotic, and Zoloft, an anti-depressant, in the US, while sales of its branded anti-cholesterol drug Lipitor, the world’s top-selling medicine, also dipped 1 per cent in the fourth quarter to $3.3bn.

Mr Kindler said: “While we attained nearly all of our financial targets for the year, we continue to face a difficult operating environment, including competitive challenges and the risks inherent in drug development.”

Mr Kindler had only just announced an overhaul of drug research last month when he was forced – because of safety concerns – to cancel development of Torcetrapib, an experimental drug designed to be combined with Lipitor.

He said adjusted diluted earnings per share of $2.06 for the full year were in line with guidance, and that its Adapting to Scale productivity programme had achieved savings of $2.6bn last year against a goal of $2bn.

Pfizer’s reported net income for the final quarter of 2006 was up sharply to $9.5bn from $2.7bn in the same period of 2005. The full-year net income was $19.3bn on revenues of $48.4bn. The figures included one-off gains from the sale of its consumer healthcare business to Johnson & Johnson, which raised $16.6bn. Mr Kindler said proceeds would be invested in new products and “to support a strong dividend and an active share purchase programme”.