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Pfizer Under The Gun

Tuesday, January 23, 2007

Well, Pfizer made its big news official yesterday. The company plans to cut 10,000 jobs—about 10% of the company—by the end of 2008 and close some facilities, including three research sites in the United States. The job cuts and site closings are expected to save $2 billion a year.

To me, what is important is the company’s research plans. The three research sites set to close are all in Michigan, but don’t include a large manufacturing facility in the state and Animal Health. The company is also looking at shutting down research sites in Nagoya, Japan and Amboise, France.

“These and other actions will allow us to reduce costs in support services and ‘bricks and mortar’ and to redeploy hundreds of millions of dollars into the discovery and development work of our scientists,” Dr. John LaMattina, head of Pfizer Global Research and Development, said in a statement.

Pfizer’s long list of problems, from intense generic competition to its recent failure to get cholesterol drug torcetrapib through clinical trials, have been well documented here and in many other places. Once that big pipeline failure was announced last month, it was clear that Jeffrey Kindler, Pfizer’s chairman and chief executive officer, would take dramatic action.

But just cost cutting won’t do it. If Pfizer is to right itself, it must fill huge revenue gaps with new, big-selling drugs. To help find those drugs, the company said it will simplify its R&D organization. The company hopes to improve productivity by consolidating research teams focused on a particular therapeutic area to one of four big sites. These research teams are currently in multiple locations around the world. It’s a tall order.

Pfizer can’t catch a break. The AIDS Healthcare Foundation told Reuters it plans to take legal action against Pfizer in an attempt to stop the company from allegedly marketing its erectile dysfunction drug as a sexual enhancement. Pfizer denies the accusation. The AIDS organization claims the marketing of Viagra has led to risky behavior by men and an increase in HIV.

Pfizer’s announcement yesterday essentially admitted that its R&D efforts have a long way to go. And the AIDS group’s lawsuit took aim at one of the most productive areas of big pharma companies: marketing. At each end of the drug pipeline, Pfizer is under fire. The company must make its own breaks by simplifying R&D and producing new drugs.

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