Pfizer's Cutbacks Reflect Difficulties Facing Big Pharma

Pfizer (NYSE: PFE) announced it would close six out of its 20 R&D facilities around the globe as part of its post-Wyeth-acquisition consolidation. Some employees will be transferred to other facilities, while others will be let go. Pfizer did not disclose how many of its R&D staff would be fired, though it said R&D square footage would be reduced by 35%. The company’s Shanghai R&D operation was not affected by the reorganization.

After the changes, Pfizer will have five major R&D centers: Cambridge, Mass.; Groton, Conn.; Pearl River, N.Y.; La Jolla, Calif.; and Sandwich, U.K. There are three additional “research-oriented laboratories” with specialized research capabilities: monoclonal antibody discovery in San Francisco, regenerative medicine in Cambridge, UK, and research and development activities in Shanghai, China. The Shanghai facility was given the least specific mission of the three.

Pfizer’s Shanghai operation now has a staff of 345, up from 17 when the facility opened in 2005. Its strategy follows a partnership model that is neither virtual nor completely in-house. In recent months, the company has announced two cooperation agreements, one with Fudan University and the other with the Shanghai Institutes of Biological Sciences. Pfizer says it has spent $150 million on its China R&D operations between 2005 and the first six months of 2009.

Pfizer will close its R&D facilities in Princeton, NJ; Chazy, Rouses Point and Plattsburgh, NY; Sanford and Research Triangle Park, NC; and Gosport, Slough/Taplow, UK. It will move some functions from Collegeville, PA; Pearl River, NY; and St. Louis to other locations.

In addition to the rationalization of facilities following a major acquisition, the cutbacks also reflect the difficult situation faced by big pharma. It is losing patent protection on its major cash cows, and drug R&D has eaten vast amounts of capital without producing blockbuster replacements.

Disclosure: none.

Comments

[desicon:]

PFE is following the tried and proven business methods. The key strategy is cost management not revenue growth. Next will be the closure of plants in western countries and move manufacturing to China and India. The political climate, healthcare reform and cap & trade makes the management decisions easy. When you do deal with the devil (the government) the innocent bystander (the people) are the victims.

Nov 10 11:59 AM

[medsearch:]

With Pfizer, J & J, and Merck cutting jobs in droves, olther medical suppliers will only follow. The result will be the loss of over 500,000 jobs as a direct result of health care reform. In my industry, medical sales, we have already lost 30,000 jobs in medical sales. It will only get worse. Learn more about the impact of reform on medical device sales jobs at www.gorillamedicalsale...

Nov 10 12:10 PM

[Tom B:]

"The key strategy is cost management not revenue growth."

In other words, to hell with a patient that might be waiting for a new, life-saving therapy-- we have the much more important goal of preserving our dividend. Idiots!


On Nov 10 11:59 AM desicon wrote:

> PFE is following the tried and proven business methods. The key strategy
> is cost management not revenue growth. Next will be the closure of
> plants in western countries and move manufacturing to China and India.
> The political climate, healthcare reform and cap & trade makes
> the management decisions easy. When you do deal with the devil (the
> government) the innocent bystander (the people) are the victims.

Nov 10 03:02 PM