Faced with growing generic competition and an insufficient pipeline, Pfizer (NYSE:PFE) execs are scrambling some more and plan to cut another $1 billion or so in expenses on top of the billions in cuts that have already been drained from R&D and marketing over the past few years, The Wall Street Journal reports.
The first phase of the cutbacks will amount to $500 million and take place later this year, with the rest coming next year. “We’re going to take out another billion dollars of our expenses,” Pfizer CEO Ian Read was quoted as saying, according to the paper. A Pfizer spokesman adds that “we’re focused on operating in new, more effective and efficient ways, while at the same time continuing to invest where opportunities are robust.”
Among the areas to be cut: Duplicative administrative work at Pfizer’s New York headquarters and offices elsewhere, promotion, travel, entertainment and consultants, as well as materials, supplies and electronic devices for sales reps. The cuts would trim almost 5% from selling, informational and administrative expenses, which were $19.6 billion last year, the paper writes.
Over the past few years, Pfizer has cut nearly 20,000-19,000 jobs to save costs and combine operations after acquiring Wyeth. Overall, Pfizer currently employs nearly 110,000 people. Last year at this time, Pfizer announced plans to slash 6,000 manufacturing jobs and close several plants, and has since trimmed still more facilities (see here). Since 2000, Pfizer has cut spending by $4.1 billion.
Meanwhile, the Lipitor cholesterol pill, a $10.7 billion seller, begins facing generic competition this year. Last year, the Effexor antidepressant lost patent protection and next year, the Viagra impotence pill, a $1.9 billion seller, follows suit. Pfizer sales last year were nearly $68 billion.
To cope, Pfizer is also considering the sale of so-called non-core units, including animal health, nutrition and consumer goods. The drugmaker already agreed to sell a unit that makes drugs in capsule form for $2.38 billion. Some analysts, however, believe the move is misguided and will not transform either an established entity consisting of older, off-patent meds, or core products, which would be home to newer drugs and R&D, into growth operations (back stories here and here).