The world's biggest drug maker announced that it would shut down two US manufacturing plants and try to sell a third in Germany. The closures will also affect research and development with three R&D sites in the US being deemed surplus to requirements and possibly two more, in France and Japan, under threat.
By the end of next year, Pfizer plan to have cut its global workforce by 10 per cent, some 10,000 jobs. This includes the loss of 2,000 US sales jobs, announced last November and the newly-proposed plan to reduce its European sales team by 20 per cent.
The reason for the change becomes abundantly clear in light of the impending loss of revenue with several of Pfizer's biggest selling drugs losing patent protection now or in the near future. Profits dropped 43 per cent in the fourth-quarter of 2006 as generic products began to make their presence felt.
Zithromax (azithromycin) and Zoloft (sertraline) both came off patent in the last 14 months. Combined, this cost Pfizer over $2.5bn in sales last year compared with 2005. In September this year, Pfizer's $5bn blood pressure drug, Norvasc (amlodipine) - the most prescribed brand name high blood pressure medicine worldwide - will also come off patent.
And it doesn't stop there: drugs representing 41 per cent of Pfizer's sales are coming off patent between 2010 and 2012, according to Prudential Equity Group's Timothy Anderson. These are Aricept (donepezil), Lipitor (atorvastatin), Viagra (sildenafil citrate), Detrol (tolterodine) and Geodon (ziprasidone).
The biggest loss will be Lipitor, which had sales worth nearly $13bn (€10bn) in 2006 and is the world's biggest drug - selling more than the next two drugs put together. The blow will be even more keenly felt after development of torcetrapib was halted amid safety concerns last December. The drug would have been prescribed as a combination treatment with Lipitor and had been pitched as a key foundation for Pfizer's cholesterol business, allowing it to defend its franchise once the Lipitor patent expired.
The cost cutting programme aims to save the business up to $2bn annually and is part of a wider plan to "transform" the way Pfizer do business, according to Pfizer CEO Jeff Kindler, who was appointed last July.
"We are facing significant challenges in a profoundly changing business environment," he said. "We must fundamentally change the way we run our company to meet these challenges."
Streamlined R&D
In addition, Pfizer hope to simplify the structure of its R&D teams with scientists focused on a given therapeutic area being moved to one of four major sites. The pharma giant will also stop drug discovery programmes in gastroenterology and dermatology. In a move that highlights there's no room for sentimentality in big business, one of the sites being closed is the Brooklyn, New York, address where the company was founded in 1849.
It's not all bad news for Pfizer though. Sales of their new drug to combat nerve pain, Lyrica (pregabalin) exceeded expectations, with sales of $1.2bn. The drug is an improved version of off-patent gabapentin and works by binding to the A2D subunit of voltage-gated calcium channels.
Pfizer is not the only pharma company that is being hit hard by patent expiries. The report from Prudential Equity Group shows that GlaxoSmithKline is set to lose 23 per cent of their total sales between 2010 and 2012.