Pfizer to Cut Jobs, Close Plants
STEVE INSKEEP, host:
The business news starts with painful cuts at the world's largest drug company.
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INSKEEP: The pharmaceutical giant Pfizer has announced that it's slashing 10,000 jobs. The company is struggling with competition from generic drugs, and it's reeling from a failure of a drug that it thought would be its next blockbuster.
Here's NPR's Frank Langfitt.
Mr. JEFFREY KINDLER (CEO, Pfizer): There are no longer any sacred calves.
FRANK LANGFITT: That was one of the messages from Pfizer CEO Jeffrey Kindler yesterday as he announced that company was reducing its global workforce by 10 percent. Kindler says the firm will slash middle management and hopes to save $2 billion by the end of next year.
Mr. KINDLER: In the past, Pfizer was a large, bureaucratic company that was often slow to take risks and make decisions. In the future, we must be a streamlined company that listens to its employees and its customers.
LANGFITT: Like other pharmaceutical firms, Pfizer faces intense competition from generic drugs. For instance, sales of its antidepressant Zoloft - which recently lost patent protection - plunged nearly 80 percent in the final three months of last year. And it's unclear where future big sales will come from.
Last year's safety concerns forced the company to cancel a cholesterol treatment, torcetrapib, which Pfizer thought would become its next big money maker.
This is Jamie Rubin, an analyst with Morgan Stanley.
Ms. JAMIE RUBIN (Analyst, Morgan Stanley): Torcetrapib was expected to replace Lipitor once Lipitor goes generic, middle of 2011. And as you know, Lipitor is a $13 billion drug that represents roughly half of Pfizer's earnings.
LANGFITT: And Rubin says the company will not see much increased revenue as patents lapse on other drugs.
Ms. RUBIN: They've got another two years where we anticipate no topline growth, largely because of somebody's patent expirations.
LANGFITT: The company's job cuts will hit communities at home and abroad.
Mr. KINDLER: Amboise, Ann Arbor, Esperion, Kalamazoo and Nagoya.
LANGFITT: Those are the locations of five research sites Pfizer plans to close as part of its restructuring. It will also shut plants in Brooklyn, New York and Omaha, Nebraska. Ann Arbor will lose 2,100 jobs.
That's especially bitter for Michigan. Leaders often cite Ann Arbor's diversified economy as a model for the Rust Belt state. At a news conference, Governor Jennifer Granholm says she was determined to forge ahead.
Governor JENNIFER GRANHOLM (Democrat, Michigan): I don't think there's any sugar coating, that this is a very tough blow to a state that is already reeling from the contraction of the automotive industry and globalization. But that's why we are determined - all of us up here - to not have this be the end of the story.
LANGFITT: Workers in Ann Arbor say they weren't prepared for the layoffs. But some are already looking forward. Jeremy Castarina(ph) has worked for Pfizer for five years.
Mr. JEREMY CASTARINA (Employee, Pfizer): It's shocking, but I always want to be a cop, so I suppose can figure something else out.
LANGFITT: Financial analysts applauded Pfizer's cost-cutting. But they say the company must now find new drugs to increase profits.
Frank Langfitt, NPR News.