Pfizer Begins Post-Merger Layoffs, Consolidation
After merging with Wyeth last year, Pfizer announced that it would cut 19,000 jobs. The first round of 6,000 job cuts was announced today, as well as plans to close plants. BusinessWeek reports:
Pfizer said it has spent the past six months reviewing how to reduce the combined company’s manufacturing operations. Pfizer is trimming costs as it braces to lose patent protection next year on the company’s top-selling Lipitor cholesterol pill, which generated $11.4 billion in sales last year.
The drugmaker plans to shut manufacturing operations over the next five years at plants in Puerto Rico, Ireland, and Rouses Point, New York. Operations at plants in Germany, Ireland, Puerto Rico, the U.K. and U.S. will be cut back, the New York-based company said in a statement today.
The plants that will be closed include those in Caguas, Puerto Rico; Carolina, Puerto Rico; Dublin; Loughbeg, Ireland; Shanbally, Ireland; Rouses Point, New York; Richmond, Virginia; and Pearl River, New York.
The jobs cuts affect 18% of Pfizer employees, according to Reuters. When Pfizer bought Wyeth, it added more than 36 manufacturing facilities on top of its existing 40. This kind of streamlining is necessary to avoid operational overlap and inefficiencies.
Still, Pfizer has to choose where it withdraws carefully. If it withdraws from New York City, for example, it could face $24 million in government penalties.
Meanwhile, Pfizer is scrambling to find revenue streams to offset its loss of the Lipitor patent. It struck a new deal with universities to find new uses for its existing drugs (if you soon learn that Viagra also cures migraines, this partnership could be behind it). Pfizer is striking other partnerships to expand its footprint in generics.
In a sense, for Pfizer, it’s consolidation and patent cliff preparation as usual.