Report: Pfizer cutting up to 2,400 sales jobs

January 16, 2009 1:33:23 PM PST
Drug giant Pfizer Inc. reportedly plans to lay off nearly a third of its 8,000 salespeople. Company spokespeople declined to comment Friday on a Wall Street Journal report that New York-based Pfizer will cut as many as 2,400 sales representatives.

But David Heupel, health care and pharmaceutical portfolio manager at Thrivent Large Cap Growth Fund, said that figure is "probably a pretty decent cut" for a company Pfizer's size.

"We've seen reductions in the sales force of every major pharmaceutical company" recently, Heupel said.

That includes Pfizer rivals GlaxoSmithKline, Merck, Wyeth, Schering-Plough and Johnson & Johnson.

Earlier this week, Pfizer, the world's No. 1 drugmaker by revenue, confirmed it is cutting the jobs of up to 800 scientists and other research staff around the world.

The latest sales division cuts would follow elimination of roughly 2,000 sales jobs under a massive restructuring that began two years ago and resulted in about 14,600 jobs being slashed. "We don't comment on rumors or speculation," company spokesman Ray Kerins said in a statement.

"We will continually look for ways to operate our business in a more effective and efficient way," he said.

Pfizer has been working to lower costs ahead of generic competition expected in late 2011 for its blockbuster cholesterol drug Lipitor, which brings in nearly $13 billion a year.

Competition is likely to cut sales drastically.

The company is widely expected to make an official announcement about layoffs when it reports on its 2008 fourth-quarter and full-year financial results, on Jan. 28.

"They need to make the company smaller" to do well in the long term, said Edward Jones analyst Linda Bannister. "In order to do that, you need to take your medicine now."

Heupel said that until recent years, the pharmaceutical industry had a sort of arms race going as companies continued to expand their sales forces.

"They didn't think much about the expense of it because they thought they would grow and grow forever," he said.

Pfizer faces one of the industry's biggest patent cliffs, in terms of sales about to be lost to generic competition. Heupel said it's been promising to replace those revenues with acquisitions or licensing deals, but hasn't yet and that the other strategy for addressing a big sales drop is to cut staff and other costs.

Last October, Pfizer said that it was replacing its current geographic divisions with new ones centered on primary care, specialty care and operations in emerging markets. At the time, Kerins said that that shift would not involve layoffs, but that he could not speculate on what would happen in the future.

The prior month, Pfizer announced it was narrowing its research focus to six disease areas - Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes - and abandoning new research in other areas, including cardiovascular research.

Pfizer had been one of the dominant companies in that field with Lipitor, the world's top-selling drug.

Pfizer shares rose 11 cents to $17.50 Friday.

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