Wyeth Merger Cripples Efficiency Drive at Pfizer

(MoneyWatch)  Pfizer (PFE)'s merger with Wyeth appears to have cost it dearly in terms of the merged company's ability to generate it's own revenues, according to its Q4 2009 earnings report.

Pfizer showed $16.5 billion in revenue for the quarter, off $5.4 billion in sales, marketing and admin costs. Post-merger, Pfizer's staff now only generate $3.08 in revenues for every dollar invested in their salaries and ad costs. In 2007 that number was as high as $3.71 and was above $3.28 all through 2008.

Then Wyeth came along. On paper, some things have improved. Pfizer now only has a handful of drugs with declining sales when under the old regime most of its products were tanking.

But that revenue boost -- Wyeth added 34 percent to its sales -- has made the company much more inefficient. This chart tells the story:

Until recently, Pfizer appeared to be becoming more efficient, generating more dollars in sales for every dollar invested in staff and marketing. But since the Wyeth deal, all that progress has been lost. (Pfizer declined to release Q3 2009 numbers for Wyeth.)

And those inefficiencies aren't the result of restructuring costs (which were $3.1 billion this quarter). Those aren't included in the chart, meaning this decline is organic.

• Related:
• Pfizer Layoffs: Whose Jobs Are Safe, and Whose Aren't?
• Pfizer Won't Share Wyeth's Q3 Numbers; Layoff Announcements Due This Week
• Pfizer Q3: Healthy Profit Masks Revenue Decline