Last Updated Dec 5, 2008 5:21 PM EST
Bloomberg just published an excellent backgrounder on layoffs at Pfizer -- the author also believes layoffs are happening January -- and other major pharma companies, based on interviews with analysts. None of them believe Pfizer has cut enough jobs. Some highlights:
Pfizer has slashed 14,000 jobs since January 2007, when Chief Executive Officer Jeffrey Kindler announced a plan to trim spending by as much as $2 billion by the end of this year. Pfizer now needs to cut even deeper because it doesn't have enough products in development to offset the more than $12 billion in revenue it will start losing in November 2011, when generic copies of Lipitor, a cholesterol pill, go on sale, the analysts said.
The world's biggest drugmakers have eliminated or announced plans to cut more than 59,000 jobs since 2005.
Pfizer's sales and marketing departments remain too large to be efficient, analysts said. Pfizer chopped 20 percent of its sales force in 2006, becoming the first major drugmaker to scale back selling. GlaxoSmithKline Plc, of London, has since reduced 1,000 sales jobs; Merck & Co., of Whitehouse Station, New Jersey, eliminated 1,200; and Schering-Plough Corp., of Kenilworth, New Jersey, cut 1,000.
Drugmakers need to trim sales staffs by an additional 25 percent over the next five to seven years, said Jaideep Bajaj, managing director at marketing consulting firm ZS Associates.
The total U.S. pharmaceutical sales force has doubled in the last seven years while the number of doctors has grown just 15 percent.Here's the rehash of why this is happening, and the fact that it is no surprise: Kindler's plan was telegraphed to the company back in 2007. It's worth reading in detail, if you're interested in where Pfizer is actually going. One important paragraph in terms of layoffs:
Pfizer will generate cost savings through site rationalization in research and manufacturing, streamlined organizational structures, staff function reductions, increased outsourcing and procurement savings. The company will reallocate many of these cost savings to more value-added activities. After making those investments, Pfizer plans to achieve an absolute net reduction in the pre-tax total expense component of adjusted income(1) of between $1.5 billion and $2 billion by the end of 2008, while continuing to invest in R&D, business development, emerging markets and new marketing approaches.Here's what Pfizer reps are currently saying:
We have had several cuts in the last fews years. Not only are they hard on us as individuals, they always fall around Christmas making it that much more stressful for our families. Only this time he has made it even harder on us by withholding information. Putting that aside, I do plan on leaving the industry given its instability; however, I am waiting until they make their final decision. I don't want to jump the gun and possibly miss out on the package.
I agree. It really does feel like this is the Titanic slowly sinking. If somebody hands you a Life Boat you better take it now. Otherwise there may be nothing left.
If I get severed, I am seriously thinking about walking away from my upside down mortgage, moving someplace warm, renting an apartment, getting a job as a Bartender and going to nursing school or getting a job teaching. The hell with this crap.But this, perhaps, is the most heartbreaking Pfizer post ever. It's headlined simply:
I am so stressed over this it's killing me