Pfizer to cut 10,000 jobs, close at least 5 facilities

The drug maker is at risk of losing 41 percent of sales to generic competition.
NEW YORK (AP) -- Pfizer Inc., struggling with fierce competition from makers of generic drugs, announced Monday it will cut 10,000 jobs and close at least five facilities to slash its annual costs by up to 2 billion.
The drastic measures being taken by the world's largest drug maker highlight the challenges faced by many pharmaceutical companies these days.
In addition to patent expirations, big drug companies are struggling with a business climate where insurers and other large purchasers of medicines are demanding lower prices and more evidence of products' worth.
It's the second time in two years that the maker of Viagra and Lipitor has announced a major cost reduction plan to combat the loss of about 14 billion in revenues this year due to expiring patents on key drugs.
The company is at risk of losing 41 percent of its sales to generic competition between 2010 and 2012, according to one analyst.
Previous announcement
The latest cuts come on top of a previously announced plan to cut costs by 4 billion a year by 2008.
The 10,000 layoffs amount to about 10 percent of the company's global work force and include the elimination of 2,200 jobs from the U.S. sales force, which Pfizer announced late last year.
The company said Monday it would cut 20 percent of its European sales force but couldn't immediately say how many drug representatives it employed there.
Pfizer will close three research sites in Michigan and two manufacturing plants in New York and Nebraska.
It may also sell another manufacturing site in Germany and close research sites in Japan and France.
Pfizer also announced it would restructure its U.S. commercial business into five distinct units, each with a general manager responsible for that group's performance.
Sense of urgency
"I believe we must transform the way we've done business in the past in order to be more successful in the future," said Jeffrey Kindler, who became Pfizer's CEO last summer and chairman last month.
"Incremental evolution is not enough. Fundamental change is imperative -- and it must happen now," Kindler added.
Pfizer reiterated that its revenue would be flat this year and next year, but said it expects its earnings will jump by between 6 percent and 9 percent in both 2007 and 2008.
Analysts are skeptical that Pfizer's current and pipeline drugs can generate enough sales to compensate for revenue it stands to lose.
Pressure on Pfizer has intensified since safety issues forced it to halt development of the star drug in its pipeline, which was slated to replace the best-selling Lipitor as it loses patent protection as early as 2010.
"You can't cost-cut your way to prosperity," said Les Funtleyder, an analyst at Miller Tabak & amp; Co.
Still, the cuts do help shore up business and remain a good short-term strategy as the company seeks acquisitions to boost revenue, said Barbara Ryan, an analyst at Deutsche Bank.