Pfizer cuts 7,800 more jobs
NEW YORK – Pfizer Inc. said it plans to cut 7,800 more jobs, including over 20 percent of its European sales force, in an effort to save up to an additional $1 billion by the end of 2008 and ensure profit growth despite flat revenue.
Pfizer, whose sales growth has stalled due to generic competition and failure to introduce many significant new drugs, previously had aimed for annual cost savings of $4 billion by 2008. It had already announced plans to cut its U.S. sales force by 20 percent, or 2,200 jobs.
The company, during an afternoon meeting with analysts, projected flat revenue in 2007, with earnings of $2.18 to $2.25 per share — in line with the average estimate of $2.20 among analysts polled by Reuters Estimates. The forecast, which excludes special items, translates into earnings growth of 5.8 percent to 9.2 percent.
For 2008, it projected flat revenue and profit growth of 6 percent to 9 percent, to $2.31 to $2.45 per share.
Pfizer said in November it expected earnings per share growth in 2007 and 2008 to average in the “high single-digits” range.
“Everything was within the bands of expectation; that’s why the stock is not reacting much,” said Miller Tabak analyst Les Funtleyder, who attended the meeting.
“We now have a rough idea of what (Pfizer) wants to do; now they have to prove they can do it,” Funtleyder said.
Monday’s meeting follows Pfizer’s bombshell announcement on December 2 that it had halted late-stage studies of torcetrapib, a drug that raises “good” HDL cholesterol, due to safety concerns. Pfizer had been counting on the product to post future annual sales of more than $10 billion.
With torcetrapib’s demise, analysts have questioned whether Pfizer can produce enough new products and revenue to offset dramatic sales declines for its popular cholesterol fighter Lipitor when the $13 billion-a-year drug faces generic competition in 2010 or 2011.
The company on Monday said it expects Lipitor to achieve “modest” sales growth this year.
“It’s a company with a weak late-stage (drug) pipeline for its size,” said Michael Levesque, an analyst with Moody’s Investors Service — echoing Wall Street concerns about a dearth of important Pfizer experimental drugs that could soon reach market.
Pfizer increasingly is relying on cost savings to keep profits growing. On Monday, the New York-based company said it would close manufacturing sites in Brooklyn, New York and Omaha, Nebraska, and hopes to sell a third plant in Feucht, Germany.
Moreover, the company said it plans to close three research sites in Michigan and aims to shut other research sites in Nagoya, Japan and Amboise, France.
Pfizer also said it will no longer attempt to discover drugs in dermatology or gastroenterology, although it will continue to develop such drugs already in testing and will license or buy such products from other drugmakers.
The company also said its research teams within specific disease areas — now scattered through different parts of the world — will be consolidated into fewer sites.
Shares of Pfizer closed down 27 cents, or 1 percent, to $26.95 on the New York Stock Exchange, little changed from before the meeting with analysts began.