Pfizer Slashes R&D | November 16, 2009 Issue - Vol. 87 Issue 46 | Chemical & Engineering News
Volume 87 Issue 46 | p. 5 | News of The Week
Issue Date: November 16, 2009

Pfizer Slashes R&D

Pharmaceuticals: Company to close six research sites and consolidate others as part of integration with Wyeth
Department: Business
Keywords: Pfizer, restructuring, jobs
Pfizer’s headquarters in New York City.
Credit: Newscom
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Pfizer’s headquarters in New York City.
Credit: Newscom

Pfizer took a heavy hand to its research organization last week, saying it would shutter six of its 20 research sites to reduce overall lab space by 35%. The move is part of the restructuring due to Pfizer’s recent acquisition of Wyeth.

The pharma behemoth will discontinue research at sites in South Brunswick, N.J.; Chazy and Rouses Point/Plattsburgh, N.Y.; Sanford/Morrisville, N.C.; and Gosport and Slough, England.

Remaining research activities will be centered around five hubs in Cambridge, Mass.; Groton, Conn.; Pearl River, N.Y.; La Jolla, Calif.; and Sandwich, En­gland. Pfizer says those facilities will be supported by specialized sites, such as those focused on monoclonal antibody discovery in San Francisco; regenerative medicine in Cambridge, England; and research in Shanghai.

R&D at Pfizer’s New London, Conn., facility will shift to Groton, and some operations at three sites—College­ville, Pa.; Pearl River; and St. Louis—will move to other locations. For example, Pfizer will center biotherapeutics and vaccines research at Pearl River but will transition the small-molecule activities there to another site.

Monsanto has agreed to pay $435 million for the Chesterfield, Mo., research center, one of Pfizer’s four campuses near St. Louis. Pfizer recently invested $200 million in the site, a cutting-edge facility with about 250 labs that, upon opening in April, was intended to integrate scientists from the region. The drug firm will continue to conduct some biotherapeutics research in Chesterfield but overall is laying off 600 of its 1,000 employees in the St. Louis area, a Pfizer spokeswoman confirms.

The R&D cuts amount to 35% of its “R&D square footage,” according to Pfizer. The company has not indicated how many scientists fit into a square foot, but Pfizer and other estimates suggest that, when combined, roughly 1,300 researchers work at the locations earmarked for shuttering. Moreover, layoffs are sure to come at the sites being consolidated. In addition to the 600 jobs being lost in St. Louis, hundreds of jobs in Collegeville could be at risk as Pfizer plans to shift the majority of its R&D there to other sites. As of last year, Pfizer and Wyeth employed roughly 14,000 R&D scientists combined, according to the spokeswoman.

When Pfizer agreed to pay $68 billion for Wyeth earlier this year, it said it would shed 15% of the combined workforce of roughly 128,000 people to achieve $4 billion in cost savings by 2012. Those roughly 19,000 cuts included the 8,000 jobs Pfizer had already planned to eliminate by 2011.

Stock analysts expected much of the cutting to come from the research side. “Despite aggressive restructuring efforts, the industry must reduce its operating cost structure more substantially,” Deutsche Bank analyst Barbara Ryan said in a note to investors after the acquisition closed. “R&D budgets of 16 to 18% of sales are no longer sustainable.”

But the ability of a leaner R&D organization to produce a robust new-drug pipeline won’t become evident for years, notes Steven Tanis, a former Pfizer researcher who now works as an independent consultant. With all levels of staff being cut, the company risks losing years of institutional knowledge, he points out. “That’s really lethal. Young scientists learn from osmotic pressure,” he adds.

The R&D shake-up at Pfizer comes as the entire drug industry reevaluates how it does business. Last year, major drug firms announced plans to cut more than 21,000 jobs, many in R&D. GlaxoSmithKline eliminated 850 jobs in preclinical development and molecular discovery, or 6% of its R&D staff. Merck & Co. shed natural products scientists in Spain and Rahway, N.J., and closed research facilities in Seattle; Tsukuba, Japan; and Pomezia, Italy. For its part, Pfizer said in 2008 that it was abandoning research in anemia, bone health, obesity, gastrointestinal diseases, and some cardiovascular diseases.

 
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