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Pfizer Reveals More R&D Cuts

Pharma Jobs: Firm will close its Sandwich, England, site and exit several research areas

by Lisa M. Jarvis
February 7, 2011 | A version of this story appeared in Volume 89, Issue 6

Credit: Pfizer
Pfizer is closing this research complex in Sandwich, England.
Credit: Pfizer
Pfizer is closing this research complex in Sandwich, England.

Pfizer will shed thousands more R&D jobs as it yet again shakes up how it does research. The company said last week it will close a research hub in Sandwich, England, and move some activities out of its Groton, Conn., R&D headquarters as part of a winnowing of the therapeutic areas it is working on.

Like every big pharma company, Pfizer is struggling to bring new medicines to market. But the pressure to find new drugs is particularly acute for Pfizer; later this year, it will lose U.S. patent protection for Lipitor, its biggest-selling product.

“The most fundamental question that Pfizer has to fix is our innovative core,” Pfizer’s CEO, Ian C. Read, said in a conference call with analysts. “This is the start of fixing that in a way that will give us consistent productivity in our innovation.” The goal, he says, is to stop pushing resources into high-risk areas that provide a low return on investment or where Pfizer lacks the expertise to compete.

The layoffs come on top of the 15% of its 128,000 employees Pfizer has shed over the past two years after its acquisition of Wyeth. In late 2009, the company said it was closing six of its 20 research sites as it reduced its overall R&D footprint by 35%.

Two research sites previously considered untouchable are the most heavily impacted by this latest round of cuts. Pfizer is closing its Sandwich labs, which had long been viewed as the company’s powerhouse in small-molecule drug discovery. Drugs invented there include the erectile dysfunction treatment Viagra, the blood pressure medicine Norvasc, and the antifungal Diflucan. Pfizer will also shift a number of programs, including neuroscience, cardiovascular, and metabolic research, from Groton to a facility in Cambridge, Mass.

The Sandwich closure will affect roughly 2,400 people. As the site is shut down over the next two years, Pfizer’s goal is to transfer several hundred positions to other locations or to external partners. The jobs of about 25% of the 4,400 employees at Pfizer’s Groton and New London campuses in Connecticut are being cut or transferred. The company notes that Groton “will remain our largest R&D site with a critical go-forward role for Pfizer R&D.”

Pfizer will focus research on several core areas: neuroscience, cardiovascular health, metabolic and endocrine diseases, inflammation and immunology, oncology, and vaccines. The company is creating specialized units in pain and sensory disorders, biosimilars, and Asia R&D.

The firm is exiting research in allergy and respiratory medicine, located in Sandwich; internal medicine, which includes some research in lung, kidney, and urinary diseases, also in Sandwich; oligonucleotides and tissue repair, in Cambridge, Mass.; and antibacterials, in Groton. The company is also abandoning regenerative medicine research in Cambridge, Mass., but will fold similar R&D conducted in Cambridge, England, into the new pain and sensory disorder research unit.

On the conference call, Read said Pfizer could partner, out-license, or spin off the research programs. “My point of view is there are no sacred cows in this portfolio,” he declared. Read expects the company to complete a review of assets being jettisoned by the end of 2011.

The R&D budget is taking a hard hit as Pfizer shakes up its research approach. The company has been progressively trimming its R&D spending from the $10.8 billion it shelled out in 2008. A year ago, the firm said it would reduce spending to an estimated $8 billion to $8.5 billion by 2012. Last week, Pfizer cut that figure to $6.5 billion to $7 billion.

Stock analysts had expected Pfizer to again lower R&D costs, but the cuts announced last week were deeper than expected. “Having to cut R&D is not necessarily a good thing because it reaffirms the ongoing struggle with low productivity,” Bernstein Research analyst Timothy Anderson said in a note to investors. “Yet, continuing to spend without being able to demonstrate adequate returns necessitates action, and Pfizer acted in a meaningful way.”


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