As the big drugmaker grapples with its big slowdown, the board and top management are exploring a number of interesting ways to jumpstart business, according to sources. The moves may involve laying off still more employees - a large number of reps, for instance; plans to sell off some of the R&D units that arebeing eliminated and possibly purchasing a brand-name biotech, our sources tell us.
How Pfizer may actually peddle units that focus on heart disease, gastrointestinal illnesses and obesity, for instance, remains to be seen, but presumably other drugmakers may be approached about a purchase or venture. The effort could include offering both intellectual property and staff, sources say. This leaves the fate of some facilities at R&D headquarters in Groton, Connecticut, up in the air.
As a sign that more job cuts are coming, sources say Pfizer recently extended its severance package program, which was due to expire on September 30, until December 31, until mid-2009, because the drugmaker couldn’t defend treating the new round of layoffs differently from previous rounds. A Pfizer spokesman tells us "various pre-announced initiatives across the entire company...will continue into 2009."
Meanwhile, Pfizer brass continue to explore possible acquisitions as they refocus the company. Whether this would include revisiting a bid for Biogen remains unclear, although one source suggests the possibility has been discussed. You may recall, Pfizer eyed Biogen last year, but the notion was squelched over disagreements about integrating the biotech into the Pfizer fold, among other things.
A Pfizer spokesman declined to comment on what he termed "speculation," other than to say "we'll continue to realign the company to better serve our customers."
26 Comments
the ATS severance agreement was originally going to expire on dec 31,2008. Not in September, and pfizer has extended it into late summer 2009.
How will this affect pending litigation?
Ed, can you explain what you mean by "this leaves the fate of some facilities at R&D headquarters in Groton ... up in the air." Also, what do you mean by Pfizer selling off both intellectual property and staff? You can't sell people, last I knew. Also, are the R&D units being sold off as units, or are some of the projects the units were involved with being sold off?
As a person who suffered a heart attack after using celebrex for 2 years [ no previous heart problems],I cant say I feel sorry for pfizer,they need to test their products more before putting them out on the market.I was only 53 years old and basicly havnt had a life since feb 21 2003 due to their neglegance.
To answer a few questions...
First, thanks for the update, Todd. I went with the most recent info I had that came from good sources and the Pfizer spokesman declined to say anything about the dates, one way or the other, except for the remark about continuing into 2009, which I believe may dovetail with your own comment.
To anon, which litigation do you mean?
And to Lee, a research unit or project could, theoretically, be sold or spun off, or thrown into a venture - and that could include people. I wasn't trying to suggest Pfizer scientists would be sold as slaves. Were enough units and/or projects disposed of somehow, this could create some empty space in Groton. What does Pfizer do with that space? Maybe shift work from other locations.
Hope this helps, ed
I will be interested to watch your column Ed, because as an employee of Pfizer I dont believe my own company when they say in their memo to our sales force that there won't be any job cuts. Mark my words Ed, our sales force is demotivated, scared, and waiting for the other shoe to drop in the same way it did two years ago. The problem with the company today is that is run by treating it sales reps like children and not empowering them to be true sales people in the capacity that med device or other industries do. Something is coming and the whole sales force knows it
HR runs the show in this company. RM's / VP's really honestly have no say so. Sr. VP maybe.
If Pfizer can get off the teet of HR, it will be good again. We've been regulated so much that it's killed motivation and sales. I think the move to a smaller company was good, but Kindler MUST call of the HR dogs and let it be a sales/marketing company again. Pfe used to have the BEST sales reputation, but noone is motivated anymore.
Kindler can do some really good things if he leaves sales alone after this.
Pfizer buying Biogen Idec would be hilarious. No biogen idec employee would stay a day longer than the retention bonus is payed out. Who wants to work at that pathetic dinosaur?
In many ways, intellectual property and PEOPLE are all that Pfizer has to offer. Their major drugs lose exclusivity very shortly and their top line will drop dramatically. At one time Pfizer's selection process was one of the best in the industry, that is when they were a "sales" organization. Now there is little to "sell" in terms of products, so most of these sales people are redundant and used as robots. When you "sell" people, you sell job knowledge, intellectual capacity and other "competencies" people carry with them from job to job. This is Pfizer's best asset or product at the moment (sales people and scientists), so they need to "sell" these competent people before they leave this sinking ship and use their key competencies elsewhere. Selection, if done properly, is very costly, although this is where you get a fantastic return on investment.
HR at Pfizer is the exception, you couldn't give these people away.
Human Resources runs the show because Pfizer is so frightened of disclosures and lawsuits. The HR people know the "dirt" regarding compliance issue and FCPA violations, and hold this over their heads. HR people at Pfizer are some of the least respected in the industry, but most accomplished at managing their own careers. One day the Justice Department and the SEC will wake up to this company's practices and procedures, and the HR fraud that has resulted.
HR has it's place, but when it gets to the point of people no longer using email/voice mail b/c of fear of something being taken out of context, things have gone too far.
VP/RM's no longer take risks. They don't go above what's required, only do the minimum. That filters down to the reps.
HR really has no accountability or oversight and that needs to change. What they needs is some former Sales collegues in HR, not college grads/master's degree grads w/ no sales, which is what they have now.
The 1st pharma company to figure this out wins.
Part of middle management here at Pfizer. I agree that the salesforce is suffering from 'change fatigue'. Our CEO needs to go ahead and get the ball rolling regarding the upcoming downsizing, especially for management. Please don't wait any longer. Believe me, we can take it. It's the waiting around that is demotivating everyone.
Mr. Smith - Pfizer is what it is today (in terms of size/market share) due to the talents of the sales force, but it cannot go back to being a sales/marketing company. It needs to revert back to being a science focused company if it is to develop any worthwhile drugs(whether they come originally from in-house or aquisions). Otherwise, what will there be to sell when everything else hits LOE?
S - if I may, I agree but there needs to be both forces in play. Without an effective sales and marketing effort all the science is underexploited, and the corollary applies too: with no new and well-documented scientific developments the sales force is beached with old stuff and old news. Not good and probably not a situation that Pfizer ever saw itself being in. Which might have something to do with it.
If the products that a company produces are dangerous, when used as directed, it does not matter if you have the best sales force in the universe. If the products that a company produces are dangerous, it makes sense that the HR department is defensive.
As a prescriber, I think most docs dislike having typical sales reps in the office at all. Ours is considering banning all reps as some others in town have already. Pfizer does a decent job, but it would take 1 rep to do the job of about 5 that see us.
JP,
It will be happening sooner rather than later. You're right, there are way too many reps. This should improve after the next downsizing.
As a prescriber, I find the service my Pfizer reps as a very valuable service. Pfizer has always produced great medicine and offered me CME opportunities. Their reps have always been knowledgable and professional in my office. We will miss the ones that get cut and their services. To the prescriber above, the reality is that we are seeing less and less reps every year. The days of blockbuster drugs are over and that means reps days are limited. I especially find their samples helpful for patients with chronic conditions so they must not occur any out-of-pocket costs for a medicine that may not work for them. I am also a HUGE fan of Wal-Mart's $4 generic programs!
One might consider that there is a ceiling to the ability of prescription medications to treat common conditions, e.g. in my field that it is hard to argue that new antipsychotics are better than ones developed 20 or even 40 years ago, so that maybe pharma should focus on organized downsizing, rather than waiting for disaster to strike. There will always be a market for these drugs, but maybe not blockbusters, unless there is some fundamental breakthrough in research (i.e. not just more me too drugs).
Perhaps one should consider that corporate drug pushers may not be the best source of information, given their vested interest to make sales higher. In fact, the data provided is not based on scientific research, it comes from marketing company's. I'm sure they won't tell you about the fact that clinical trials are rigged in order to create an artificial conclusion that the drugs are safe. For example, risperdal. The placebo group was a bunch of sick people that were on antipsychotic drugs. This is clearly not adhering to scientific integrity. 4 people died in the risperdal trial (non-placebo) versus one person in the so-called placebo group. Don't count on the FDA to protect us.
Daniel, Of course their information is biased, they are sales representatives afterall. The real question is what type of data are they showing us. I will not let a rep show me a study that is considered a "marketing study", which is what you refer to. Most reps, in fact, happen to have studies that reflect their data from their respective package inserts. I find this credible, non-biased data, as the FDA is in control of what data goes into the PI and bases that drugs indications off of it. It looks like you have lost the confidence in the FDA, there are definate needs of reform but what other governing agency do we currently have?
JD, I agree with that "marketing" studies are biased. I have lost confidence with the FDA, but I have also lost confidence in some MD's. That's what so sad, I would like to think that MD's are researching all studies/trials for all these new drugs before they prescribe them.
Dear James, That is what blows my mind. Why aren't doctors doing their own research in reading package inserts and unbiased data? I know their time is stretched in lots of different directions...but come on, here! Why would a doctor take the word of a 24 year old beauty queen who has NO RESPECT for patients? Her only interest is shopping at Ann Taylor or getting highlights in her hair at 3pm.
Like the lady who had heart problems with Celebrex. Well if Viox had problems wouldn't it be highly probable that a drug in the same class would have issues as well? If I were a physician, I would NEVER prescribe Celebrex. There are too many other options, like Mobic for example that haven't had these sorts of issues.
I figure I could leave the clinic an hour early a couple days a week and do my own reading on new products, indications, etc if I devoted no time to reps in the office. Hard to ignore the reality of it.
PFE is not well. Clearly you and I want to believe in this once-great company, but we've got to face the facts:
The current 'restructuring' is nothing more than a musical chairs game for the management. Note that reorganizations, transformations, and restructurings have occurred at PFE non-stop for at least the last five years. The result of this is a completely demoralized work force which does not believe in anything that senior management says and is just hanging on for dear life. The internal PFE pipeline is idling until reorganizations stop for at least three years (which has not happened so far!).
Cost cuts come primarily from reductions in R&D - a very dangerous long-term strategy that compromises PFE's long-term potential to discover new compounds. Political pressure inside the company (and not cool reason) dictates what direction the cuts take (the recent Ann Arbor exit is a great example of this).
Third phase pipeline is full of stuff that has either low chances for success or a very low profit margin. Numbers of PIII compounds mean nothing in themselves - you have to analyze what these compounds represent.
PFE's interest in biologics is five years too late - and is driven on without much understanding of what it takes to generate successful biological therapeutics. The only hope PFE has to succeed in this arena is to acquire a major player.
While R&D is the life blood of any Pharma company, it has not been the case at Pfizer. Pfizer has been pumping about $8 B annually into R&D with very little to show for it. So they could easily make cuts in R&D with little negative impact. Pfizer's R&D organization is a joke. The only thing they have come up with of any commercial significance in the last 10 years is Viagra and that was a mistake. Parmacia and Warner Lambert had better R&D organizations, but Pfizer closed them down (obviously the wrong choice). This company's leadership does not have a clue how to turn the company around. That is why they took over two of the best Pharma companies of the last decade and distroyed them.
Steve,
A lot of talented folks from the companies that Pfizer 'distroyed' are still around - and we are engaged in serious high quality research - or rather we would like to be - if the enlightened ones in charge give us a breather from the ceaseless 'change' and endless restructuring. But don't worry - it looks like many of us are about to hit the proverbial road, without having the equally proverbial door hit us on the way out.
The good news is that most of the adorable and super-smart senior managers are still going to continue guiding the good ship Pfizer.