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Pfizer Plans to Lay Off Researchers
 
 
  By THE ASSOCIATED PRESS Published: January 13, 2009
 
TRENTON (AP, Wall St Jnl) - Pfizer, the world's biggest drug company, is laying off up to 800 scientists this year in its latest effort to refocus disappointing research efforts and cut its overhead, anticipating a drop in revenue.
 
The pharmaceutical industry faces pressure from investors to slash its spending because drugs with an estimated $30 billion in sales will lose patent protection and start facing competition from cheaper generics over the next several years. The recession may trigger even bigger cuts, analysts say, if cash-strapped consumers start filling fewer prescriptions or turning more to generics.
 
Now, pharmaceutical companies think they can trim their research costs while still bringing the same, if not more, new drugs to market, either by buying the rights to promising molecules from smaller biotechnology companies or by purchasing those companies outright.
 
Pfizer plans to reduce its global research staff - currently about 10,000 people - by 5 to 8 percent this year, a company spokeswoman, Kristen Neese, said Tuesday.
 
The cuts will reduce Pfizer's $7.5 billion in yearly spending on research and development, although company officials wouldn't say by how much until the company reports fourth-quarter results on Jan. 28.
 
"This is in line with our refocused research areas," Ms. Neese said.
 
Pfizer's research and development headquarters are in Connecticut, in New London and Groton.
 
The company announced in September that it was narrowing its research focus to six disease areas - Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes - and abandoning new research in other areas.
 
That included cardiovascular disease, where Pfizer had been a dominant player with its $13 billion-a-year cholesterol fighter Lipitor, the world's top-selling drug. But Lipitor is expected to face generic competition in late 2011, and efforts to come up with a successor drug failed. The once-promising torcetrapib was linked to heart problems in late-stage human testing.
 
Already, Lipitor sales have dipped slightly, apparently partly because of consumers trying a much cheaper generic form of a similar drug, Zocor.
 
Investors have been losing patience with the incremental measures announced by Pfizer Chief Executive Jeffrey Kindler since he took the company's helm in July 2006. Some have been clamoring for a big acquisition to offset the pending loss of Lipitor revenue.
 
Martin Mackay, Pfizer's head of global research, told analysts Tuesday at a J.P. Morgan health care conference in San Francisco that since he arrived just over a year ago, a priority has been to ensure the company had its research in the most promising areas.
 
"We've had extensive reviews of our portfolio, both internal and with external experts, to make sure we had the best portfolio that we could," he said. In the past two years, Pfizer has dropped the insulin spray Exubera after spending $2.8 billion on it and scrapped a once-promising Lipitor successor drug because it was linked to too many deaths in clinical trials.
 
That review resulted in the six-disease focus, where he said research is growing despite flat spending.
 
Mr. Mackay said the company expected to have 24 to 28 late-stage human studies by the end of this year. About half are on new compounds, the rest on existing drugs being tested for new uses.
 
An analyst said more cuts are likely.
 
"This is probably not the end," said a biopharmaceuticals analyst Erik Gordon, a professor at University of Michigan Business School.
 
He said Pfizer likely has identified 500 to 800 scientists not in the new core areas in its first round of review, but more could be cut later.
 
Mr. Gordon said the cuts are not the result of the recession but to the long-term problems plaguing the entire drug industry. Those include stiffer generic competition and general lack of research productivity.
 
Also last fall, Pfizer said it was reorganizing its business units, including replacing its current geographic divisions with new ones centered on primary care, specialty care and operations in emerging markets.
 
But analysts have been saying recently that they expect Pfizer to make a big move, such as a major acquisition that would allow massive job cuts to save money while adding drugs to its pipeline.
 
Under a major restructuring begun in January 2007, Pfizer has eliminated roughly 13,500 jobs and closed eight plants already.
 
"R&D is still the heart and soul of a pharmaceutical company, but it doesn't always have to express itself as a company's own R&D, and that's what I'm seeing more and more," says David Canter, who headed Pfizer's Michigan labs until they shut down last year.
 
In an interview, Dr. Mackay said the R&D layoffs are part of a continuing reorganization designed to focus Pfizer's research work on treatments with the best chances of reaching the market. As part of this reorganization, Pfizer has abandoned work on new cardiovascular drugs__, the research area it was once best known for.
 
Even as it makes those cuts, Dr. Mackay said Pfizer was making progress in shoring up its research pipeline. He told investors in San Francisco Tuesday that the number of drugs in Pfizer's pipeline that are in the late stages of human testing jumped to 25 from 16 less than a year earlier.
 
Pfizer has bought stakes in biotechnology companies like Avant Immunotherapeutics, which is developing a brain cancer vaccine, and is increasing its collaborations with academic researchers, Dr. Mackay said. And it is hiring at new labs developing vaccines, other biologic drugs and treatments using stem cells, he added.
 
 
 
 
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