Pfizer Announces More R&D Cuts

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 is closing a research hub in Sandwich, U.K., and moving some activities out of its Groton, Conn., R&D headquarters as it winnows the number of therapeutic areas it is working on.

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

"The most fundamental question that Pfizer has to fix is our innovative core," Pfizer's CEO, Ian 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.

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 at the site 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 and 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 at risk. The company notes that the Groton site "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 located 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, U.K., into a 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.

Meanwhile, Read is tasking Pfizer's R&D head, Mikael Dolsten, with changing the research culture at the company. Research units need to take on a greater sense of responsibility for the outcome of their work, Read said. At the end of the day, he said, they need to have a feeling of "owning the money and owning the results."

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 budget from the $10.8 billion it shelled out in 2008. A year ago, it said it would reduce spending to an estimated $8 billion to $8.5 billion by 2012. Today, Pfizer cut that figure to $6.5 billion to $7 billion.

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