History suggests a Pfizer-Allergan hookup would mean sizable cuts in manufacturing

Today Pfizer ($PFE) has about 65 plants since picking up Hospira in September. A hookup with Allergan ($AGN), which the two have acknowledged they are exploring, would add another 40. That inevitably leads to the question of what would be in store for such a large network in the event that those two should complete a deal. The history of both companies suggests that headcount across the board would be trimmed and that the manufacturing network would be in line early for a haircut.

Allergan CEO Brent Saunders

As pointed out by in-PharmaTechnologist.com, which initiated this line of thinking, Pfizer acted quickly to cut manufacturing after it merged with Wyeth some years back. Of the 19,500 total jobs it said would be eliminated postmerger, 30%, of that came from manufacturing, amounting to 6,000 jobs. The company put 8 manufacturing plants on the chopping block, scaled back production at 6 more and slated the 6,000 job cuts through 2015.

Of course, a deal between the two drugmakers is not assured. In-PharmaTechnologist.com reminds that Allergan's agreement to sell its generics business to Teva Pharmaceuticals ($TEVA) would reduce some of manufacturing network ahead of any deal with Pfizer.

And while manufacturing is often an easy place to find savings, Pfizer has cut more employees total from other areas after the Wyeth deal than it did from manufacturing. The specific numbers and locations trickled out over time and included the sale of an office building in Manhattan where it laid off about 1,400 workers and 680 positions from campuses in Collegeville and Great Valley, PA.

Actavis, which was once Watson and is now Allergan, also has always been quick to look for "synergies" to help pay for the many deals it has done as it has morphed from a generics company to a brand-focused operation. When Watson completed its $5.5 billion deal with Actavis in 2012, it said that it would close some of the 28 combined plants as part of the $300 million a year in postmerger cuts it was looking to achieve.

Last year, it said about 30% of its sales force in the U.S. had to go after completing its its $8.5 billion merger with Warner Chilcott, the deal that also turned it into an Irish-based company. That was about 350 jobs. After closing its deal to buy Forest Laboratories, it handed out pink slips to about 200 employees who had worked for Forest in the St. Louis, MO, area.

Brent Saunders, the Allergan CEO who is reportedly being vetted for the top job if a deal with Pfizer were to happen, has his own experience wielding the job-cutting ax. He cut 117 jobs last month from recent acquisition Kythera Biopharmaceuticals, including its top executives. That came after the company whacked about 1,000 employees from its California operations last year.

- read the in-PharmaTechnologist.com story

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