|Pfizer CEO Ian Read|
Anyone who's examined Pfizer's ($PFE) job-chopping track record knows the company has a tendency to wield the ax in the wake of a megamerger. Just look at its 2009 Wyeth buy, which spurred an initial announcement of 20,000 job cuts--and many thousands more since.
But this time? Things will be different, CEO Ian Read said of Pfizer's Allergan ($AGN) tie-up on Tuesday at the J.P. Morgan Healthcare Conference.
The way Read sees it, the $160 billion deal--agreed upon in late November--"is a lot more about growth" than it is about cost-cutting. The company's target of $2 billion--which comes in below where it's been with deals past--"reflects the lack of overlap" between the pharmas' businesses as well as the fact that "both companies have been extremely good at taking costs out."
"I take my cap off to (Allergan CEO Brent Saunders) and the way he's managed his integration of companies, and I think Pfizer has taken out more fixed costs from its base than almost any other company or combination of companies in the last 5 years," he said.
It's a nice change of tune for Pfizer employees, some of whom have already lived through painful cuts surrounding the Wyeth merger and buyouts of Warner Lambert and Pharmacia before that. Still, though, Read promised to wring as much out in savings as he could, and that means some layoffs are on the way.
|Allergan CEO Brent Saunders|
As to where those will fall? Don't expect to see them in areas like sales or R&D, Saunders said.
Allergan has itself gone through a number transformations with the pickup of--and name-change to--Allergan back when it was Actavis, and deals to buy Forest Labs and Warner Chilcott before that. And during each of those integrations, "we've really tried to minimize change on the people who really make the business successful--the frontline people," he said, with the brunt of the change falling on those in and at company headquarters.
"To the extent that we can keep that on the people we have greater control around because we see them more--they're not dispersed around the world--we can minimize the impact of the change and not have that break to the consumer or the product that's so important to make us successful," Saunders said.
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