Having deep-sixed its $160 billion merger with Allergan ($AGN), and the tax savings the inversion deal had promised, Pfizer ($PFE) is already looking at ways to cut costs. Manufacturing looks to be one area where it hopes to cut costs by 20% on some key products in coming years.
That is the message given to employees at Pfizer's plants in Little Island and Ringaskiddy in Cork County, Ireland, the Irish Examiner reports. The plants make the API for Lipitor and other drugs. The site has already cut costs an average of 34% at the two plants in recent years, improvements that helped the Little Island facility avoid Pfizer's earlier decision to shutter it.
Seamus Fives, who oversees the two facilities, told the Examiner that the plant employees had "stopped the rot" at the operations but would need to remain focused on efficiency and redouble efforts to be competitive.
The observation followed the decision announced Wednesday by Pfizer and Allergan to cancel their tax inversion-based merger after the U.S. Treasury rolled out even more new rules, specifically targeted at stopping it. The inversion would have cut Pfizer's U.S. tax bill significantly because it planned on taking on Allergan's domicile in Ireland, a low-tax country, while its management could have remained ensconced in New York. This deal, and others like it, have been criticized by some politicians and others for being nothing but tax dodges.
The employees in Cork are already steeped in the vicissitudes of the pharma world. The drugmaker announced its plan to consolidate its manufacturing in Ireland in May 2013, expecting to be fully out of the Little Island plant by August 2014. However, due to the efficiency improvements and "unexpected increase" in Lipitor demand, Pfizer postponed the closure and then canceled it last year. The facility, helped by sales strength of a couple of cancer drugs for which it makes the APIs, actually added employees late last year.
- read the Irish Examiner story