All the cost-cutting Pfizer ($PFE) has already planned apparently won't be enough. The Wall Street Journal reports the drugmaker is scouring its operations for an additional $1 billion in annual savings. Most of the squeeze will come from the administrative side of the business, sources tell the Journal.
And it's not just anonymous sources talking about the scalebacks. CEO Ian Read (photo) referred to the plans in a recent interview, WSJ says. "We're going to take out another billion dollars of our expenses," he said. And a March memo to employees hinted at a need for greater efficiencies. "Pfizer will need to operate differently to meet its financial commitments and continue to invest where opportunities are robust," it said.
According to WSJ's sources, management has been eyeing operations over the past several months, planning to start making the cuts later this year. If focused on the admin side, the cuts would take almost 5 percent out of the budget for sales and administrative expenses, which came in at $19.6 billion last year. Of course, the company has already cut heavily from its sales operations, the WSJ notes, so the axe may now be aimed at management.
Pfizer has been cutting costs for years now, and the process accelerated after its 2009 megamerger with Wyeth. Thousands of employees have lost their jobs. R&D facilities are being shuttered. So are manufacturing plants. In fact, the company has cut spending by $4.1 billion since 2000 and is in the process of cutting $6 billion more, Morningstar's Damien Conover told the Journal. Of course, Pfizer is hardly alone in its cost-cutting zeal; the industry has been shedding jobs and closing facilities as companies gird for the loss of patent protection on some of their biggest-selling drugs.
- see the WSJ piece