If you're the type who wants cold, hard facts about pharma restructuring, take a look at the cacophony of Pfizer-reorg numbers in the company's most recent 10-Q filing. Reported in part by The Day, the figures add up to one gianormous dollar amount: Pfizer expects its latest round of cost-cutting--announced at the end of January, in tandem with the Wyeth merger--to cost another $6 billion. Ironic, eh?
Here's the nitty-gritty: Total workforce cuts of about 10 percent, in sales, manufacturing, R&D and admin. Included in that amount were 1,650 jobs slashed during the first quarter--and that's net of any hiring worldwide. Plus, the company plans cuts in real estate square footage of about 15 percent. Of the $6 billion in associated costs, $1.5 billion was booked in 2008, and another $331 million in the first quarter of this year.
So that leaves about $4.2 billion of cost-cutting expenses to be charged off, presumably spread over the rest of 2009 and all of 2010, because Pfizer says it expects the restructuring program to wrap up by the end of next year. Between now and then, the company will be laying off at least 17,000 additional employees, plus shutting down or selling off another five manufacturing plants as it cuts its internal network of facilities to 41 from 46. Outsourced manufacturing will grow to make up for that downsizing, amounting to 30 percent of product output within two years, compared with 24 percent now.
There's lots more in the 10-Q for you numbers-lovers, though some of it is a little painful to read--such as the fact that Pfizer's field force had already shrunk 12 percent globally, even before the January-announced round of layoffs began. Or the fact that Pfizer will end up wth 53 percent fewer manufacturing employees than it did in 2003. Part of that decline came with the selloff of Consumer Healthcare, true, but plenty of it happened in the downsizing push.
The good news? Pfizer looks to save some $3 billion annually once these costly restructurings are complete. How does that sound?
- read Pfizer's SEC filing
- see The Day's take on the numbers