January 23 2007
by Jessica Fraser
(NewsTarget) Pfizer Inc. -- the world's top pharmaceuticals manufacturer -- announced earlier this week that it would cut 20 percent of its U.S. sales workforce as part of its plan to reduce costs and boost earnings in the coming years.
The job cuts will affect 2,200 employees at all levels of the drug giant's sales operation, from field sales representatives to upper-level management, according to Pfizer spokesman Paul Fitzhenry. While the latest workforce reduction is set to end layoffs in the U.S. sales sector, the rest of the company's operations are still under review and could possibly experience cuts, Fitzhenry said.
According to Prudential Equity analyst Tim Anderson, the job cuts should help Pfizer successfully reign in costs.
"The easier way to win is to have a pipeline (of new drugs in development), but until you have more sources of growth ahead of you, cutting costs is the smart thing to do," Anderson told Reuters.
In July 2006, new Pfizer Chief Executive Jeffrey Kindler took over for Hank McKinnell, and in mid-October the company announced it would review its operations in an effort to cut costs. Kindler said Pfizer hopes to save roughly $4 billion per year by 2008.
With 20 percent of its sales force now unemployed, Pfizer said it would still be able to maintain its sales operations with its 11,000 remaining employees. However, Pfizer could announce more cuts to further balance costs, Anderson said.
"I wouldn't be surprised if this was just the first step, but just how low to go is a very tough question to answer," he said. "I actually don't think the industry knows how far they can cut."
Pfizer's profits have suffered recently after slow sales of older medications and failed attempts at launching newer drugs. The company said it likely will not experience revenue growth again until 2009.