Exhale: Pfizer Fires 660 Workers Due To Exubera
14 CommentsBy Ed Silverman // January 28th, 2008 // 12:28 pm
The drugmaker says there’s no other use for the specialized production operation at its Terre Haute, Indiana facility, according to The Kalamazoo Gazette, which cites a press release that doesn’t appear on the Pfizer site. The layoffs begin in March.
A Pfizer spokesman tells the paper that the operation has about 800 workers in total, most of the affected workers were hired in the last five years to produce Exubera. The 140 workers who will remain support sterile manufacturing operations for such things as antibiotics.
For those who may not recall, the inhaled insulin device was originally touted as a breakthrough product, but Pfizer failed to anticipate concerns over the clunky size and sales never materialized. By the time drugmaker yanked Exubera last October, the campaign was dubbed the industry’s biggest marketing failure in years and raised larger questions about whether such devices would ever be widely accepted.
Hank
Condolesnces to Terre Haute. The Ann Arbor site is almost fully empty now. We ended up losing about 5,000 jobs - about half from Pfizer directly, and the other half support and service contractees, etc.
RTW
Ya Hank - Have to agree. Fortunately I left Pfizer A^2 9 months before that mess. Unfortunately a lot of my friends really had their lives turned upside down by the closing, and for many it still sounds like they are unsettled even after moving to other Pfizer facilities. Glad I got out of there before that mess started.
I know this has got to be a tremendous blow to Terre Haute as there is not a not of similar type manufacturing jobs in the area. With all big pharma seemingly making cuts in their production facilities its not likely this technical and skilled labor force will be absorbed very easily some where else. Too much of this work is going overseas…. Next up on the chopping block I bet is St Louis and perhaps more in Kazoo. 3 years time will tell.
brady
Well this is my second plant closing with pfizer and let me tell you its getting very old…
Hank
Based on local newspaper story, David Canter said about half the Pfizer Ann Arbor employees were offered jobs elsewhere in the company, and about 80% took them. He noted that was a high percentage, with which I’d agree.
Bob Freeman
Let me see if I’ve got the calculus right: export high-paying manufacturing and R & D jobs to the far east in return for monopoly prices, R & D credits and state tax abatements here in the US. Something doesn’t quite add up, does it?
Please pharma don’t talk about innovation suffering. It rings hollow. And, don’t threaten the public with future drugs not being discovered, I believe that’s called extortion.
Hank
Most of the Pfizer pfolk here went to Massacusetts and Connecticutt. I suppose that’s the “far east” as viewed from the midwest.
"Phil"
Pfizer is steadily moving to become a Marketing only company. I say this because:
1. They have a goal of outsourcing 1/3 of the production activities per the current strategy. How much will this increase over the years? They aren’t making anything a contract firm can’t make, and probably make cheaper.
2. They have to buy a company and suck it dry for products. They can’t develop from within.
So, you end up with a marketing giant that happens to buy R&D driven biotechs and farms out the production work to contract manufacturers.
Best of luck to my fellow colleagues at TH.
Nathan
Bob,
You say:
“Let me see if I’ve got the calculus right: export high-paying manufacturing and R & D jobs to the far east in return for monopoly prices, R & D credits and state tax abatements here in the US. Something doesn’t quite add up, does it? Please pharma don’t talk about innovation suffering. It rings hollow. And, don’t threaten the public with future drugs not being discovered, I believe that’s called extortion.”
You can call it extortion, you can call it whatever you like. The reality is that (for whatever reason) we are spending more the 10x what we were spending on research just a decade ago, but the # of drugs being approved has remained constant. It’s not extortion — it’s reality. To keep the profit margin that Wall Street has come to expect, we have to make major slashes in R&D - My company (you can guess which one) just announced 10% job cuts last week. Our suspicion is that it’s going to translate to higher than 10% within the R&D departments. More expenditures on R&D has not translated to more INDs. However, you can be pretty assured that lower R&D expenditures will result in fewer INDs. This isn’t extortion — its simple economics.
Nathan
Bob,
PS. As a society, it’s possible that we OVERSPEND on medical R&D. That’s a different question. But don’t blame the industry for the lower R&D output. For a variety of reasons that you are probably well aware of, R&D has become far less efficient. Maybe it’s time as a society to say that we are relatively happy with the state of medical care as it stands. We don’t need a gazzilion new drugs over the next few decades. That’s Ok. It just sucks for me and the others who depend on this industry for their monthly paycheck.
Outside the Box
Aren’t we moving to the Hollywood model? Years ago studios did everything and owned everything - from the stars in the movies to the theaters that showed the movies. Now the big studios sub everything out, often to boutique companies that are set up just to make a single movie. Big pharma has been moving this way for some time; more products coming from in-licensing and acquisition, less productivity from in-house R&D, major emphasis on marketing. I think we haven’t seen the half of it yet and I am just waiting for the first of the major companies to increase their target of in-licensed products from the current 50% (or thereabouts) to over 90% or even 100%. What these companies are moving towards is the ability to screen external technologies and then construct effective in-licensing agreements for development and launch. You don’t need a full function R&D capability to do that.
James
Nathan,
seeing your comment “Maybe it’s time as a society to say that we are relatively happy with the state of medical care as it stands” made me smile. Because you know, and I know, that the moment you guys stop cranking out new drugs, the same people who have whined and accused the drug companies of being so very bad would suddenly whine about the lack of new cures for disease.
Sure, it’s a little silly that we have 4 treatments for ED and 3 or 4 for RLS advertised ad nauseum. What doesn’t get the press are all the amazing advances in cancer treatments, AIDS drugs and the like.
There’s a lot of good work being done, and you need the cash cows to drive it. Ultimately, however, it is a simple market proposition–if people don’t want all these drugs, they should stop buying them.
Exubera proves that point.
RTW
Hank - I know almost all of the chemists and a few of the biologists that made the move east. Most have major regrets, but it was that or still be out of a job as is the case with a large number that where not offered a position in the down sized company. I was lucky and able to leverage my chemistry background and other interests into a new career.
I am sorry to hear about your situation Brady. I made new friends among the Pharmacia folks that joined us in Ann Arbor, then had in a few short years to look for work again. I am particularly upset that a couple I helped to recruit to the Ann Arbor site. Sorry they too had to go looking for work again. For many the Pfizer saga in Michigan has been nothing but chaos since 1999.
Phil is correct in that Pfizer seems only able to buy products, not develop from inside. They got lucky with Lipitor, and Celebrex. The Blockbuster drug model is dead or at any rate should be. Even so when they do purchase a company, what have they gotten. Nothing came of Esperion, no blockbuster from there, thought Roger Newton is laughing all the way to the bank. I doubt we will see much come from the several smaller deals that have been made since. I don’t think top management have a clue. Most of these sorts of deals are usually made with very little input from R&D management, the people that should be evaluating the IP of the potential acquisition.
Hank
I should know this, but….
I was trying to recall products that were truly Pfizer’s development rather than bought via Pharmacia/Searle/Upjohn/Warner-Lambert/Parke-Davis/et.al.
Viagra?
Zoloft?
None of the above?
Jack
PFIZER TO CUT WORKFORCE 120 PERCENT
NEW YORK, N.Y. (AP.com) - Pfizer will reduce its workforce by an unprecedented 120 percent by the end of 2008, believed to be the first time a major corporation has laid off more employees than it actually has. Pfizer stock soared more than 12 points on the news.
The reduction decision, announced Wednesday, came after a year-long internal review of cost-cutting procedures.The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 108,000 employees.
From there, said a spokesperson, “it didn’t take a genius to figure out that if we cut 40 percent of our workforce, we’d save $2.4 billion, and if we cut 100 percent of our workforce, we’d save $6 billion. But then we thought, why stop there? Let’s cut another 20 percent and save $7
billion.
“We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line,” he added.
Pfizer plans to achieve the 100 percent internal reduction through layoffs, attrition and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 22,000 non-Pfizer employees who presently work for other companies.
“We pretty much picked them out of a hat,”.
Among firms Pfizer has picked as “External Reduction Targets,” or ERTs, are Quaker Oats, AMR Corporation, parent of American Airlines, Lockheed, Boeing, and Charles Schwab & Co. Pfizer’s plan presents a “win-win” for
the company and ERTs, said Chris, as any savings by ERTs would be passed on to Pfizer, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.
“We’re also hoping that since, over the years, we’ve been really helpfulto a lot of companies, they’ll do this for us kind of as a favor,”.
Legally, pink slips sent out by Pfizer would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.
“This is ridiculous. I don’t work for Pfizer. They can’t fire me,” said Kaili Blackburn, a flight attendant with American Airlines.
Reactions like that, replied the Pfizer spokesperson “are not very sporting.”
Inspiration for Pfizer’s plan came from previous cutback initiatives, said company officials. In January of 1998, for instance, the company announced it would trim 18,000 jobs over two years. However, just a year later, Pfizer said it had already reached its quota. “We were quite
surprised at the number of employees willing to leave Pfizer in such a hurry, and we decided to build on that,”.
Analysts credited the short-term vision, noting that the announcement had the desired effect of immediately increasing Pfizer’s share value. However, the long-term ramifications could be detrimental, said Bear Stearns analyst Beldon McInty.
“It’s a little early to tell, but by eliminating all its employees, Pfizer may jeopardize its market position and could, at least theoretically, cease to exist,” said McInty.
The spokesperson, however, urged patience: “To my knowledge, this hasn’t been done before, so let’s just wait and see what happens.”