Pfizer CEO announces 10,000 job cuts and Wyeth CEO warns against "arrogance."
Pfizer's CEO, Jeff Kindler, just announced that the company will cut 10,000 jobs around the world and slash annual costs by up to $2 billion by 2008. This amounts to 10 percent of Pfizer's worldwide workforce, on top of a previously announced plan to cut costs by $4 billion a year by 2008. So a total cost reduction of $6 billion.
Pfizer said it will close a production site in Brooklyn, New York, a plant in Omaha, Nebraska, and research operations in Ann Arbor and Kalamazoo, Michigan; Nagoya, Japan; and Amboise, France. The total number of plants will be reduced to 48 in 2008 from 93 in 2003.
Meanwhile, Wyeth's CEO Robert Essner, was quoted in the WSJ today, saying: "No company has ever been No. 1 in this industry two decades in a row -- or two decades ever. In most industries there's some movement, but not the kind of rise and fall that you see in this industry. One problem is this sense of entitlement -- believing that you've kind of got it figured out. But all it is is that the guy before you was pretty good at discovering a few brilliant drugs. How do you become great and not become complacent, not become comfortable, not become arrogant, not think that you're entitled to success?"
Some in the drug industry think the Pfizer organization might learn from Mr. Essner's sentiment. As for me, I think this is the beginning to Pfizer's downsizing, not the end. Pfizer will be forced to make significant additional cuts over the years to come and we will continue to be disappointed by Pfizer's feeble attempts to launch new drugs.
The 80/20 rule is well and alive in the drug industry in general and at Pfizer in particular. 20% of the efforts generate 80% of the results, but the 80% aren't cut because management isn't sure of what is really going on in the organization.
Pfizer has grown into an arrogant organization that thinks it walks on water. But now reality is starting to set in. In my opinion, Mr. Essner expressed what that reality is inside Pfizer.