Pfizer, the world's largest drug company, and one that's proud of its scientific acumen, announced yesterday that it will cut R&D spending in 2012 by about 20%, from $8.5 billion to $7 billion. The company also said that it will close a research facility in Sandwich, U.K., that employs a staff of about 2400 and sharply trim its U.S. research center in Groton, Connecticut. At the same time, Pfizer plans to increase its research staff in Cambridge, Massachusetts, by several hundred, according to unofficial estimates. The aim, CEO Ian Read said in a teleconference with investors, will be to "fix our innovative core." Read, who took over in a rapid change at the helm in December, said he hopes to instill an "entrepreneurial sense" and a "results-oriented culture in research."
Before the announcement, Pfizer's stock price had been drifting downward because it faces business challenges. The company is losing exclusive control of several important drugs--including, this year, its U.S. rights to Lipitor, a key product. At the same time, new drugs have been slow to emerge from research labs, even after Pfizer's efforts to beef up its pipeline following a takeover of Wyeth in 2009. Pfizer's shakeup is intended to streamline the organization and focus on products that will give "consistent returns" in the market, Read said.
The reorganization will cut expenditures. To help boost stock value, Pfizer has set aside $5 billion to buy some of its own shares.
Some U.K. government and research leaders were shaken by Pfizer's announcement. The BBC reported that Colin Blakemore, a University of Oxford neuroscientist and former head of Britain's Medical Research Council, viewed Pfizer's decision as a "shocking wake-up call." He interpreted it as a "signal that one of our most important industries no longer has confidence in the future of British science." But Pfizer officials hastened to deny it. "Sandwich has an extremely talented workforce with a proud and rich history in science research and development. This decision is no reflection on the site, the workforce, or the operating environment in the U.K.," said Pfizer's chief at Sandwich, Ruth McKernan.