Pfizer: No Sacred Cows in R&D

Just when we thought it was over, the cost-cutting at Pfizer continues. In tandem with this morning’s fourth-quarter earnings announcement, Pfizer said it was closing its R&D site in Sandwich, U.K., and paring back research in Groton, Conn., both sites that had survived earlier cutbacks relatively unscathed. Upwards of 3,500 jobs are at risk in the cutbacks. First some details, and then some thoughts on what the new Pfizer research might shape up as. The details: --The closure of the Sandwich site will impact 2,400 jobs, although Pfizer says as the shutdown happens over the next 18-24 months, it hopes to move a few hundred folks over to other sites or to external partners. --Some 25% of the 4,400 employees at Pfizer’s Groton and New London campuses will be shed. --Internal research will be focused on a few core areas:  neuroscience, cardiovascular, metabolic and endocrine, inflammation and immunology, oncology, and vaccines. --Pfizer is creating dedicated units focused on pain and sensory disorders, biosimilars, and Asia R&D. --Pfizer is exiting research in multiple areas: allergy and respiratory, located in Sandwich, U.K.; internal medicine, which includes some research in lung, kidney, and genital urinary diseases, also located in Sandwich; oligonucleotides and tissue repair, in Cambridge, Mass.; and antibacterials, situated in Groton. --Regenerative medicine research in Cambridge, Mass., is also being dumped. However, similar work in Cambridge, U.K., will be part of a new pain and sensory disorder research unit. --The R&D budget for 2012 will shrink. The company previously expected to spend $8-$8.5 billion on research next year; now, it will shell out nearly 20% less, or between $6.5 and $7 billion. Remember back to 2008 and 2009, when R&D spending topped $10 billion? --Pfizer will establish external relationships for several activities, including manufacturing of active pharmaceutical ingredients and dosage forms, toxicology, and bioanalytics. --Pfizer is aligning its R&D network around a few hubs: Cambridge, Mass., San Francisco, New York, LaJolla, and Cambridge, U.K. As for the new “innovation engine” at Pfizer, CEO Ian Read today told investors he would be working closely with R&D chief Mikael Dolsten to overhaul the research culture at Pfizer. The idea is to empower research units with the decision making and also hold them accountable for the outcomes. Or as he put it, give scientists a feeling of “owning the money and owning the results.” This strategy sounds a lot like one that’s been taking shape over the last two years at GlaxoSmithKline and, more recently, at AstraZeneca. One analyst asked whether the research programs falling to the ax will be spun out into biotechs. The possibility seemed real, and it again sounded a lot like the kind of de-risking approach GSK is using with its external discovery unit, which has started up several small companies out of clusters of assets. Another question is what will happen with that Sandwich site. It's worth noting that some of Pfizer’s critical small molecule discoveries happened at that site. Viagra, Norvasc, and Diflucan are among the inventions to come out of Sandwich. There was a lot of talk on today’s call about external partnerships, and one has to wonder whether Pfizer will go the way of Lilly, Sanofi, and GSK. Recall that those companies have all sold major R&D sites to contract research organizations (Lilly/Covance, Sanofi/Covance, and GSK/Aptuit), but signed a long-term contract for services out of the sites they had just shed. Readers, any guesses on what will happen with that site?

Author: Lisa Jarvis

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  1. Not sure I would classify New York as an R&D ‘Hub’.

    Not only is the “owning the money and owning the results” taking place at GSK and AZ but also Sanofi-Aventis (thanks to the new-CEO (formerly GSK)). The one thing in that statement is also “owning the failures” – this allows the management to distance itself and shed those areas.

  2. -Pfizer is exiting research in antibacterials…

    Because everyone knows all infectious diseases have been wiped out?

  3. Anyone consider doing a Science degree in the UK should forget it, unless they want to work in China for 20% of a typical UK wage.