Generics are a bitter pill for Pfizer

Stephen Beard Jan 22, 2007

KAI RYSSDAL: The world’s biggest drug maker is trying to stay that way. And Pfizer’s playing the percentages to do it.

The company announced huge layoffs today. 10,000 jobs. That’s about 10 percent of its work force. All of it driven by one simple number: Pfizer could lose as much as 40 percent of its sales to generic competition by 2012.

Today’s announcement’s the second time in less than a year the company’s tightened its belt. From London, Marketplace’s Stephen Beard has more.

STEPHEN BEARD: Pfizer is shutting down plants at Brooklyn and Omaha. Research laboratories are going in Michigan and in Japan and France. By the end of next year, the company’s global work force of 100,000 will be 10 percent smaller.

The cuts are necessary, says the chief executive. Profits are under pressure. Like many big drug companies, Pfizer is suffering withdrawal symptoms. It’s lost the patent protection on some of its best-selling medicines, like the antidepressant Zoloft.

An industry-wide problem, says Stephen Schondelmeyer of the Universiity of Minnesota.

STEPHEN SCHONDELMEYER: Companies aren’t finding innovative new products to replace those products before they go off patent. In the past, they’ve been able to do that. And companies are finding it increasingly difficult to find novel new compounds that become blockbusters in the marketplace.

Some researchers have reached the conclusion that medical science may have already found most of the chemical entities we’re going to find. A big, perhaps incurable, headache for the drug companies.

In London, this is Stephen Beard for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.