Pfizer's Kindler warns against fueling public's anger
Boston - Three months after his company paid the largest criminal fine in U.S. history, Pfizer Inc. chief executive Jeffrey B. Kindler called on government and business leaders Tuesday to face up to the "real and legitimate anger" of citizens fed up with ethics breaches.
"If we fail to change, the future will not be pretty - for business or for society as a whole," Kindler said in a keynote address to the Boston College Chief Executives' Club at the Boston Harbor Hotel. "People have had enough, and the backlash is real."
Kindler told the luncheon meeting of about 250 chief executives in the Boston area that a recent survey found two-thirds of the American people now have less trust in corporations than they did a year ago - and the decline in their faith in government and public officials has been even more drastic.
"When the majority don't trust you, they will find a way to force you to change," he said. These changes, he added, could include limits on businesses' licenses to operate and might affect private-sector innovation.
Pfizer, he acknowledged, has had ethical lapses as well, capped by the $2.3 billion in fines imposed in September for the company's illegal marketing of various drugs. The company's $1.2 billion criminal fine was the largest corporate penalty in U.S. history.
"It was a real blow to our employees," Kindler said. "It did not reflect the company we all knew."
The government of Switzerland also fined Pfizer and two other firms a total of $5.7 million Tuesday for alleged price-fixing of erectile dysfunction drugs.
Kindler said he understood those in the audience who might wonder, in the wake of Pfizer's own ethical problems, "Who are you to talk about trust?"
But he said Pfizer has changed. Golf trips, fancy dinners and tchotchkes left for doctors are now out, and there are fewer company sales representatives in the waiting rooms. Results of clinical trials are now posted for all to see.
Kindler also said Pfizer has been pushing for a stronger Food and Drug Administration, the federal agency that regulates pharmaceutical companies and approves new medicines. Regulators that are not affected by political considerations, he said, will help restore trust in the drug-approval process.
"How many businesses do you know that want a stronger regulator? We do," he said.
Kindler said Pfizer also has been pushing for health care reform. He called the current health care system in the United States unsustainable.
"In the long run, I'm a big believer we must improve the system," he said. "It's ultimately good for our business."
Kindler said in answer to a question from the audience that he could not predict the direction of employment at Pfizer's Massachusetts research sites in Cambridge and Andover, but he pointed out that drug companies have cut between 130,000 and 140,000 jobs in the past year. Some of those cuts have come with three major pharmaceutical mergers announced this year, including Pfizer's $67 billion buyout of Wyeth Pharmaceuticals.
Reductions announced this year hit local Pfizer R&D campuses in New London and Groton hard, with at least 500 losing their jobs. Pfizer just last month announced it will be vacating its former world research-and-development headquarters in New London within two years, but promised that its local work force of about 4,900 would survive largely intact.
"It's a very, very challenging time for our industry," Kindler said. "R&D has gotten very expensive and very challenging."
In fact, he said, new drugs that make it to market often take 10 years and cost more than $1 billion to develop. For every remedy that makes it to market, 10,000 other drugs are tested and fail, he said.
Speaking with reporters after his address, Kindler addressed company priorities in only the broadest of terms. He did not offer specifics, for instance, on why Pfizer decided to vacate its New London site.
"We undertook a review globally of all our R&D sites around the world and decided the best of the (alternatives)," he said. "There were a host of factors ... but we made a very substantial commitment to Connecticut."
Asked whether a drug firm can ever grow too big, Kindler said, "Size can be a problem if you don't utilize it well." Concern over size, he said, is what led Pfizer to develop smaller business units within the organization.
"The organization we've created is dedicated to the spirit of small and the power of size," he said.
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