Pfizer adding heavily to layoffs
Pfizer Inc., continuing its cost-reduction initiatives, could lay off up to 11,700 more employees than the 19,500 it had announced in connection with the buyout last year of Wyeth Pharmaceuticals.
Pfizer confirmed Monday that it would be reducing its worldwide work force by more than the originally expected 19,500 but would not give an official number, either locally or nationally.
"At this point, it's too early to determine the extent to which we'll exceed our original expectation," Pfizer said in a statement.
But a quarterly report filed Friday with the U.S. Securities and Exchange Commission states that Pfizer has estimated termination costs for 46,600 employees, while only 33,400 workers had actually been laid off as of Oct. 3.
The latest estimates would allow Pfizer a cushion to lay off up to 13,200 employees in the coming years. This appears to indicate the company plans to reduce its work force by 11,700 more than originally announced, given that Pfizer is only 1,500 positions away from fulfilling its job-elimination pledge related to the Wyeth merger.
But it's not quite that simple.
"Employee-termination costs don't account for hirings in other areas," said Pfizer spokeswoman Joan Campion.
Campion said that while Pfizer has plans to eliminate 13,200 positions over an unspecified period, it may see growth in other areas, such as emerging markets. So there isn't a one-to-one relationship of layoffs to reduced jobs at Pfizer, she said, although that may be small comfort to scientists who do not work overseas or in favored research areas.
Campion added that the job-termination estimate is actually a small reduction from the previous quarter's layoff prediction, though it is higher than what had been anticipated in the first quarter.
"It does not necessarily mean a reduction would occur by 2012," she said. "It could be further out."
The extra job cuts - if they came to fruition - would amount to about 10 percent of Pfizer's worldwide work force. If a reduction of that magnitude were applied to Pfizer drug-research sites in Groton and New London, which currently employ nearly 5,000 workers, about 500 jobs would be lost.
The company in January 2009 announced that cuts would total 15 percent of the combined Pfizer and Wyeth work force. At the time, the combined work force numbered about 130,000; the latest official figure places that number at 111,500.
The post-Wyeth job cuts were intended to save the pharmaceutical giant $4 billion to $5 billion annually on salaries and related expenses, an amount that will not be fully realized until 2012. The reductions also are being contemplated in anticipation of a large revenue decline expected in 2012 as Pfizer faces the loss of U.S. patent protection for blockbuster cholesterol treatment Lipitor.
"As we previously stated, we continue to expect approximately 50 percent of these cost reductions to come from Selling, Informational and Administrative expenses, and the remainder from R&D and Manufacturing expenses," Pfizer said.
But Pfizer is paying dearly in upfront costs related to the layoffs. The company, starting in 2005, has incurred $8.3 billion in employee-termination costs, with total restructuring charges estimated at an astonishing $11.3 billion, according to SEC documents.
Pfizer expects total costs related to job terminations through the end of 2012 will range from $11.5 billion to $13.5 billion, according to the company's SEC filing. The costs include severance payments, pensions and other retirement benefits.
As part of Pfizer's worldwide downsizings, the New York-based company eliminated a longtime manufacturing plant in Groton in 2007 and announced last year that it would be closing its former worldwide R&D headquarters in New London by the end of 2012. Pfizer later sold the office to Electric Boat, but continues to occupy parts of the building.