Pfizer cuts effectively end ‘arms race'

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In a move many say will have wide repercussions for the industry, Pfizer announced plans to trim its US sales force by 20%.

The company said the layoffs are part of an ongoing cost-cutting strategy.

“This is an important step toward making Pfizer a more agile and effective company,” said Pfizer CEO Jeffrey Kindler in a statement.

The reductions, based on performance appraisals, were to be completed by the end of 2006, a Pfizer spokeswoman told MM&M

“We'll have a reconfigured sales organization in place by April,” she said.

At press time, Pfizer fielded the largest sales force of any pharma company—around 11,000. The 20% reduction equates to about 2,200 sales reps.

Pfizer stands to save upward of $450 million annually from the cuts, according to a research report issued by Prudential Equity Group.

Analysts said Pfizer's move may portend a broader shift toward leaner sales forces among other companies.

“It seems like it's the end of an arms race,” Michael Krensavage, an analyst from Raymond James, told The New York Times.

Starting in the 1990s, Pfizer led the charge in building a sales force juggernaut behind its blockbusters including Viagra and Lipitor. Other companies followed suit. But the proliferation of sales reps generated a backlash among doctors complaining about visits from multiple reps from the same company, promoting the same drug.

The news of Pfizer's sales force cuts came just a few days before the company announced it would be forced to scrap development of torcetrapib, its most promising pipeline candidate.
Pfizer had been counting on torcetrapib to make up for several patent expirations, including the patent on the cholesterol-lowering drug Lipitor, Pfizer's top-selling product with $12 billion in annual sales.

As a result, Kindler said Pfizer's plans for transformation will be expedited. Although he didn't give any specifics, those plans could mean more belt-tightening.

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