Firing Workers Won't Fix Motorola or Pfizer

But the cuts won't just affect the sales force. About 2,900 jobs will come out of research and development through the closure of three research sites. That's the second reorganization of the company's drug research program in less than two months: Kindler had announced the first overhaul after the company was forced to cancel development of torcetrapib on safety concerns. That drug was designed to be combined with Lipitor to extend the life of the company's blockbuster.

Although Pfizer is cutting research-and-development staff, it won't be cutting research-and-development spending, which is set to stay roughly steady at $7.5 billion a year. Good thing, too, since CEO Kindler has committed the company to launching four internally developed drugs a year annually by 2011, to go with the launch of two externally acquired drugs a year.

As with Motorola's plan, there's no guarantee that Pfizer's effort will work. Revenue growth in the drug industry as a whole slowed to about 7% a year in 2004-2005, according to Standard & Poor's. That's after a decade of double-digit revenue growth.

And it's not like Pfizer is ramping up research-and-development spending from nothing, either. The company spent $7.4 billion, or 14.5% of revenue, on research and development in 2005. That's essentially the same as the 2007 budget. Pfizer now has a pipeline of 170 novel drug candidates, but it's tough to predict how many of these will turn into viable drugs and how many will become the kind of big sellers that Pfizer's sales force used to thrive on.

It's safe to say at this point that Pfizer is, like Motorola, another former great growth stock whose growth has become very unpredictable.

(Also, be sure to check out my other article on companies struggling with growth issues -- and companies showing great growth prospects.)

>To order reprints of this article, click here: Reprints