Updated from 4:50 p.m. EST
new chief executive, Jeffrey Kindler, promised he would streamline the drug giant's operations, and now he's delivering.
The company said Tuesday after the market closed that it will slash 20% of its U.S. sales force as part of a strategy "to most effectively and efficiently meet customer needs as well as match the organization's business needs."
Pfizer has approximately 11,000 U.S. sales-representatives. The unlucky employees will be gone by year-end.
The dismissals don't affect sales representatives in foreign markets; but spokesman Paul Fitzhenry said Tuesday that all of Pfizer's activities are under review. He was unable to immediately provide the number of foreign sales-representatives.
Fitzhenry said the decision on who stays and who goes will be "performance-based." Dismissed sales representatives will receive severance and other benefits based on terms of service, but Fitzhenry didn't provide details about the severance or the evaluation process.
The job cuts are the first action emanating from Kindler's promise in October to begin
a "comprehensive look" at the way Pfizer develops and markets drugs and the way it manages its operations.
In September, Kindler
reorganized top management to create what he said is "the spirit of a small company" that benefits from the financial and scientific strength of a giant drugmaker.
In January, Pfizer plans to present its long-term outlook and its additional actions for restructuring the company. On Thursday, Pfizer will describe its research and development plans.
Kindler's announcement is part of a strategy that recognizes Pfizer will have no revenue growth through 2008 due to patent expirations of major drugs and the inability, so far, for sales of new drugs to outpace the eroding revenue from generic competition.
Pfizer expects to achieve its 2006 earnings guidance of approximately $2 a share, excluding one-time items. In October, the company forecast "high-single-digit" earnings-per-share growth in 2007 and 2008, excluding one-time items.
On Tuesday, Pfizer said it would still maintain "strong" sales support for its major products such as the cholesterol drug Lipitor, the arthritis treatment Celebrex and the schizophrenia medication Geodon. It also will devote a major effort to marketing what it considers promising drugs of the future, including the inhaled insulin Exubera, the stop-smoking treatment Chantix and the kidney- and stomach-cancer drug Sutent.
"The changes we are making today will better align our sales organization to our overall customer and business needs," said Kindler, who replaced Hank McKinnell as CEO in July. McKinnell will remain chairman until February.
"This is an important step toward making Pfizer a more agile and effective company," Kindler said in a prepared statement. "Our field force will now be in a much better position to adapt to changes in our product mix and capitalize on the growth opportunities we see for our innovative medicines."
Ian Read, president of worldwide pharmaceutical operations, praised the U.S. sales force, but added that "it is incumbent upon us to look ahead and carefully assess our changing marketplace and all the factors affecting our outlook."
Pfizer's announcement came after markets had closed. In regular trading, Pfizer finished at $27.05, up 8 cents. After hours, it gained another 10 cents.