INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

PFIZER TO SELL CHANDIGARH PLANT, PLANS COST CUTTING

PFIZER India is in the process of selling off its Chandigarh plant and has already received a an advance of Rs 27.8 crore from a prospective buyer. "The products manufactured at Chandigarh came under the open general licence. It was a fermentation plant used to manufacture animal feeds supplements. Our cost of manufacturing here was significantly high as compared to importing it, as a result the plant had become cost inefficient," a Pfizer spokesperson told ET. The company declined to disclose the name of the prospective buyer and the amount for which the plant was being sold. The plant was slated to be closed in 2003.

The sale of this plant, which stopped operations over three years ago, is not part of Pfizer's global cost cutting plans announced last month but is a strategic decision by the Indian arm, the company said.

Confronted to fierce competition from generic drugs' makers, Pfizer said it would cut 10,000 jobs globally and close at least five facilities to slash its annual costs by up to $2 billion. The latest cuts come on top of a previously announced plan to cut costs by $4 billion a year by 2008. The 10,000 layoffs amount to about 10% of the company's global work force, and include the elimination of 2,200 jobs from the US sales force. Pfizer will close three research sites in Michigan and two manufacturing plants in New York and Nebraska. It also might sell a manufacturing site in Germany and close research sites in Japan and France. The impact on Indian operations at this stage remains unclear. "In line with the global transformation initiative, we are reviewing our business in order to prepare ourselves for the future. We will have our own strategy to manage this process, as each business in their respective countries face different challenges and opportunities. The details of the local transformation impact are not yet finalised as we are only at the early stage of an on-going process," said Pfizer's spokesperson.

The measures taken by the world's largest drugmaker highlight the challenges faced by big pharma companies. In addition to patent expirations, pharma companies are in a business climate where insurers and other large buyers of medicines are demanding lower prices and more evidence of a product's worth. Pressure on Pfizer has also intensified since safety issues forced it to halt development of the star drug in its pipeline, which was slated to replace its best-selling drug Lipitor, as it loses patent protection as early as 2010.