Pfizer is to close a UK R&D facility in Sandwich (Kent), affecting more than 2000 positions, as it seeks to reduce expenditure by realigning its R&D division. The Sandwich facility conducts research in the therapeutic areas of allergy and respiratory disease.
A number of other facilities will also be affected by the realignment, with the company planning to shift selected resources from its Groton (CT, USA) plant to Cambridge (MA, USA) and outsource certain functions. According to a statement, Pfizer will also enhance its presence in Cambridge, San Francisco, New York, La Jolla in the US and Cambridge (UK).
“We continue to closely evaluate our global research and development function and will accelerate our current strategies to improve innovation and overall productivity. Key steps in this process include greater focus in disease areas of greatest scientific, medical and commercial opportunity, a realigned global R&D footprint to increase our presence in key biomedical innovation hubs, and an increased level of outsourcing for services that do not drive competitive advantage for Pfizer,” Ian Read, President and CEO, said in a statement.
"Today's news is a real shame for all those involved in the UK pharmaceutical industry, but sadly reflects the fact that all businesses, including those in the pharmaceutical sector, are continuing to face tough decisions if they are to remain lean and healthy in the current economic climate,” Esther Smith, Pharmaceuticals employment law Partner for Thomas Eggar LLP, commented in a statement.
The closure is a major blow for the UK. In a statement issued in response to the closure, Richard Pike, Chief Executive of the Royal Society of Chemistry (RSC), said: “What we are witnessing is the hemorrhaging of the lifeblood of the British pharmaceuticals industry.”
According to the RSC, the UK has seen almost 6000 job losses in the last 12 months from a number of pharma players including AstraZeneca, GlaxoSmithKline, Vectura, MSD, Aptuit and Qinetiq.
According to a report from the UK’s BBC, the Sandwich facility employs approximately 2400 people and is Pfizer’s largest R&D centre in Europe. The staff will be made redundant over the next 18 months to 2 years, although the company did add that it hopes to transfer several hundred positions to other Pfizer sites or to external partners.
As well as announcing the closure, Pfizer also revealed its Q4 and full year 2010 financial results. Revenues were $17.6 billion for Q4 and $67.8 billion for the full year. The full year results represent an increase of 36% compared with 2009 when revenues were $50 billion. The results were favorably impacted by $18.1 billion (37%) from Wyeth legacy products.
The company also announced that it has authorized a share repurchase program for up to $5 billion, which will increase its current authorization to $9 billion.
“We believe that the planned increase in share repurchases and the decrease in research and development spending will serve to provide a greater degree of certainty and a more clearly defined path for us to achieve our 2012 adjusted diluted EPS target of between $2.25 and $2.35,” said Read.