From today’s Wall St. Journal:
Pfizer Inc. said Wednesday that it plans to cut research-and-development spending by as much as $3 billion by 2012, in an attempt to wring efficiencies following its take-over of Wyeth without sacrificing future product development.
The New York pharmaceutical giant outlined the aggressive cuts, which represent more than a quarter of the two companies’ combined research budgets in 2008, as it reported fourth-quarter earnings of $767 million, or 10 cents a share, up from $266 million, or four cents a share, a year earlier.
The drug maker also forecast lower financial targets from the Wyeth deal than it provided last year, sending Pfizer shares down 2.3% to $18.62 on the New York Stock Exchange.
R&D is considered the lifeblood of pharmaceutical companies. Big drug makers like Eli Lilly & Co. and Bristol-Myers Squibb Co. are increasing their spending to find new products that can replace aging blockbusters. Yet drug discovery is unpredictable, and industry scientists have struggled in coming up with big new products. Pfizer’s announcement suggests executives believe its research hasn’t been worth the high levels of investment.
Add this news to the fact that I know two major pharma companies have laid off a combined 20,000 employees since November and you have serious signs that one of the last economic innovative engines of America is in trouble.
Thanks Washington. Anti-industry rhetoric and anti-capitalism policies have direct consequences out here in the real world.
-Bruce (GayPatriot)
Huh?
Would you care to maybe flesh out your argument just a bit? Y’know, like share with us some evidence that anything that has actually happened in Washington can be linked to Pfizer’s troubles?
I’ll give you an example of why you might need to do so. It so happens that Pfizer had one of its major R&D sites operating in the town where i live. They shut it down, throwing thousands out of work, – but that was in 2007 – before the recession, before Obama.
There are lots of reasons why a corporation like this needs to “wring efficiencies” from its operations (“without sacrificing future product development” – did you miss that part?) – such as having taken on an ill-advised merger, which seems to be the case here.
But you seem to think that there is no need whatsoever to actually make your case. Pfizer makes cuts, Obama is president, it must be his fault somehow. His rhetoric even!!! You think this is how the business world works?
Tano-
Use your powers of deductive reasoning. It doesn’t take a rocket scientist to figure it out.
In other words, you are unable to explain your own point.
Exactly what I figured.
It amazes me that anyone ever answers Tano.
Actually, Tano is following the proper line of questioning.
There are several factors at work here. When one company acquires another, there are always, as you very well know, a set of targeted layoffs that both reduce redundant positions, and lean out the payroll to make a company more profitable. In this case, they are probably cutting duplicate lines of drug research pursued by the former competitors. They may be cutting lines of research that have been determined to be less promising. I mean, the article says it in the first part of the quote:
I’m not sure how much clearer they would have to be. And isn’t making a company more efficient a good thing? Isn’t this what we wanted GM to do for all these years? Isn’t that what we want the government to do in the next ten? Yeah, I know, fat chance on that one.
Anyway. I understand the point you’re trying to make, and I’m sure there are plenty of examples that can be used to make it. This one however, is a poor choice and doesn’t work.
Well certainly here in NJ, which is home to much of Big Phama’s R&D, there’s certainly no sign of any economic recovery. The only large economic-sector that’s making money is the financial-sector of Big(gest) Banks and Wall Street. The small local banks and lending institutions have slammed the credit taps shut. And I’ve yet to see any of these “shovel-ready infrastructure projects” actually creating any local jobs.
Everyone is pulling-in there horns and hunkering-down for a dark and bumpy night. So far, I think this is a phony recovery….
To put a new drug into market takes a big investment, a big chunk due to government regulations. (This is a pet peeve of mine in that drug companies have to go through numerous human trials, while any “health supplement” can be put in the market without trial, but that is another issue.) Anyway, so the drug company puts in lot of money not only into the initial research and development, but then into all the efficacy trials for the government (mostly in the FDA), etc. All of this before the product gets out and requires educating the medical/patient community and advertizing. So, of course, a company hopes to recover the cost of producing a drug (that is why name brand prescription drugs are more expensive) and make a profit (because that is what companies do.) Now if the government starts playing pricing games in a health insurance bill, why would a company want to go through the expense of developing a new drug if it can’t make the money back before the drug goes generic?
What I’d want to watch out for is how many people are furloughed at ex-Wyeth sites, and other Pfizer R&D sites (Groton, CT for example) and then how many scientists they’ll be hiring in India.
As a PhD chemist myself (though not employed by pharma), I have seen how the big companies treat their employees. And in today’s world, employees — even highly skilled technologists — are merely costs to be contained.
Beyond that, there are far too many managers whose incentive compensation is dependent upon others’ livelihoods, in other words, “I’ll make my numbers, but to do that, you’ll lose your job.”
Maybe this will make things clearer for Tato. Majority of Democrats view socialism favorably.
Democrats = socialists. Socialists = anti-business. Why is this so difficult to
understandadmit.V the K,
This is an example of what happens when ideologues rampage through our vocabulary. What does socialism actually mean? I have had these arguments around here many times. Rightwingers, who are always more intent on name calling than actually making any points, have been calling anyone to the left of Jim DeMint a socialist. Social Security is socialism in their view. Obama, of course. So there ya go. By the definition of the rightwing, 53% of the people voted “socialist”. Probably 70-80% support “socialist” programs. So in the end, the name-callers lose the war. The term has been completely defanged – its actually surprising that the poll numbers arent even higher.
Thank you, Iris. I’m glad to see that you are able to educate Tano The Moronic who can’t grasp a simple proposition.
Iris,
Thanks for repeating the standard pharma industry rationale. But you seem to be overlooking, or willfully ignoring a rather big point. The pharmaceutical industry has been a supporter of Obamacare. So this thesis, that the election of Obama is responsible for a pullback in R&D is simply false.
But of course, that point was actually made in the quote that Bruce provided, (and apparently did not read, or think much about):
“Big drug makers like Eli Lilly & Co. and Bristol-Myers Squibb Co. are increasing their spending to find new products…”
Now why would they be doing that? How can Obama be blamed for this?
“Pfizer’s announcement suggests executives believe its research hasn’t been worth the high levels of investment.”
So they have a bad R&D department that has not had success? Relative to Eli Lilly and BMS? Gee, that must be Obama’s fault too!
On a sort of side note. I find it interesting that when new drugs are researched and put through their paces before getting to market, they are not compared to the older drugs to see if they are more, or as effective as other drugs already on the market. A recent study found that the much more expensive, prescription arthritis drug Celebrex is actually no more effective than regular ol’ ibuprofen base medicines. But because of the profit motive, the drug is pushed heavily, even though it is not shown to be any more effective. Don’t get me wrong, I have no problem with the profit motive. But, if you want real health care reform that will lower medical costs, return to the policy where pharmaceuticals can not advertise prescription drugs on TV or in magazines. Remember, the advertising budgets take up a lot of money too. Pushing a drug through R & D and getting it to the market for the sole purpose of profit instead of actual improved medical effectiveness costs us all in the end.
Tano The Tool:
Obama & the Democrat majority have repeatedly demonized the biotech & pharm industry — despite the Obamacare “deal”.
Anti-business rhetoric, regulations and legislation are all leading to the healthcare industry moving innovation out of the USA.
You are an idiot if you can’t see the destructive nature of your Premier’s policies.
Bruce,
Sorry, but calling me names, and making bland, unsupported claims, does not advance your argument.
The fact remains that you are claiming, with no evidence whatsoever, that Obama’s policies are causing a reduction in R&D, while you provide a quote that makes clear that 2 of the big 3 companies are actually increasing R&D.
Total fail. And no, calling me an idiot won’t salvage your argument.
“if you want real health care reform that will lower medical costs, return to the policy where pharmaceuticals can not advertise prescription drugs on TV or in magazines.”
I agree completely. This has been a complete disaster of a policy.
The smarter policy would be to encourage drug companies, insurance companies, doctors and hospitals to make more money. The more profit there is in an industry, the more smart people will be drawn to that industry. Profits + smart people + competition = innovation. Innovation and a larger pool of suppliers bring down costs and improve quality for consumers.
Anyone with a basic understanding of economics gets that. Unfortunately, Dear Reader has surrounded himself with lawyers, academics, and radicals… and precious few people with real world business experience.
They already do that… by charging rates three times the rate of inflation.
Sorry, but calling me names, and making bland, unsupported claims, does not advance your argument.
Funny, that’s what you tried to do, Tano.
Thanks for repeating the standard pharma industry rationale. But you seem to be overlooking, or willfully ignoring a rather big point.
Just another example of your hypocrisy and your failures. It almost becomes painful to watch someone make a fool of themselves as often as you do.
Do you guys remember the days when more than one Obama troll would try to defend Obamateleprompter?
I find it interesting that Pfizer has come up at several points this week.
Here the GayPatriot brings up Pfizer’s financial woes due to its merger with Wyeth – the merger being long touted as just the right remedy to Pfizer’s woes.
Then there’s the story (http://online.wsj.com/article/SB10001424052748704041504575045702997683276.html) on Pfizer’s CEO taking a big hit if Healthcare goes downhill.
Seems to me that Pfizer hoped to rape the American wallet in three ways:
– maintain or increase high costs for drugs and supplies
– By supporting healthcare, have our Government support artificially inflated costs, either through sole-source-of-supply or other means
– By taking the “too-big-to-fail-so-requires-a-big-bailout” route. Soon we’ll see stories about women who died of some disease and being buried in an Obama campaign t-shirt because scientists who would have developed a cure for her were instead laid off. Or small children – all to the same affect.
Perhaps fantastic, but given Mr. Kindler’s advocacy, being a Democract, and being hired to bring in the $$$ by the truckloads seem to me to be indicators.
My two cents…