Company Overview

Pfizer, the company that gave us Viagra and Lipitor, remains a pharmaceutical powerhouse. But it has fallen from the lofty heights that it reached in the early 2000s after releasing a string of blockbuster drugs and making major acquisitions. The company’s revenues increased  only 1 percent from 2006 to 2007, although largely because of favorable foreign exchange rates, and in 2008 the company reported a small decline of .3 percent. The decline has come as patents for several of the company’s flagship drugs have expired, most notably Norvasc, a treatment for high blood pressure, and Zoloft, an anti-depressant. In 2007, revenues for those two products alone fell a whopping $3.4 billion. In 2008, Pfizer’s highest sales-producing drugs were Lipitor, Norvasc, Celebrex, and pain medication Lyrica, topping $2 billion in sales.

The company replaced its long-time CEO Hank McKinnell in 2006 with chief legal counsel, Jeffrey Kindler. Kindler has been working to streamline operations and reduce costs. In 2006 and 2007, Pfizer laid off more than 10,000 employees and closed three research and three manufacturing facilities. The challenge to develop high revenue-producing drugs to replace drugs whose patents have expired is a problem throughout the pharmaceutical industry. The company has been looking to assign more of its manufacturing to outside contractor and collaborate more with competitors.

Still, Pfizer is optimistic about its future. It has been aggressively acquiring companies with strong products including Coley Pharmaceutical and Embrex, an agricultural biotech company. In 2008, Pfizer purchased Encysive Pharmaceuticals for $195 million, inheriting a hypertension drug, Thelin, that is already marketed in several European countries. Most notably, the firm purchased Wyeth in January 2009 for $68 billion, the largest pharmaceutical deal in nearly a decade (since the merger of GlaxoSmithKline).

With the acquisition of Wyeth, the company is preparing to defend themselves against increased competition from generic drug makers. The acquisition will allow Pfizer to have a more diverse product line, while at the same time cutting costs. The firm plans to integrate redundant operations between the two companies, including administration, research and development, and manufacturing, resulting in an estimated 15 percent reduction in the combined workforce.

Pfizer also announced in Feburary 2009 that it was ending development of Esreboxetine, for fibromyalgia, and a drug known as PD 332,334, for generalized anxiety disorder.  According to The Wall Street Journal, when announcing the decision, Pfizer made a subtle reference to the increasing pressure on the drug industry from insurers and regulators to devote resources to creating products that make a real difference for people’s health rather than adding more drugs to categories that already have multiple treatment options.