Pharmaceutical Cost Cutting
A recent article from New York Business.com talks about Pfizer cutting costs. This is because although they had increased revenue, profits were flat.
Pfizer announces $4 billion cost-cutting plan
This $4 billion cost saving through 2008 represents 12% of their cost base and if they can do it would be tremendous. However, I think it depends on how they achieve these “savings”. In Pfizer’s case, after many mergers in the last few years they probably have redundancies and duplicate facilities. Closing these seems to make sense. However, the one thing that is always overlooked in these cases is the value of the people who operate these facilities especially scientists and operators. Too many times I’ve seen highly motivated and productive people let go simply because that facilities has been chosen to close for a variety of reasons.
This isn’t always a bad thing. Sometimes, people become motivated and decided to start their own small company to compete and fill the void created by such actions. This is especially true in cases where people do not wish to relocate. Such small companies can afford to take risks that large companies are unwilling to take and are more nimble and able to make quick strategic changes that are impossible in larger companies.
On the down side though this means that sometimes, these small companies, once they have achieved some success, can be looked at as food for the these larger pharmaceutical engines. They then end up getting bought out and sometimes shut down. While this means the principals make money, it often means that many are out of work again.
Such is life in the pharmaceutical industry these days.
Other Resources
• Pfizer Unveils Broad Cost-Cutting Plan - Forbes.com
Technorati Tags: Pfizer, cost cutting
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