New York – Pfizer Inc. will likely slash staff and accelerate merger and licensing deals as the pressure on it to improve its financial performance intensifies after the weekend’s announcement that the company ended development of a key drug, analysts said.
Analysts differed on how much they believed Pfizer stock would fall today.
Barbara Ryan, an analyst at Deutsche Bank, said she believed the dividend yield of roughly 4 percent would keep shares from a free fall, but another analyst estimated the stock could plunge to $20 a share. Pfizer shares closed Friday at $27.86 on the New York Stock Exchange.
The world’s largest drugmaker said Saturday that an independent board monitoring a study for the cholesterol treatment torcetrapib recommended that the work end because of an unexpected number of deaths.
The news is devastating to Pfizer, which had been counting on the drug to revitalize stagnant sales that have been hurt by numerous patent expirations on key products. It has said it was spending around $800 million to develop torcetrapib, which was supposed to fill the void when its best-selling drug, cholesterol treatment Lipitor, loses patent protection in 2010 or 2011.
Lipitor sales totaled $12.2 billion last year.
“This is obviously unfortunate because this was the biggest opportunity in their pipeline,” said Ryan. “Clearly, there is more pressure on them to do cost-cutting.”
Two months ago, Pfizer said it would detail plans in January to go beyond its program to cut $4 billion in expenses by 2008. Patent expirations will cost the company $14 billion annually between 2005 and 2007.
