Pfizer to trim workforce by 2% as new CEO prepares to lead
- Pfizer will offer early retirement incentives to some employees before beginning a series of layoffs that will cause the pharmaceutical giant's workforce to shrink by "a couple percentage points," a company spokesperson confirmed to BioPharma Dive on Thursday.
- For a company that employs roughly 90,000 people, that suggests about 1,800 staff will be affected by this workforce shrinkage, set for early 2019. CNBC was first to report the news.
- "As we prepare for growth, we're creating a simpler, more efficient structure, which will affect some managerial roles and responsibilities," Pfizer spokesperson Sally Beatty wrote in an emailed statement. "We're offering enhancements to certain benefits to lessen this effect."
It has become a year of substantial corporate changes for Pfizer.
In April, the pharma giant signed a 20-year lease for a new corporate headquarters in Manhattan, with plans to gradually move into the site through 2022.
Then, Pfizer rolled out a reorganization plan in July to establish three business units for innovative medicine, established products and consumer health. The company continues to look to sell off its consumer health business, and originally announced it was looking at strategic alternatives in October 2017.
Most recently, at the beginning of this month, the company said its longtime leader Ian Read will be stepping down effective Jan. 1, 2019. Albert Bourla, currently the pharma's chief operating officer, will become CEO then.
He'll take over just as these planned workforce reductions begin to take effect.
Pfizer will report third quarter performance on Oct. 30, and its earnings call will be one to watch out for, as the company will ostensibly field investor questions on where all these decisions will lead it in the future.
Bourla will have his hands full in managing Pfizer's own initiatives in 2018, while needing to keep an eye on a White House that's become increasingly critical of drugmakers like Pfizer.
Over this summer, President Donald Trump attacked Pfizer in a public spat that ended in the pharma rolling back price hikes for roughly 40 drugs.
An administration proposal released this week that seeks to require list prices in television drug ads would also impact Pfizer in particular, as the company is among the largest spenders on direct-to-consumer TV marketing.
CNBC got specifics on the company's plan from an obtained internal email that Pfizer declined to share. The company did not, however, dispute the accuracy of the reported details.
"As we simplify the organization to avoid duplication, create single points of accountability and reduce the number of layers within teams, there will be an impact to some managerial roles and responsibilities across the organization," Pfizer said in internal documents explaining the decision to employees, according to CNBC.
According to CNBC's report, the voluntary early retirement option will increase the severance payout to 12 weeks of base salary plus three weeks of salary for every year of work, up to 104 weeks.
"This is about creating a simpler, more efficient structure and not achieving cost savings," Beatty noted.