Pfizer, the world's biggest pharmaceutical company, has announced a major reorganisation aimed at cutting billions in costs and boosting profitability.
The maker of blockbuster drugs like cholesterol-lowering Lipitor and erectile dysfunction treatment Viagra said the moves would hurt profits in the short term, requiring spending of between $5 billion and $6 billion by 2008.
Hank McKinnell, Pfizer's chairman and chief executive officer, said that although Pfizer had a strong position in the industry, 2005 would be a transition year because of the expiration of key drug patents and a murky outlook on the class of painkillers including Celebrex.
The company's net profit for 2005 is likely to fall to $8.6 billion from $11.4 billion last year, the group said.
'We expect our performance to rebound quickly in 2006 and accelerate in 2007 as we increasingly realise the benefits of the continued growth of major in-line products, new product launches and productivity initiatives,' McKinnell added.
Pfizer plans to invest some $8 billion in research in 2005, compared with $7.7 billion in 2004.
The overall cost-cutting plan, the outline of which was announced earlier this year, is aimed as saving $4 billion a year by 2008, or about 12% of Pfizer's current cost base.
Pfizer also said it would take advantage of a special law that provides a lower tax rate for repatriated profits, by bringing back more than $28 billion in foreign cash in 2005. It will set aside $2.2 billion for taxes on this sum.
