Pfizer, based in New York City, now outsources about 15% of its manufacturing capabilities. The company aims to double that figure, as part of cost-cutting measures, it said at an investor presentation in Hong Kong, which was broadcast over the Internet. Pfizer didn't give a timetable, or specific Asian countries it is targeting. "For a lot of this work, it makes sense to outsource to lower cost areas, from New York or elsewhere in the U.S. to Asia," a company representative said during the presentation. The outsourcing plans follow Pfizer's announcement at the beginning of the year that it would shut down manufacturing sites in Brooklyn, N.Y. and Omaha, Neb. and sell a third manufacturing site in Feucht, Germany. These cuts, along with the closure of several research sites, were part of a companywide plan to cut its worldwide workforce by 10%, or 10,000 jobs, and save US$2 billion. Pfizer isn't the only pharmaceutical company to talk about such a move. AstraZeneca said recently that it would start shifting manufacturing operations to Asia. Like other pharmaceutical companies, Pfizer is facing tepid growth amid encroaching generic competition and the lack of clear blockbusters in its drug pipeline. "I'm the first to admit [the drug pipeline] is not as rich as I'd like it to be," Martin MacKay, Pfizer's new president of global research and development, said. But he noted that the company has a "very rich" portfolio of 47 compounds in phase two development. Drugs in phase two development are still several years away from the marketplace. MacKay noted that a recent trial for a rheumatoid arthritis drug went very well and is now well into phase two and "moving along nicely." He also said that the collaboration with Bristol-Myers Squibb - developing a compound called apixaban - is going well and could lead to similar alliances with other pharmaceutical companies. Pfizer saw a big setback in its pipeline recently when it pulled Exubera, an inhaled-insulin product. Once viewed as a potential blockbuster, Exubera was approved in January but its launch was delayed because of manufacturing problems. Moreover, diabetes patients found the inhaler difficult to use. Pfizer's decision to drop the product dragged on the company's recent third quarter results.
Quarterly net profit declined 77% to $761 million because of a pretax charge of $2.8 billion, or 31 cents a share, related to the company's decision to drop Exubera. The charge included a write-off of assets associated with the product. Analysts have expressed concern that the company doesn't have enough new drugs in its late-stage pipeline to offset slowing sales. Its top product, Lipitor, a drug that lowers cholesterol, had roughly $13 billion in sales last year, but sales growth of the drug has slowed, partly due to the availability of generic versions of other cholesterol drugs. Lipitor will lose U.S. patent protection as early as 2010, becoming vulnerable to direct generic competition.
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