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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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October 16, 2009

"Day One" at Pfizer

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Posted by Derek

I've heard from several sources that today is what they're calling "Day One" at Pfizer. The merger with Wyeth is now official, and word is going to start going out on which sites will stay, which will close, and who will be moved or let go during the entire process.

Problem is, I'm also hearing that (for research, anyway) it could take as long as another sixty days for all the news to come out. We'll see what the real timetable is, but that's enough to make me wonder if there's any way they could have found to make the whole business more excruciating.

But it's a sad day. I think the Pfizer-Wyeth merger is a bad idea which will do bad things. I wish it hadn't happened, just like I wish many of the other mergers on this scale had not happened, and I wish that I could have some hope that this sort of thing won't happen again. But the lessons are taking a long time to be learned.

Comments (32) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. darwin on October 16, 2009 9:26 AM writes...

monkey-see, monkey-do

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2. Lucifer on October 16, 2009 9:27 AM writes...

Pfizer should cut on the Newspeak.

This is just another senseless act, whose only purpose is to give the impression of thoughtful decisive action.

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3. Hap on October 16, 2009 10:08 AM writes...

The lessons probably aren't being learned, because the people that know the lessons don't have any power, and the people that do have the power (the management and the major stockholders, particularly the short-term ones) have no incentive to learn those lessons and much incentive to ignore them, take the money, and leave the consequences of their acts for others.

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4. T on October 16, 2009 10:12 AM writes...

I hear the numbers of cuts are going to be massive across the board. A sad day indeed.

I really hope they get on with it for everyone's sake. Best of luck everyone

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5. goldilocks on October 16, 2009 11:21 AM writes...

The day that the Pharmacia acquisition was completed was Day One, wasn't it? Shouldn't they be on Day Ten by now?

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6. lkt on October 16, 2009 11:38 AM writes...

They're closing Wyeth's Great Valley, PA (near Philadelphia) site...but vague as usual about who's going to get cut.


http://www.philly.com/philly/news/homepage/20091016_Post-merger__Wyeth_s_Great_Valley_site_to_close.html

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7. JANDA on October 16, 2009 12:48 PM writes...

Sites closed in NJ, PA.

http://www.bloomberg.com/apps/news?pid=20601103&sid=ajmYujiT2rFQ

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8. RandDChemist on October 16, 2009 2:23 PM writes...

“We understand the importance of the dividend,” D’Amelio said.

Says it all, doesn't it?

These mergers add value for no one except the executives and board members. Everyone else pays the price of the greed. The shareholders do not win with this one. They rarely do anymore.

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9. Layoff victim on October 16, 2009 3:20 PM writes...

But isn't it good to know that Pfizer and Wyeth consider a person's worth to be about 3 month's salary plus another month's salary for every year of loyal service?

I mean, like, wow, they really value their human resources...

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10. S Silverstein on October 16, 2009 3:28 PM writes...

My thoughts on the merger were expressed some time ago at "Pfizer/Wyeth Merger And Sacrificing The Future: Laying Off Scientific Staff All Over The Place".

Healthcare Renewal recently was named a "must read" health blog by Forbes. Guess my critical pieces on pharma did not disqualify us from that attribution...

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11. Hap on October 16, 2009 3:56 PM writes...

#8: I think you should consider yourself fortunate that there's not a market for human organs, otherwise your bosses would have sold off your "spare" organs before laying you off. The money would probably end up in the "Miscellaneous Mangerial Expense Fund". "You know, Crane's liver bought us three flights on the company jet. I appreciate him so much more now than when we actually employed him."

Actually, one month per year wouldn't sound so bad (I think at my company it's two weeks), but probably many of the longer-term people were already laid off, so that no one is going to get much. (And the job market still sucks.) I hope it works out OK for you.

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12. Lucifer on October 16, 2009 4:12 PM writes...

I have to point out that many pharma scientists used to justify their employers questionable decisions through varying degrees of sophism.

Now they are at the receiving end.

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13. JIA on October 16, 2009 4:15 PM writes...

OK, this isn't about Pfizer, but I couldn't resist. Last paragraph:

"Finally, after a recent announcement that it would restructure, including a global workforce reduction of 5,500 employees to trim $1 billion in yearly costs, Ely Lilly announced that it plans to expand its workforce in China, including doubling its sales force there from 800 to 1600 to expand its coverage in central and western areas of the country."

http://www.burrillreport.com/article-1805.html

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14. PharmDood on October 17, 2009 6:40 AM writes...

It took about a year from the time it was announced to when the Pharmacia deal was actually closed. Then there was another 2 months or so before the effects on R&D, mostly the "acquiree's" I might add, were announced. Something about issues with sharing pipeline information before the deal was done in case things fell apart. So, 60-days is about right - or at least consistent with past performance, anyway. What I suspect will change is the interval between the time a site/fuctional closure is announced and when you hand over your badge. Took 4 months back in 2003/5. All work stops dead, of course, so there is plenty of time to read books, drink coffee, do the experiments you always felt like doing but never had the time to undertake, and cruise LinkedIn. Not really as much fun as you might think. Good luck to all.

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15. milkshake on October 17, 2009 7:18 AM writes...

The only way anyone can enjoy this limbo is to get another job lined up and just wait and see if they give a severance. I know this is hard because there are so few jobs, but the best starting position is to accept that your job is over and your research project will go down the drain no matter what you do.
(Looking back, Pfizer did me a great favor by sacking us all - though it certainly did not feel that way at the time.)

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16. Mark on October 17, 2009 9:43 AM writes...

A few comments:

1. The lingo has changed. Previously, "Day One" was the announcement of restructuring changes after the merger of Pharmacia/Pfizer. Now it's just the first day of the combined companies. The layoffs/site closures will be announced 30-60 days from now, but I'll will bet it will be delayed until after Xmas.

2. Pfizer's severance package was extended to the end of 2010. The base package is 13 weeks plus 3 weeks for every year of service. I think this is quite generous to be honest, considering the financial difficulties of the company. I think most Pfizer employees thought it would have been cut before the Wyeth merger. You also get 60 days of pay after your last day, a year of health insurance at subsidized premium, then another year at full premium.

3. I think the bigger issue is so many Wyeth sites have been told they will remain open. The Collegeville, PA site is huge and I would have thought slated for closure. The Pearl River, NY site is safe as it has a heavy biologics component. So what major site will be closed? Groton and St. Louis have been told they are safe. La Jolla? Sandwich, UK? Or will Pfizer do what they did in the past? Keep a bunch of sites open knowing it can't be sustained in the long run. So maybe a bunch of layoffs this year, then some site closures next year? That should help productivity!

Mark

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17. LayoffGuru on October 17, 2009 12:03 PM writes...

Mark - you are close to the truth. This year we can expect layoffs and maybe a few minor site closures. Then as things settle down we should see a flurry of corporate activiy (hint: watch where the CEO/CFO are flying to, and also where they're *not* flying to!) culminating in closure of a single major site. In parallel another major site would be 'restructured' (read - gutted). Then during year two of this 'merger' we should expect additional layoffs. At the end of year two or perhaps beginning of year three we should see the resolution of the 'two captains' situation - the dynamic duo of MD+MM will resolve itself into an even more dynamic solo (my money is on MM staying and MD going away).

I wish all of my ex-colleagues at both Wyeth and Pfizer all the best - this is a very unpleasant time to be an industrial scientist and it's not likely to become better any time soon, especially since the BRIC countries (read - China) have such an abundant supply of cheap scientific workers.

Be smart. Get an idea now what you need to do to survive, then be ready for when the hammer strikes again.

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18. Anon on October 17, 2009 12:22 PM writes...

Part of the fun of "doing science" is figuring out what happened when the outcome of an experiment differs from expectations. Always follow the data. To this old hand it looks like Pfizer's decision to relocate existing Pfizer business units to old Wyeth locations is a way to maximize disruption, and to maximize the number of employees who can be eliminated.

Relocating a business unit was always the fastest way to eliminate headcount.

My impression is (can anyone confirm?) that relocation cost will be handled "on an individual basis", which I read to mean we can move your job, but not move you.

How this philosophy will be reflected in the R&D site decisions is to be seen.

If the Pfizer severance package is 3 weeks per year of seniority plus 13, it exceeds Wyeth's 2 weeks per year of seniority plus a week per $10k annual pay.

Interesting and painful.

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19. LNT on October 17, 2009 8:56 PM writes...

The Wyeth severance package for the "special transaction" (Pfizer deal) is 6 months minimum. This applies for any "legacy Wyeth" folks laid off up to two years following the deal closure. We anticipate (based on Pfizer's history) an additional 60 days of "notice" (WARN perion). It's a scary situation to loose your job -- but I think most Wyeth folks will get ~8 months of salary continuation. So don't feel too sorry for us...
I always heard that Pfizer gives thier employees the "golden boot". Now I know that it's true.

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20. milkshake on October 17, 2009 10:40 PM writes...

When the former SUGEN site were sacked, Pfizer made promise about 6 month severance from the termination date. But we got laid off in several waves, the phased firing and site shutdown went over a period of several month.

Someone at Pfizer must have figured out that they were paying too much and so Pfizer reneged on the promised severance pay for people in late waves, and suddenly they counted the trigger day severance differently (I believe from the layoff notification date). I guess they tried to test if those affected were brave enough to sue. And sure enough class action lawsuit of ex-employees was dragging out for couple years and Pfizer eventually settled out of court for the difference owed plus interest plus the lawyers fees...

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21. Rosalind on October 18, 2009 7:32 AM writes...

I think many Wyeth folks are going to leave for greener pastures, if Day One is any indication of Pfizer's corporate culture. Unfortunately for Pfizer, it won't be the people they would like to leave--it'll be the very good biotech experts, who can always find something else in the New England area, often for more money, even in these economic straits. Wyeth was always somewhere in the middle of the pay scale, better than a startup but not as good as the other big pharmas.

The corporate culture in biotech-land is fairly collegial, with a strong interest in basic science and lots of academic ties. Pfizer's corporate culture...well, I personally have never seen such an amazing display of hostility, stupidity and, for lack of a better word, advertising BS in all my life. Most of us folks on the Wyeth sites just stared in silent horror, occasionally whispering "you've gotta be KIDDING me!" to the person sitting next to us. Meanwhile, the 30 or so Pfizer executives all laughed on cue with JK and his ilk, without any apparent sense of wonder about why they were the only people in an audience of 1000+ people who were laughing, or why people were walking out halfway through the presentation.

The smart way to buy a successful biotech pharma in New England is to go directly to the biotech people who actually do the work, and offer them truckloads of money. Then deal with the other bits of the company that you don't really want as a sort of secondary issue. This method has worked great for Shire, Biogen, and many other successful Northeastern biopharmas. It worked for Wyeth when Wyeth bought Genetics Institute: we would like to buy you, for lots and lots of money, because you are so special. Stock options and new labs for everyone! Unfortunately, that's not what JK did...

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22. Mercury on October 18, 2009 6:30 PM writes...

The grapevine has it that J&J is next... soon to slash 20% or more of their workforce.

These things comes in waves, and when one body of executives has demonstrated its courage by laying off people (and probably remunerated themselves with a handsome bonus for doing it) the other executives feel pressurized to be equally brave. Investors are generally stupid enough to reward a company for laying off people, regardless of what damage is done to its long-term productivity. Not something investors have any sight of anyway.

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23. Anon on October 18, 2009 9:36 PM writes...

"and when one body of executives has demonstrated its courage by laying off people"

Let me fix that for ya...

"and when one body of executives has demonstrated their inability to find real solutions to pharma research obstacles by laying off people"

That's better.

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24. Discoking on October 19, 2009 8:35 AM writes...

My favorite "upper management" quote from the Bloomberg article link pasted below:

http://www.bloomberg.com/apps/news?pid=20601103&sid=a8U9oCkKn5dU

“Scientists at the two companies aren’t permitted to exchange information about their work until the merger is completed, and are “desperate” to talk, Roblin said Oct. 2. “As soon as the close happens, the phones will be red hot,” Roblin said. “It’s an exciting time for scientists because there’s nothing like new data.”


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25. Outsider on October 19, 2009 9:16 AM writes...

#21 and #24 are a clear indication to an outsider of the Pfizer executive view of the world.

Amazing

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26. Jonadab the Unsightly One on October 19, 2009 9:21 AM writes...

Hey, at least they're not calling it the year zero, eh?

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27. pharmedout on October 19, 2009 10:39 AM writes...

Pfizer, and large pharma in general, seem to be intent on eliminating "excess" research capacity. Several comments (esp. 10) point out that talent utilization and productivity suffer from poor management and poor decision making throughout management.

It seems that the folks who can't manage research successfully have decided to manage less of it, and hope that other companies bring them drugs to sell. It's an interesting business plan, but I haven't seen the funding mechanism to support all of those startups it will take to feed pipelines.

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28. Mercury on October 19, 2009 12:28 PM writes...

"It seems that the folks who can't manage research successfully have decided to manage less of it, and hope that other companies bring them drugs to sell."

Oh, other companies will certainly do that! The problem is, how will Big Pharma decide which ones to buy, if they don't have a strong in-house research team? Profiling candidate drugs that are offered by other companies is at least as difficult as profiling compounds that you find yourself.

If Big Pharma really hope that they can buy new drugs from "Micro Pharma' and put them straight away into development, they're in for a nasty -- and expensive -- surprise.

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29. Hap on October 19, 2009 12:39 PM writes...

Yes, but by that time the people who sold everything off and cashed out will be long gone. The people who steal your grandma's silver and melting it down for bullion don't care how much work it took to make or buy or how much it will cost to replace - it didn't cost them anything, and won't, unless they get caught.

I guess Puzo really was right.

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30. S Silverstein on October 19, 2009 1:00 PM writes...

Mercury wrote:

"how will Big Pharma decide which ones to buy, if they don't have a strong in-house research team? Profiling candidate drugs that are offered by other companies is at least as difficult as profiling compounds that you find yourself."

From my experience in pharma, sr. management will hand the data to the IT people and ask for a decision. The less the knowledge of biomedicine by the IT department, the better.

This is somewhat tongue in cheek - but just somewhat.

After all, it's gospel if it comes from IT.

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31. Jonadab the Unsightly One on November 3, 2009 8:28 PM writes...

S Silverstein: now if only companies would let the IT guys decide which *software* to deploy...

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32. Critical Thinker on May 27, 2010 7:19 AM writes...

So much for the theory that the Pearl River NY facility is "safe" because of the "heavy biologics component" there. Just one more facility shut down and more than 2,000 jobs out the door...

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