Pfizer-Allergan hookup would mean sizable cuts

History suggests a Pfizer-Allergan hookup would mean sizable cuts in manufacturing
November 16, 2015 | By Eric Palmer

Today Pfizer ($PFE) has about 65 plants since picking up Hospira in September. A hookup with Allergan ($AGN), which the two have acknowledged they are exploring, would add another 40. That inevitably leads to the question of what would be in store for such a large network in the event that those two should complete a deal. The history of both companies suggests that headcount across the board would be trimmed and that the manufacturing network would be in line early for a haircut.

As pointed out by in-PharmaTechnologist.com, which initiated this line of thinking, Pfizer acted quickly to cut manufacturing after it merged with Wyeth some years back. Of the 19,500 total jobs it said would be eliminated postmerger, 30%, of that came from manufacturing, amounting to 6,000 jobs. The company put 8 manufacturing plants on the chopping block, scaled back production at 6 more and slated the 6,000 job cuts through 2015.

Of course, a deal between the two drugmakers is not assured. In-PharmaTechnologist.com reminds that Allergan's agreement to sell its generics business to Teva Pharmaceuticals ($TEVA) would reduce some of manufacturing network ahead of any deal with Pfizer.

And while manufacturing is often an easy place to find savings, Pfizer has cut more employees total from other areas after the Wyeth deal than it did from manufacturing. The specific numbers and locations trickled out over time and included the sale of an office building in Manhattan where it laid off about 1,400 workers and 680 positions from campuses in Collegeville and Great Valley, PA.

Actavis, which was once Watson and is now Allergan, also has always been quick to look for "synergies" to help pay for the many deals it has done as it has morphed from a generics company to a brand-focused operation. When Watson completed its $5.5 billion deal with Actavis in 2012, it said that it would close some of the 28 combined plants as part of the $300 million a year in postmerger cuts it was looking to achieve.

Last year, it said about 30% of its sales force in the U.S. had to go after completing its its $8.5 billion merger with Warner Chilcott, the deal that also turned it into an Irish-based company. That was about 350 jobs. After closing its deal to buy Forest Laboratories, it handed out pink slips to about 200 employees who had worked for Forest in the St. Louis, MO, area.

Brent Saunders, the Allergan CEO who is reportedly being vetted for the top job if a deal with Pfizer were to happen, has his own experience wielding the job-cutting ax. He cut 117 jobs last month from recent acquisition Kythera Biopharmaceuticals, including its top executives. That came after the company whacked about 1,000 employees from its California operations last year.

- read the in-PharmaTechnologist.com story

 

I don't care how big the cuts are as long as Sesha and Cheater are gone - gone - gone

 

Keep wishing....not likely.

 

there will be no cuts, at least not until after the split up of the massive 315 bill market capitalization is complete and established as a Dublin HQ

 

Therapeutic Areas

• Immunology & Inflammation
• CV & Metabolic Diseases
• Oncology
• Vaccines
• Neuroscience & Pain
• Rare Disease

 

They planned to cut 20,000 after the Wyeth acquisition and they delivered more than 30,000 staff cuts.
Pfizer is mostly A+ players these days. I dont think very many of you are going to make the cut.

 

Pleeeease. This is so laughable. They certainly won't cut the aesthetics division. We are literally going to make them look good. The aesthetic division is A+++ players. So get that right.

 

Even if we're not cut we need to get ready for big pharma to have a big impact on our lives.

 

Grasshopper, you are suffering from dunning kruger syndrome

 

There will be cuts. Just look for areas of redundancy. Start there.

It's not rocket science. Why merge 2 companies just to keep the overhead of both and not squeeze out greater synergies and increased revenue?

As far as who gets cut, it'll be a numbers game with emphasis on cutting from the company being bought not the one buying although no one is 100% secure.

It's life.

 

I know who's getting cut, that space cadet at the Viberzi launch who asked a KOL if he was going to switch all his patients to a drug with 30% of the patients hitting the primary endpoint...

 

there were any 60 day PIPs given out last week in several divisions; this is the beginning of the end.

 

With veteran job-choppers Pfizer and Allergan joining hands, how many layoffs are in the cards?
November 23, 2015 | By Carly Helfand

Both Pfizer ($PFE) and Allergan ($ACT) have a history of doing "transformational" deals--and those can come along with serious layoffs. So now that they've joined hands in a $160 billion merger agreement, is there reason to expect any different?

The companies are eyeing more than $2 billion in cost cuts over the first three years closing, they said Monday, with just under two-thirds of that coming from SI&A, just under one-third coming from R&D, and the remainder coming from COGS. Forty percent of those savings will squeezed by the end of the first full year after closing, with 60% coming by the end of the second year.

As Goldman Sachs ($GS) analyst Jami Rubin pointed out on a call with investors, though, that $2 billion target seems low in comparison with other deals. The reason, according to Pfizer CFO Frank D'Amelio? "These are two companies that are run very effectively already," with not a lot of fat to trim, he said. And beyond that, there's not a lot of overlap between the two portfolios.


Pfizer CFO Frank D'Amelio
As he told listeners, though, "we'll get every dollar of synergy that's available to us," and if that involves surpassing the $2 billion mark, then "when we get it, we'll tell you where" it's coming from, he said.

Pfizer certainly has a history of wielding the ax in the wake of large tie-ups. Take Wyeth, a 2009 Pfizer buy that D'Amelio spotlighted in discussion his company's experience with large integrations. The year the deal closed, the New York pharma giant announced 20,000 job cuts, and thousands more have come since. Warner-Lambert and Pharmacia buyouts before that came along with painful layoffs, too.

And Allergan, the product of a number of recent deals, has plenty of its own experience in that department. Back when it was Actavis, it announced it would let go 30% of its U.S. sales force after closing its Warner Chilcott transaction--a tally that amounted to 350 jobs. And after later cementing its Forest Labs buy, it dismissed 200 employees who had worked for the company in the St. Louis, MO, area.

Most recently, though, it's been Irvine, CA, feeling the pain. After Actavis and Allergan agreed to join forces--adding 11,500 employees to the 25,000 or so Actavis already had--the company cut loose 577 workers there. And that's not to mention the 500 Irvine staffers who lost their jobs as part of Allergan's cost-cutting effort to dodge hostile predator Valeant ($VRX).

As far as California goes, though, a couple of key Allergan businesses--aesthetics and eye care--will be staying put even as the company works to integrate with its merger partner on the opposite coast.

That decision is "not about protecting people," Allergan CEO Brent Saunderssaid on the call. "It's about keeping the best people in the right location to drive value in the future."

- read the deal announcement

 

I realize you Allergan people don't have a ton of Brent experience. But I'll give you a hint: Believe nothing. He might be telling the truth, but it's 50/50. You might as well shake a magic 8 ball.

 

Layoffs and site closures are Pfizer's specialty and it is no different this time around. The near future will verify this inevitable outcome.

 

they do have a reputation

 

My suggestion for who to cut is Neervanan, Pujuran, Graham, Lin, and Chang. Pat is the only one worth keeping

 

Totally agree

 

All should go

 

All should stay