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February 8, 2005
Maybe They Should Fire Them All?
So I see that Pfizer's stock is up today, partly on news that an oncology compound of theirs worked very well in a clinical trial against stomach cancer.. Well, it's not their compound, actually; they bought it from a little outfit called Sugen. Well, actually, they just went ahead and bought Sugen, and the compound came with it. It's a pattern. Hardly any of Pfizer's big compounds are from Pfizer, and when they go out shopping for one, they often just buy the company it came from. They must be on the mailing list for some kind of coupon offer that the rest of us don't get.
Where was I? Pfizer's stock price, yes. Good clinical news is certainly a legit reason for a drug stock to go up, and congratulations to everyone involved. But the other reason for Pfizer's stock action, a bigger one in terms of earnings per share, was the report that they might be about to cut 10,000 jobs from their sales force. The market liked the sound of these layoffs, as it often does, because those savings show up pretty quickly in a company's earnings reports.
That figure should give you an idea of what a leviathan Pfizer really is. There are plenty of well-known companies whose sales force couldn't be cut like that without first hiring a few thousand people. Perhaps I'm a bit thick-headed, though. Is it a good time to be bidding up the stock of a company that's thinking about heaving 30% of their sales force overboard? The reason you do such a thing is, well, slow sales. Firing people isn't going to make the sales pick up - just the reverse, actually.
At the very least, I wouldn't touch Pfizer until after the FDA hearings on COX-2 inhibitors next week. I can't imagine that their Celebrex sales are doing very well so far this year, but that meeting could really put on the brakes. Add that to slower sales for Neurontin and Viagra, and the medium-term patent expiration of Lipitor, and I can only ask again what I've been asking for a few years now: just how is Pfizer going to make this work?
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