Pfizer’s CEO Faces The Drug Pricing Firestorm

When Ian Read, an accountant and company lifer, took over as Pfizer’s chief executive in December 2010, the drug firm–the world’s largest–was facing the impending patent expiration of Lipitor, the bestselling drug ever made, and the utter failure of one of the most lavishly funded research laboratories on the planet to develop much of anything. The stock was suffering, and Read’s predecessor–Jeffrey Kindler, a bearlike lawyer hired from McDonald’s–had just spent $68 billion to buy rival drugmaker Wyeth in a Hail Mary strategy shift. Now Read had to make it work.

“I’m not going to talk about mission or vision,” Read recalls telling employees back then. “This is critical. We’ve got to talk about imperatives.” Namely, cutting costs, pleasing shareholders and fixing the company’s R&D operation (it had spent $40 billion over five years to produce just four drugs, which today have combined annual sales of about $2 billion). Read cut head count from 130,000 to a low of 80,000 at the beginning of this year, raised $32 billion by selling off extraneous divisions and got seven drugs approved. He made Wall Street salivate over the idea of breaking Pfizer into two companies, a slower-growing business that sells older medicines and a hot one that focuses on breakthroughs. Though the paring down cut sales 27% to $50 billion, annual net income has increased 10% to $9 billion. The market has applauded: Pfizer shares are up 94% over Read’s tenure, 23% more than the Arca pharmaceutical index and more than double the gains of heavyweight rivals like Merck and AstraZeneca.

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By: Matthew Herper
Image: Forbes.com

 

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