New Pfizer CEO slashes R&D to save 2012 forecast

Pfizer Inc Chief Executive Ian Read is slashing the massive research budget at the world's largest drugmaker to deliver on a 2012 profit forecast and allay Wall Street concerns the company has become too large. Read, who took the helm in December after the abrupt departure of predecessor Jeffrey Kindler, is laying off more than 2,000 researchers and said further steps were likely to shrink Pfizer's operations as it girds for the loss of billions in revenue from drugs whose patents are expiring.

Pfizer's actions were long-awaited by investors, who have criticized the company for becoming bloated after three mega-mergers. Its shares rose 5.5 per cent. Pfizer will cut 2012 research and development spending by as much as $2 billion from a planned $8bn to $8.5bn - the industry's largest R&D budget. It will also increase its share buyback program by an additional $5bn. It plans to shut its research center in Sandwich, England, eliminating all but a few hundred of its 2,400 employees, and lay off or transfer 1,100 employees in Groton, Connecticut. David Maris, analyst for CLSA Asia-Pacific Markets, said Pfizer's stock - trading at about a 20 per cent discount to rival large drugmakers - is "cheap" and will be an even better value as it takes more shares out of circulation.