Monday, May 21, 2007

Pfizer Replaces Its Bench (Forbes)

Joshua Lipton

Pfizer announced a major overhaul earlier this year, complete with a string of plant closings in the United States and Germany and the dismissal of 10,000 workers, or 10% of its workforce. The top-to-bottom transformation of the company also apparently involves some big shifts in key personnel.

On Monday, Pfizer (nyse: PFE - news - people ) told the Street that the company's longtime research and development chief, John LaMattina, and its short-time chief financial officer, Alan Levin, will be packing up and leaving the New York-based drug maker.

LaMattina, 57, has been with the company since 1977. He said he will retire from Pfizer by the end of this year. LaMattina has agreed to remain with the company as it searches for a successor.

Levin, 45, had been with Pfizer for 20 years. He became chief of finance just two years ago. In a statement, Levin said that he believed it was the "appropriate time for me to explore career opportunities outside of the company."

AG Edwards analyst Joseph Tooley said he thought the recent job shifts are just part of the broader campaign by Chief Executive Officer Jeffrey Kindler to remake the drug company, as it struggles with increased competition and the loss of exclusivity rights.

"Kindler is looking to shake things up across the company," Tooley said. "And this applies to all the leadership positions as well. They haven't done a lot on terms of mergers and acquistions. The pipelines have had some setbacks."

In both cases, Tooley thought the decisions to replace LaMattina and Levin made strong sense.

In terms of research and development, Tooley noted LaMattina's contributions to the company but also argued that the division has become a problem for the drug company.

"Research and development seems to have been an Achilles' heel for Pfizer," Tooley said. "They have had high profile setbacks and a lack of productivity in recent years in terms of significant new drug approvals. Now they have a chance to make an improvement in that area."

A new head of R&D could jumpstart Pfizer's pipeline, Tooley argued. He pointed out Merck's (nyse: MRK - news - people ) decision a couple years ago to hire Peter Kim as its R&D head, a move that has proven successful for that company.

"He seems to have been very productive at this point and they have a lot going on in the pipeline," Tooley said.

Regarding Levin's departure, Tooley argued that the move might indicate that Pfizer wants a CFO who is less of a traditional accountant and more of an M&A hot shot.

"It might mean that Pfizer wants someone with more Wall Street experience," Tooley said. "Maybe what they want is someone with more transaction experience, more M&A experience, more or a dealmaker."

In March, Pfizer lost its exclusive rights to Norvasc, a money-making blood pressure drug. (See: "Solid Sales Keep Pfizer Afloat.") Also, Lipitor, the company's cholesterol treatment, loses patent protection in 2010. That loss is, in part, what drives Tooley's current "hold" rating on the stock.

"They need to offset that loss of revenue," he said. "We don't have visibility on when and how they will do that."

In morning trading, shares of Pfizer nudged up 0.1%, or 3 cents, to $27.47.

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