Why Pfizer Inc (NYSE:PFE) Was Forced To Reduce Its Operations In Puerto Rico?
Companies are often forced to make tough choices and take hard decisions in order to maintain or improve their levels of profitability and ability to raise more revenue. Pfizer Inc (NYSE:PFE) is one such company, that intends to reduce its operations in Puerto Rico, by closing at least one of its manufacturing plants by 2017. This decision is not out of the blues, and anyone who has followed the company’s businesses in Puerto Rico will appreciate why it has made such an announcement. Let us take a look at the reasons the company has given for this bold step.
Pfizer Inc is the largest maker of drugs in the world. However, it has endured its own challenges in the recent years, which have convinced it to make decisions that are unpopular in many quarters. This pharmacological company says that it intends to work on improving efficiency in its manufacturing plants, not only in Puerto Rico, but also across all other nations where its operations are hosted. Secondly, the company seeks to find ways of managing the troubles it experienced when it lost patent exclusivity in its businesses around the Puerto Rican region.
There are more than 2,700 workers employed at Pfizer Inc (NYSE:PFE)’s three manufacturing plants in Puerto Rico. This number will reduce once the company goes ahead with its decision to close one of its manufacturing plants in this nation. However, the company has not made a decision regarding how many of its staff to lay off once it closes one of its plants in Puerto Rico. Therefore, any number you hear being mentioned is just speculation. PFE is the second pharmaceutical company after Merck to take such a step in Puerto Rico regarding their operations in the nation.
This decision is tough not only for Pfizer, but also for Puerto Rico, which had become a hub for the world’s leading pharmacological companies. The fact that Pfizer Inc (NYSE:PFE) and Merck have made decisions that affect their drug making operations in Puerto Rico is not quite good for the country. If other firms decide to follow suit, this has the potential of making Puerto Rico unattractive for major pharmaceutical companies. In no way does this mean that PFE has failed in its efforts to overcome a series of losses and negative publicity that have dogged it for years.
During October 2013, Pfizer Inc (NYSE:PFE) announced that its drug sales dropped by around 2% to settle at $12.6 billion. However, its sales news regarding a number of its drugs and the emerging markets as well were quite good. The company lost its patent for Viagra in Europe, and this has messed with its revenues in the last consecutive quarters. Not only that, but it also has to contend with serious competition for Lipitor, its main generic drug. Consequently, the company expects a reduced figure of $51.8 billion as full year revenue, down from its earlier figure of $52.8 billion.
Pfizer Inc’s decision to slice down its manufacturing operations is not limited to Puerto Rico plants only. It has carried out similar exercises all over the world as part of its efforts to cut down on costs by as much as $500 million, this year and beyond.