In a conference call, Pfizer chairman and chief executive officer Jeffrey B. Kindler announced plans to overhaul the company’s business practices, including 10,000 layoffs (including previously announced cuts of 2,200), which will reduce Pfizer’s staff by 10%, and the closing of several research and manufacturing sites. He remarked that Pfizer’s immediate priorities are to “improve performance and position itself for future success, as well as improve shareholder return.”

“Pfizer is a great company with a great future,” Mr. Kindler said. “We are facing significant challenges, however, in a profoundly changing business environment. I believe we must fundamentally change the way we run our company to meet these challenges and to take advantage of the diverse and attractive opportunities that we see in the marketplace.”

The priorities outlined in a meeting with financial analysts include maximizing revenues from its current in-line portfolio and new products, investing in medium- and long-term growth opportunities through its internal pipeline and externally sourced products, and creating smaller, more focused operating units.

In 2007, the company plans to focus on Lipitor’s “unique benefits,” build on the success of Celebrex and Lyrica, and introduce campaigns in support of newer medicines. The company also plans to strengthen its vaccine and antibody capabilities and invest R&D in promising areas.

In the short term, Pfizer plans to cut costs in research and manufacturing, streamline organizational structures, reduce staff, and increase outsourcing and procurement savings. The company is simplifying its R&D organizational structure by closing three research sites in MI — Ann Arbor, Esperion (also in Ann Arbor) and Kalamazoo — and is proposing to close research sites in Nagoya, Japan and Amboise, France. Pfizer also plans reduce its European sales force by more than 20%.

The company will continue to consolidate its manufacturing operations with the closure of two sites, Brooklyn, NY and Omaha, NE, and may sell a third site in Feucht, Germany. From 2003 to 2008, Pfizer will have reduced its network of manufacturing plants from 93 to 48. These cost reduction initiatives will result in the elimination of about 10,000 positions or about 10% of its total worldwide workforce by the end of next year.

“These are, of course, complex issues where we must balance many different considerations, and they are, without doubt, among the most difficult decisions we have to make,” said Mr. Kindler. “We have thought long and hard about these steps, because we are acutely aware of their impact on colleagues and the communities where we are located.”

Another priority is to create smaller, more focused business units in an effort to enhance innovation and draw on the company’s resources, including medical, marketing and sales. U.S. pharmaceutical operations will be restructured into four business units led by a general manager with profit-and-loss accountability, and a fifth business unit responsible for customer support.

Pfizer plans to improve productivity within its R&D organization by consolidating therapeutic area (TA) research teams. A single leader will run each TA with more responsibility, authority and accountability, as well as more control over resource decisions. Pfizer plans to discontinue research in gastroenterology and dermatology, but will continue to develop compounds already in the pipeline.

Lastly, as part of an ongoing effort to cut down on bureaucracy and reduce management layers, it has “eliminated unnecessary committees and cross-functional teams” and is in the process of cutting three to four management layers in its pharmaceutical, R&D and manufacturing divisions, as well as company-wide support functions.

“By reducing middle management and increasing spans of control, we’re getting leaders closer to colleagues and customers and giving colleagues a clearer line of sight to those aspects of the business for which they are accountable. As a result, our managers will delegate, empower and focus on developing colleagues more than ever, and our colleagues will grow and take on more responsibility than ever,” said Mr. Kindler.

“Obviously, this change won’t happen overnight. It will take time, it will take discipline, and it will take determination to turn these aspirations into reality,” he added. “But at Pfizer our goals are clear. Our leadership understands both our challenges and our opportunities. And we are committed to providing the value our customers need, the working environment our employees want and the results our owners deserve.”