Wyeth Fires to Get Back on Fire

Generic competition and the FDA's slowing pace of approval for new drugs are making it tough for pharmaceutical companies to increase revenues. Instead of sitting on their hands, the companies are cutting expenses so earnings can grow faster than revenues.

Wyeth (NYSE: WYE  ) is the latest proactive company to cut its expenses. 1,200 U.S. sales reps were reportedly given pink slips this week. The cuts are part of a cost-cutting program announced earlier this year. Wyeth expects to reduce its workforce by 4%-6% by midyear and 10% over the next three years. The most recent cuts represent about 2% of the workforce, so additional job cuts are coming.

A lot of the now-unemployed sales reps were probably pushing Wyeth's heartburn medication, Protonix. The drug is receiving generic competition from Teva Pharmaceuticals (Nasdaq: TEVA  ) and Caraco Pharmaceutical Laboratories (AMEX: CPD  ) after the companies made at-risk launches of their knockoff versions. Wyeth claims the patent is valid until 2010, but it looks like a court will ultimately decide if Wyeth is due damages from the generic-drug makers or if the competition will remain on the market.

The new leaner Wyeth -- and Amgen (Nasdaq: AMGN  ) , Bristol-Myers Squibb (NYSE: BMY  ) , and others that have announced cuts -- are looking much healthier in my eyes. There are many people in the industry advocating that pharmaceutical companies have way too many sales reps for the number of doctors that are interested in listening to them. I'd much rather see the companies cut sales reps than R&D costs, which might further hurt those already beleaguered pipelines.

Now if only the industry could figure out how to speed up the FDA.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 609299, ~/Articles/ArticleHandler.aspx, 9/2/2014 12:44:52 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement