Pfizer's (NYSE:PFE) pipeline took a major hit yesterday as the company cut 100 projects from its ranks. Even with 500 projects remaining, that's still 17% fewer than it had on the day it took control of Wyeth.

Investors should be excited. That's right: Excited. Overjoyed. Downright thrilled about the move.

I haven't been the biggest Pfizer supporter since the acquisition, but the culling of the pipeline is a good sign that management can follow through with its goal of not repeating the screw ups integrating Pharmacia and Warner-Lambert. We're only three months into the integration and they've already cut a lot of the fat. Merck's (NYSE:MRK) only cut one of Schering-Plough's drugs that I know of, although it's about a month behind Pfizer on its large integration.

There were bound to be some overlaps between Pfizer's and Wyeth's compounds, and the culling of the pipeline should leave only the best drugs to treat the diseases they're interested in. Some programs were also cut because the data wasn't strong, and it sounds like the company may cut more programs as data comes in. No reason to spend big bucks on clinical trials for drugs that don't seem like they're working.

Pfizer now has 133 drugs in human trials, 33% more than it had before buying Wyeth. Most importantly, the addition of Wyeth helped boost Pfizer's biologics and vaccines count; the company now has six vaccines and 27 biologics in development, up from just one vaccine and 16 biologic drugs before the integration. Unlike small-molecules drugs, biologics and vaccines tend to have a longer marketing life after their patents expire since they're harder to copy.

It wasn't a perfect announcement for Pfizer though. The company said it's dropping its application to market Lyrica as an add-on treatment for anxiety. That shouldn't come as much of a surprise after two failed attempts at getting the fibromyalgia-nerve pain-seizure drug approved for anxiety, even if it's something its biggest rival, Eli Lilly's (NYSE:LLY) Cymbalta, has already done.

With such a large revenue base to work from, Pfizer needs some major hits from its pipeline -- data due this year for its Alzheimer's disease drugs partnered with Medivation (NASDAQ:MDVN) and separately with Johnson & Johnson (NYSE:JNJ) and Elan (NYSE:ELN) would be a good start.

But Pfizer also needs to be selective on what it chooses to develop. The bloated, unproductive Pfizer of the past just isn't going to cut it. Yesterday's announcement was a move in the right direction.

Pfizer is a recommendation of the Inside Value newsletter. If you're interested in picking through the wreckage for possible turnaround candidates, you should have the Inside Value team on your side. Check it out for free with a 30-day trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Elan is a Rule Breakers recommendation. Johnson & Johnson is an Income Investor recommendation. The Fool's disclosure policy was cut from the payroll years ago, but it still shows up for work every day.