Inside the world of business
Little surprise in Pfizer cut as patent issue starts to bite
Pfizer’s decision to shed 177 jobs at two Cork sites can come as little surprise to the staff affected. If anything, the surprise is that the company is not moving more swiftly to address the collapse of sales in Lipitor, its blockbuster cholesterol treatment, and the biggest-selling drug worldwide in recent years.
The loss of patent protection – in the United States last year and across Europe in the first half of this – has already knocked a significant hole in Pfizer’s revenues. Quarterly figures published last month pointed to a 71 per cent decline in sales of Lipitor in the first three months of Pfizer’s financial year.
As a plant working solely in the production of the active ingredient in the drug, Little Island and all its staff must have known they were exposed. Two years ago, Pfizer signalled its intentions with its decision to close the Lipitor tableting plant at Loughbeg, also in Cork – a decision that remains on course for the end of this year and will, in itself, lead to the loss of 200 jobs.
Pfizer has been very good for Ireland. It employs almost 4,000 people here across a range of sites and, with its acquisition of biotech group Wyeth in 2009, will hope to continue for many years.
The Government, and its predecessors, have known for years about the impending patent cliff and its likely impact on older plants in the Republic. It is precisely for this reason that IDA Ireland have worked so assiduously in attracting the newer generation of biopharmaceutical firms, like Amgen, to these shores, and in encouraging existing businesses to invest more heavily in research and development.
These efforts have met with considerable success to date. This week’s announcement of the inevitable at Pfizer merely emphasises the continuing importance of new foreign direct investment as we seek to drive forward our economic recovery
Atlantic can be rescued by a friend
Grafton has made no secret of the fact that its Irish retailing business – the Atlantic Homecare and Woodies DIY chains – have been suffering over the past four years.
Last month it told shareholders that turnover in this division was down 16 per cent in the first four months of this year.
Last year overall sales fell 4.7 per cent to €219.7 million. The business remained profitable, returning an operating surplus of €2.1 million, down from €2.4 million in 2010.
The High Court heard yesterday that Atlantic lost more than €11 million last year. It does not take a genius to work out that Woodies is profitable while Atlantic is not.
Atlantic is close to insolvency. Opting for an examinership, which will give court protection from creditors and allow breathing space for the examiner, Declan McDonald, to come up with a rescue plan, looks like the best way forward. The restructuring could result in the loss of 114 full- and part-time jobs. Another 234 jobs will survive, as will eight of 13 stores.
If the High Court confirms McDonald as examiner – his appointment yesterday was interim – he will need the support of at least one group of creditors, or a significant creditor, and possibly to bring in new capital.
Atlantic owes Woodies €13.3 million, around one quarter of its total debt of €53.7 million, making it a significant creditor. Woodies said yesterday it is willing to invest in its sister company. This indicates that McDonald can clear both hurdles. Given that some Atlantic stores have already been rebranded as Woodies, the logical conclusion is that the financially stronger group company will take over the financially weaker.