Pfizer spends £144m on Wyeth system integration – in three months

Pharmaceutical giant Pfizer has spent $208 million (£144 million) primarily on system integration and consulting in just three months, in order to integrate new acquisition Wyeth.

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Pharmaceutical giant Pfizer has spent $208 million (£144 million) primarily on system integration and consulting in just three months, in order to integrate new acquisition Wyeth.

A large part of the work is understood to concern a global SAP rollout.

Pfizer bought Wyeth for approximately $68 billion (£47 billion) last October, with the aim of broadening its business and creating what it called a “lower, more flexible cost base”. It is targeting savings of $4 billion to $5 billion by 2012.

The group last week said it would also cut 6,000 jobs globally, principally in manufacturing facilities and its supply chain, as part of cost cutting under the acquisition. Pfizer’s biotechnology site at Havant is one of the targets for job losses.

A Pfizer spokesperson was unable to say how many back office and IT roles would be affected, because the roles “have not been identified yet”. But the company said in an announcement that it would make more effective use of technology and improve processes, in order to conduct business on the much lower staff levels.

Pfizer’s first quarter income was $2.03 billion, a fall of 26 percent year-on-year as merger costs weighed on the balance sheet. The company has regularly touted the need for Wyeth to be rapidly integrated, and the £144 million expenditure on system integration is understood to be part of this. But a spokesperson was unable to provide further details.

In its annual report for 2009, the company wrote: “The rapid pace of the Wyeth integration reflects the most fundamental principle at Pfizer.” Jeff Kindler, chief executive, in February told investors that after the acquisition closed, the firm “immediately began the integration of our operations, advancing the transformation of the company”.

It is understood that Pfizer made a strategic decision to move to a centralised SAP enterprise resource planning platform late last year, following the Wyeth acquisition. Wyeth had already begun a transition to SAP ERP globally, having moved from multiple instances of JD Edwards, now owned and supported by Oracle.

Pfizer, which did not provide information on its systems, had already used SAP R/3 in a number of its markets, including Germany, since the early 2000s.

Its move to SAP globally is so significant that the supplier mentioned it a number of times in a recent quarterly results presentation given to its investors.

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