Drugmaker Pfizer’s decision to abandon what it had called its most important new medicine caused the companies shares to plummet. The drug – torcetrapib – was supposed to improve people’s cholesterol, but in clinical trials there were increased deaths and heart problems.
Analysts now expect Pfizer to boost its dividend by at least 20%, speed up it cost-cutting plans, and look to acquire new products by buying other companies. Pfizer is already in the midst of a major restructuring that could see as much as 10% of its 100,000 workforce laid off. This news is likely to accelerate that effort.
Pfizer’s shares fell by nearly 16% at one stage, but later recovered somewhat. Some of its rivals -including AstraZenica and GlaxoSmithKline – saw the value of their stock rise as a competitor was removed. Investors know that there is big money to be made from successful drugs to lower cholesterol, which is a fatty substance in the blood linked to heart disease.