Pfizer in massive £1bn Wyeth system integration spend

Pfizer has spent nearly a billion pounds on system integration and consultancy around its mammoth acquisition of rival Wyeth two years ago, including on a global enterprise resource planning rollout.

The pharmaceutical giant said yesterday it has spent a total of $1.6 billion (£972 million) in 2009 and 2010, “primarily” on system integration and consulting costs. It spent the lion’s share of the money this year, some $1 billion (£620 million).

A large part of the work is understood to concern a global SAP rollout. Pfizer reportedly made a strategic decision to move to a centralised SAP enterprise resource planning platform in 2009, 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 had not provided information on its systems at the time of writing, already used SAP R/3 in a number of its markets, including Germany, since the early 2000s.

In October, Pfizer announced it was also buying King Pharmaceuticals, targeting $200 million (£126 million) in operational savings. The savings in that merger are likely to be greatly aided by the fact both firms share some key IT infrastructure, including SAP ERP and the SAP Netweaver Business Warehouse system.

As the ongoing costs on the $68 billion Wyeth acquisition rack up, including some $4.8 billion (£3 billion) on areas including staff contract termination and asset impairments, Pfizer also announced that the merger was delivering large operational savings. Some $2 billion had been cut from standard costs so far, it said, and a target remains of $4 billion to $5 billion by 2012.

Job losses have played a large part in the cost reduction, with up to 6,000 roles across the company, including the back office, being cut as Pfizer merges with Wyeth and dramatically restructures its business. Pfizer has not said how heavily IT staff will be affected.

This week the company said it was closing a 2,400 strong research centre in Kent that developed the Viagra drug, as it announced 2010 net profits of $8.2 billion, down four percent.

Copyright © 2011 IDG Communications, Inc.

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