Corporate greed is still alive and kicking

Up to 20,000 Pfizer employees are to lose their jobs as profits remain staggeringly high. By Vincent Browne.

Jeff Kindler is a bright fellow.

He graduated from Tufts University in 1977 with a summa cum laude, which is saying something.

There are three categories of cum laude. A simple cum laude means with honour. Then there is magna cum laude, which means with great honour. Then summa cum laude, which means with the highest honour.

(Picture: Jeff Kindler, CEO of Pfizer)

He almost did as well when he went on to study at Harvard, this time graduating from the law school magna cum laude. US president Barack Obama also graduated from Harvard Law School magna cum laude.

Kindler then worked as a clerk with one of the most distinguished judges of the US Supreme Court, William Brennan, before moving into the corporate arena, first with General Electric, then with McDonald’s, and finally joining Pfizer as general counsel (ie, top lawyer) in 2002.

Kindler was busy as general counsel for Pfizer because there was lots of hassle at the time over generic ‘‘assaults’’ on Pfizer patents, and more hassle over counterfeit drugs.

So impressive was Kindler at dealing with the hassle that, on July 28 2006, he was made chief executive of Pfizer.

A few months later, he became chairman of the board as well. Being chairman and chief executive of Pfizer is some prize - in 2008, his total salary package was $14.8m.

It is not surprising that Pfizer thinks highly of Kindler, because its revenues were $50bn in 2009, up by $1.7bn on 2008. Profits were $8.6bn, up 17.3% on the previous year.

It is not that Kindler hasn’t had his troubles. Last year, Pfizer had to pay $2.3bn to settle civil and criminal allegations that it had illegally marketed its painkiller Bextra, which it was forced to withdraw from the market. This was Pfizer’s fourth settlement of civil and criminal cases in four years.

The prosecutors in the 2009 case said that executives and sales representatives throughout Pfizer had planned and executed schemes illegally to market not only Bextra, but three other drugs as well.

Pfizer was engaged in this activity while it was trying to settle another action taken by the state over illegally marketing Neurontin, an epilepsy drug. It had to pay a $430m fine to settle that case.

It also signed a corporate integrity agreement which gave a company-wide promise to act within the law, precisely when it was illegally marketing Bextra.

The Bextra case was brought to light by an insider whistleblower, John Kopchinski, who said the whole culture of Pfizer was driven by sales. ‘‘If you don’t sell drugs illegally, you were not seen as part of the team,” he said.

For instance, Bextra was approved in 2001 by the Food and Drug Administration (FDA) to treat arthritis and menstrual pain, but Pfizer instructed its sales representatives to tell doctors that the drug could also be used to treat acute and surgical pain, and at doses well above those approved. Pfizer knew there were clear dangers from overdose use, including damage to kidneys and heart risks.

Pfizer was also found to have taken doctors on junkets to exotic locations under the guise of consultant meetings - conduct that is illegal in the US. There were also other pressures. Pfizer’s patent rights to its best-selling drug, Lipitor, is expiring next year, and 14 other patents are expiring over the next three years.

So Kindler had to come up with a strategy that would settle all these anxieties.

He did so in style with the purchase of Wyeth, one of its main rivals in the pharmaceutical industry, for $68bn. It was one of the biggest corporate mergers in US history.

According to the New York Times on January 26, 2009: ‘‘As part of the deal with Wyeth, both companies will have to repatriate tens of billions of dollars back to the United States, which could have a high tax cost. Pfizer reported $25.3bn in revenue, 52.2% of its total [revenues], from overseas operations in 2007, according to securities filings".

‘‘If foreign profits were repatriated to the United States, Pfizer would have to pay the tax paid in the foreign country, as low as 5% in Ireland, for example, and a 35% tax rate in the United States.”

At some stage over the last few weeks, Kindler decided that, to improve profitability of $8.6bn and boost further his own $14.8m salary package - or at least to soften the blow which the profits repatriation from Ireland and elsewhere would cause - 20,000 Pfizer workers would be sacked from its operations worldwide, including 780 in Ireland.

Pity.