NEW YORK (CNNMoney.com) -- Pfizer Inc. said Wednesday it will continue to ramp up outsourcing of manufacturing as it faces the imminent patent expiration of its top-selling drug, Lipitor.
The New York-based pharmaceutical giant said it has already increased outsourcing of its drug manufacturing to 17%, from less than 10% just three years ago.
Since 2004, Pfizer has closed or sold 21 factories, bringing the number of factories it operates to 57, while reducing its staff by 21% to 86,600, the company said. It has also shut down one-third of its research sites to a current total of 10.
"We will do whatever is necessary to size the company accordingly," Chief Executive Jeffrey Kindler said during Pfizer's analyst day. "Our DNA has changed. We're moving faster. We're making smarter decisions with your capital."
Pfizer also plans to expand its presence in the overseas market, particularly in China, where the company intends to spread its operations into 650 cities, nearly six times the current number.
Pfizer reaffirmed its 2008 guidance, with a sales range of $47 billion to $49 billion and full-year earnings from $1.78 to $1.93 per share, or $2.35 to $ 2.45 per share without charges.
Pfizer has launched several drugs over the last couple years that are considered potential billion-dollar blockbusters. They include the HIV treatment Maraviroc, which entered the market in 2007, as well as the 2006 launches of cancer drug Sutent and anti-smoking treatment Chantix. Sales for Sutent, used for the treatment of cancer of the kidneys or digestive tract, totaled $580 million in 2007 while sales for Chantix were $880 million.
Part of Pfizer's pipeline includes additional uses for painkillers Lyrica and Celebrex. Lyrica entered the market in 2005, and sales totaled $1.8 billion last year. Sales for Celebrex, which entered the market in 1999, were $2.3 billion last year.
Pfizer's patent on Lipitor, a cholesterol-controlling statin that is the world's top-selling drug with nearly $13 billion in annual sales, expires in 2010. The drug will then be forced to compete with low-cost generics.
The expiration has placed enormous pressure on Pfizer to come up with new blockbusters to avoid a sales vacuum. To alleviate the burden, the company is in the midst of a multi-billion-dollar cost-cutting plan.
Kindler acknowledged that "the loss of Lipitor exclusivity is getting closer." But he added that the company is "realistic about the challenges" it faces.
Pfizer had planned to protect Lipitor sales by combining it with the experimental drug torcetrapib, which would have created a whole new brand-name product to compete with generics. But Pfizer dropped torcetrapib in December of 2006 because too many patients died in the study. Since that time, Pfizer has had difficulty coming up with a replacement for Lipitor.
"In my own judgment, I don't think they're going to be able to replace Lipitor in 2011," said Les Funtleyder, a drug analyst for Miller Tabak, who attended the meeting. "There's nothing I've seen today that would change that."
Pfizer stock didn't show much movement in Wednesday morning trading. "I don't think that anybody came to the meeting with high expectations, so the bar's probably low for them," said Funtleyder, adding that the company's stock performance isn't bad at all, compared to the market as a whole.
Pfizer said it is bringing new experimental drugs into phase 3, the final phase of testing before submission to the Food and Drug Administration. The company will bring eight to 12 potential new drugs or new uses for old drugs into late-stage testing by 2009. This includes potential treatments for lung and breast cancer, rheumatoid arthritis, psoriasis, Crohn's disease, asthma and diabetes.
Since the company has had a hard time bulking up its pipeline through in-house research, it recently agreed to buy two relatively small biotechs - Serenex and Encysive - for an undisclosed price. With the acquisitions, Pfizer beefs up its pipeline for potential treatments of cancer and other diseases. But the pipeline is early-stage and the experimental drugs are years away from entering the market.
Analysts who watch Pfizer closely often say a major acquisition would be the most effective way for the company to grow. But chief financial officer Frank D'Amelio said he doesn't see a "mega-deal" on the horizon. Large acquisitions are too expensive and disruptive to be worthwhile, he said, unless they have the potential to add to profits in a major way.
Pfizer (PFE, Fortune 500) is the largest company in the world to derive all or most of its sales from pharmaceuticals. The drugmaker Johnson & Johnson (JNJ, Fortune 500) is larger, but its sales also come from consumer goods and medical devices. Merck (MRK, Fortune 500) is the No. 3 drugmaker and Abbott (ABT, Fortune 500) is No. 4. 
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