Pharmaceutical giant Pfizer will cut 10,000 jobs, about 10 per cent of its worldwide workforce, and close down several facilities in an effort to slash its annual cost by up to $2 billion by next year.

The drastic measure will help the company to counter its failure to meet the pricing by generic drug manufacturers.

The cuts, expected to be effective from the end of the next years, would mean reduction in the company's work force by 20 per cent in Europe and by a similar percentage in the US.

The company announced on Monday that it expects to close its three research facilities in Michigan in the US and one each in France and Japan and sell one plant in Germany. It would also shut down its manufacturing plants in Brooklyn, New York and Omaha in Nebraska.

Announcing the cuts, Pfizer Chairman and CEO Jeffrey B Kindler said the company's immediate priorities are to drive improved performance and position the company for future success.

"Executing on these priorities will mark the beginning of an ongoing process to change the way Pfizer does business."

"We are facing significant challenges, however, in a profoundly changing business environment. I believe we must fundamentally change the way we run our company to meet these challenges and to take advantage of the diverse and attractive opportunities that we see in the marketplace."

Among other things, the company plans to reorganise its US sales operation to avoid duplication as also its research and development activities.

Pfizer said the move would save $1.5 billion to $2 billion in yearly expenses.