Pfizer plans to fire up to 800 researchers worldwide as it signals that an annual R&D budget of $7.5 billion is failing to fill its drugs pipeline.

The Wall Street Journal reports that the world's largest pharmaceutical company by sales Tuesday, told scientists and technicians at its labs around the world that it is eliminating their jobs. By year end, the New York drug maker expects to have laid off 5% to 8% of its 10,000 research employees, according to Martin Mackay, who heads Pfizer's research and development.

The Journal says the pharmaceutical industry faces pressure from investors to slash its spending because drugs generating an estimated $30 billion in sales will lose patent protection over the next several years, sparking competition from less-expensive generic drugs. The recession may trigger even bigger spending cuts, analysts said, if cash-strapped consumers start filling fewer prescriptions or turning more to generics.

Pfizer in particular is bracing for the 2011 expiration of the patent on cholesterol fighter Lipitor, the world's top-selling drug and which accounts for a quarter of Pfizer's roughly $48 billion in annual revenue.

Pfizer spends most on R&D in its industry but it may have to acquire smaller companies with innovative products, to replenish its pipeline.

In recent years, the drugs giant has had few successes and in the past two years, it has dropped the development of the insulin spray Exubera, because of clinical trial deaths, after spending $2.8 billion on it. In December 2006, Torcetrapib, which was being developed to attack elevated levels of cholesterol, was abandoned.

Pfizer has a payroll of over 83,000, after cutting 14,600 jobs since January 2007.

The researcher job cuts represent 5 to 8 percent of Pfizer’s approximately 10,000 researchers worldwide, Raymond F. Kerins Jr., a Pfizer spokesman  told the Associated Press. “We’re methodically looking at our staffing and making decisions to ensure we have the best scientists in place, the best science, to meet our goals in the future,” he said.

Those goals include finding profits in six therapeutic areas: cancer, pain, inflammation, diabetes, Alzheimer’s disease and schizophrenia.

Asked about future layoffs, Kerins said, “To be very candid, this is clearly an ongoing process, and we’re always going to look for the more effective and efficient ways to run our company.”