Pfizer is to cut 10,000 jobs, or about 10% of its workforce, as it seeks to trim annual costs by up to $2bn (£1bn).
The patents on some of Pfizer's best-selling drugs will soon run out
The shake-up comes as the world's biggest drugs firm faces rising competition from generic drugmakers.
Pfizer said it planned to close three research sites and two factories in the US, as well as a factory in Germany and research sites in Japan and France.
The company earlier reported a sharp rise in full-year profits to $19.34bn in 2006, from $8.9bn in 2005.
Pfizer said the 10,000 job cuts included 2,200 cutbacks revealed late last year among the workforce of its US sales representatives.
Analysts say the company faces the loss of about $14bn in revenues this year because of expiring patents on some of its key drugs.
"We are facing significant challenges... in a profoundly changing business environment," said Pfizer chief executive Jeffrey Kindler.
The group is bracing itself for the patent expiry on its globally successful anti-cholesterol treatment Lipitor.
As patents expire rivals can produce copies of a firm's products, usually sparking a drop in prices.
Pfizer had been hoping to generate fresh revenues from its new cholesterol treatment Torcetrapib, but was forced to drop the product last year for safety reasons after spending $800m on its development.
Earlier, Pfizer said strong US sales of Lipitor and pain reliever Celebrex helped push revenues for the year up to $48.37bn, from $47.41bn in 2005.
It added net income during the final three months of 2006 rose to $9.45bn from $2.73bn, boosted by the $16.6bn sale of its consumer healthcare unit to Johnson & Johnson in December.
Shares in Pfizer were quoted down 41 cents at $26.81 on the New York Stock Exchange.