NEW YORK — Pfizer Inc., struggling with fierce competition from makers of generic drugs, announced yesterday it will cut 10,000 jobs and close at least five facilities to slash its annual costs by up to $2 billion by next year.

The drastic measures by the world's largest drug maker highlight the challenges faced by many pharmaceutical companies recently. In addition to patent expirations, big drug companies are facing a business climate in which insurers and other large purchasers of medicines are demanding lower prices and more evidence of products' worth.

Although big rounds of job cuts typically boost a company's stock price, shares of Pfizer fell 27 cents, or 1 percent, to close yesterday at $26.95 on the New York Stock Exchange.

It's the second time in two years the maker of Viagra and Lipitor has announced a major cost-reduction plan to combat the loss of about $14 billion in revenue this year due to expiring patents. The company is at risk of losing 41 percent of its sales to generic competition between 2010 and 2012, according to Prudential analyst Tim Anderson.

The latest cuts, forecast to save $1.5 billion to $2 billion, come on top of a previously announced plan to cut costs by $4 billion a year by 2008. The 10,000 layoffs amount to about 10 percent of the company's global workforce and include the elimination of 2,200 jobs from the U.S. sales force, which Pfizer announced late last year. The company said yesterday it would cut 20 percent of its European sales force but didn't say how many jobs that will be.

Pfizer will close three research sites in Michigan and two manufacturing plants in New York and Nebraska. It may also sell another manufacturing site in Germany and close research sites in Japan and France.

Pfizer also will restructure its U.S. commercial business into five distinct units, each with a general manager responsible for that group's performance. It will also drop two areas of research and consolidate its development efforts.

"I believe we must transform the way we've done business in the past in order to be more successful in the future," said Jeffrey Kindler, who became Pfizer's chief executive last summer and chairman last month. "Incremental evolution is not enough. Fundamental change is imperative — and it must happen now."

Pfizer reiterated that its revenue would be flat this year and next, but said it expects earnings to jump by 6 percent to 9 percent in both 2007 and 2008.

Analysts are skeptical Pfizer's current and pipeline drugs can generate enough sales to compensate for revenue it stands to lose. Still, Pfizer reiterated it will introduce six new products a year beginning in 2011, four from its own research and two from collaborations or acquisitions.

Pressure on Pfizer has intensified since safety issues forced it to halt development of the star drug in its pipeline, which was slated to replace the best-selling Lipitor as it loses patent protection as early as 2010.

Antidepressant Zoloft lost patent protection last year and its sales sank 79 percent to $166 million during the fourth quarter. This year, Pfizer will face generic competition on blood-pressure medicine Norvasc, which brought in $4.9 billion in sales last year, and allergy treatment Zyrtec, with $1.6 billion in revenue in 2006.