Pfizer Loses Heart… And Cuts Back On Research
7 CommentsBy Ed Silverman // October 2nd, 2008 // 7:22 am
The first shoe to drop after last week’s Pfizer board meeting involves cutting back several research areas, including heart disease, anemia, osteoarthritis and obesity, according to a September 25 memo from research chief Martin Mackay to employees. Yes, most of you know this by now, because the news trickled out earlier this week. But we try to ensure you that are kept up to date and so thought it necessary to post this item in order to go on the record. Moreover, many of you may not have seen the actual memo until now (please click on each one to enlarge).
And as you can see, the memo is careful not to mention the number of jobs that will be eliminated as part of this move. Remember that, early last year, Pfizer announced plans to cut $2 billion in costs by the end of this year, a move that was announced in early 2007. As part of that effort, the drugmaker is eliminating 10,000 positions and headcounts have again been examined recently in hopes of saving millions of dollars more in expenses, sources say.
Meanwhile, Pfizer wants to focus on Alzheimer’s, oncology, diabetes, inflammation/immunology, pain and schizophrenia, among some other areas, as you can see from the memo. Opthalmology is one area that is still being hashed out. Why are some areas of research in and others out? Oncology is all the rage among drugmakers looking to capitalize on a huge market where treatments generally cost a lot. As for heart disease, Pfizer saw its chances shrink when its torcetrapib cholesterol pill bombed (back story).
James R
Pfizer still has it’s “head in the sand” with regards to Chantix. This is a drug that has serious problems. There will be more people who will experience severe reactions to this drug. It will be proven that these severe reactions are not caused by nicotine withdrawal. I think that every smoker should stop smoking, but this drug is dangerous….used as directed, of course.
Nathan
James R,
What are you talking about? The memo was about redirecting the Pfizer’s research dollars into the most promising areas.
As I mentioned a couple days ago, I’m hearing similar rumors in my corner of big pharma. We expect to hear of specific therapeutic areas being eliminated by the end of the year or so. The rumored list looks to be incredibly close to Pfizer’s list.
James R
Hi Nathan. This memo mentions smoking cessation as one of the most promising areas you speak of. I am saying that a drug that Pfizer produces, a smoking cessation drug, has serious problems. Thanks
Nathan
James,
Would you really disagree? If you think that Chantix is such a bad product, then shouldn’t they be investing research $$$ into a safer and more effective alternative? It certainly is a underserved market, in terms of drugs.
James R
Nathan, I have no problems with Pfizer investing in a safer and more effective alternative. However, I have not heard of Pfizer doing so. Pfizer is full steam ahead with Chantix. Thanks again
Nathan
James,
I would suggest that you hear very little about any internal research going on at Pfizer — which is why this document was very interesting to me. The research described in the document is primarily “preclinical” work — which means that it likely hasn’t been published anywhere yet. Remember, like it or not, many many years of research went into Chantix before it made it to market. The research money described in the documents will drive the development of drugs that will be on the market in another 5-10 years. By then, Chantix will (hopefully) be ancient history.
LILLI
Fortune 500
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Cancer drug boom projected
Sector said to more than double by 2009, surpassing cholesterol-reducing drugs, says IMS.
September 19, 2005: 3:16 PM EDT
By Aaron Smith, CNN/Money staff writer
NEW YORK (CNN/Money) - Drug sales for cancer treatments are expected to more than double over the next five years, with cancer drugs replacing cholesterol-reducers as the number one pharmaceutical sector, according to a report from IMS Health.
“Right now it’s probably the fastest growing drug sector,” said Jason Kantor of RBC Capitals Markets.
Oncology drug sales are projected to reach $55 billion in 2009, compared to the $24 billion in 2004, according to data unveiled Monday by Graham Lewis, vice president of global pharma strategy for IMS.
Cancer is America’s second-biggest killer behind heart disease, and analysts say that Genentech (down $1.99 to $88.01, Research), is one of the best-poised large bitoech drug makers to reap the benefits of growing sales in cancer treatment.
Analysts identified some of the fastest growing cancer drugs as Avastin and Herceptin, both from Genentech, as well as Gleevec, a $1.6 billion drug from Swiss drug maker Novartis (down $0.72 to $48.86, Research), and Sutent, which the drug giant Pfizer (down $0.33 to $25.57, Research) filed with the Food and Drug Administration this summer.
“The biggest oncology treatment would probably be Genentech’s Avastin,” said Howard Liang, analyst for A.G. Edwards & Sons. Liang said the biotech has completed late-stage data to expand Avastin into treatments for lung and breast cancer. The company is conducting tests for additional uses in treating prostate cancer.
Avastin, which combined with chemotherapy slows the spread of colorectal cancer, was introduced to the market in 2004 and totaled $447 million in the first half of 2005, on track to become a blockbuster this year at its current rate of growth.
Herceptin, a treatment for women with HER-2 positive breast cancer, which includes about one-fourth of women with breast cancer, totaled nearly $500 million in 2004 sales. Genentech has released data from a series of tests this year showing the increased benefit of combining Herceptin with chemotherapy, and prompting some analysts to project doubled sales.
Analysts also see Amgen (up $1.27 to $86.13, Research), the world’s biggest biotech, well-poised to reap the profits of an expanding drug sector. Amgen has four oncology drugs on the market, including Aranesp, Neupogen, Neulasta and Kepivance, and nine in its pipeline.
So what’s the downside in the cancer drug sector? The drug prices are unsustainably high, said Liang. “The drugs are so expensive, I think there will be some kind of pushback on the pricing,” the analyst said.
Treatments for lowering statins, or blood fats, are currently the lead sector, totaling $27 billion in 2004 sales. This sector is lead by Pfizer’s Lipitor, a statin and the top-selling drug of all time, with $10.8 billion in 2004 sales. The statin sector is projected to grow by more than half to $38 billion in 2009, but would slide to second place as oncology becomes the lead sector, according to IMS.
In addition, the IMS study, presented at a Generic Pharmaceutical Association conference in Washington, D.C., revealed that biotechs and generic drug makers have outpaced the overall drug industry in annual sales growth. Over the last 12 months ending in June, the total drug market grew 7 percent, compared to 17 percent for biotechs and 13 percent for generics.
To read about potential new cancer drugs announced at this year’s American Society of Clinical Oncology, .
New cancer drugs — who profits?
Pfizer, Genentech present cancer drugs, steal stage from German drug giants.
May 16, 2005: 1:52 PM EDT
By Aaron Smith, CNN/Money staff writer
NEW YORK (CNN/Money) - Pfizer is planning to launch a new drug, possibly by year-end, to treat a rare but deadly form of stomach cancer, that could bring in up to $800 million a year for the world’s biggest drugmaker, an industry analyst said Monday.
In addition, Genentech presented some promising data with its cancer drug Avastin at the American Society of Clinical Oncology (ASCO) this weekend, according to another analyst, but two German giants, Schering AG and Merck KGaA, failed to bring forward potential blockbusters.
The new Pfizer (up $0.19 to $28.05, Research) drug, SU11248, would treat patients with gastrointestinal stomach tumors, or GIST. The drug recently completed late-stage testing, Pfizer reported.
“Pfizer is clearly a winner here,” said Robert Hazlett, analyst for Suntrust Robinson Humphrey, who has been attending the meeting. “Pfizer is clearly putting their solid foot forward. They’ve got a good franchise and it’s good potential for the next couple years.”
Hazlett said Pfizer, the world’s biggest drug company, could file its findings on SU11248 to the Food and Drug Administration within the next few weeks and be on the market by the end of this year “in the most optimistic scenario.”
Pfizer spokeswoman Susan Bro would not confirm Hazlett’s projection that the drug could make up to $800 million and she provided a more conservative estimate for the drug’s application and approval timeline.
“Our intent is to file for application with the FDA this year,” said Pfizer spokeswoman Susan Bro. “The review could potentially take 12 months. It’s quite early to project cost and revenue.”
Patients diagnosed with GIST are often prescribed Gleevec, a blockbuster from Swiss company Novartis (down $0.05 to $48.33, Research) that made $1.6 billion last year. But some patients’ bodies become immune to Gleevec, rendering the drug ineffective within two years, according to Pfizer.
“After about 24 months Gleevec is no longer effective and the disease progresses,” said Bro. Bro said that SU11248 is “able to stop the progression of the tumors and eliminate the cancer in 40 percent of the cases.”
The new product, SU11248, “is being developed as a drug that can be used once Gleevec failed,” said Hazlett, of Suntrust Robinson Humprey.
SU11248 is also being tested to treat kidney cancer, breast cancer and some forms of tumors, Pfizer said.
Two other companies unveiled new products at the conference this weekend.
Cytos Biotechnology, a Swiss company, unveiled an anti-nicotine injection to help smokers quit the habit. The injection has proved effective in testing in humans, according to Cytos, but the drug still has to go through late stage testing for safety in the general population.
Also, researchers revealed that chemotherapy patients with a certain type of lung cancer who took Avastin, a drug produced by Genentech, took longer to relapse than patients treated with chemotherapy alone. Genentech (down $0.06 to $72.64, Research), a San Francisco company, is majority owned by Swiss giant Roche.
But while “expectations are high” for the drug, it remains unclear how profitable Avastin will be for Genentech, Eric Schmidt, drug analyst at S.G. Cowen, said in an e-mail to CNN/Money.
“Avastin is a great drug long-term, but has to be for [Genentech] to grow into valuation,” said Schmidt. Genentech shares trade at 45 times earnings per share for 2006 estimates, compared to 25 times for the biotech industry, said Schmidt.
Schering AG (down $2.59 to $65.21, Research) is “one of the losers” at the ASCO conference, as its data for PTK787, a drug designed to block tumor cells from growing, was “quite disappointing,” Schmidt said. Merck KgaA, had some late-stage presentations on colorectal cancer drug Erbitux, “but not enough to change commercial expectations for the drug,” said Schmidt.
Merck KgaA, which is not related to Merck & Co., Inc. of Whitehouse Station, N.J., is licensed to market Erbitux outside the U.S. Erbitux was developed by ImClone Systems Inc. (down $0.11 to $33.24, Research), the New York City company that launched the drug last year, totaling sales of $261 million.
Hazlett does not own stock in these companies, but an affiliate of his company has conducted business with at least one of them. Schmidt does not own stock in these companies and his firm does not do banking with them.