Rival Cholesterol Drug programs
Pfizer's value plummets $21 billion
The impact of Pfizer's abrupt termination of its high-density lipoprotein booster torcetrapib has been reverberating around the pharmaceutical industry, and the effects have been felt not least on the New York firm's share price.
The news of the decision to stop all clinical trials of torcetrapib due to safety concerns was announced on Saturday, but on Monday investors had their say and sent Pfizer stock tumbling almost 11%, wiping out over $21 billion of its market value. Most of the major brokers were also severe in their judgements, with Deutsche Bank, Lehman Brothers, Morgan Stanley, Merrill Lynch and JP Morgan all cutting their ratings on the stock.
Speculation is now growing as to what Pfizer is going to do next in order to plug the gaping hole in its pipeline left by the axing of torcetrapib. Investors have been impressed by the company's programme of major cost-cutting but Pfizer has never been off the acquisition trail for long and a bid to shore up its pipeline with either a new product or a whole company seems highly likely. Wyeth has been mentioned as a potential target.
Rivals revel in Pfizer woe
Pfizer's pain has provided plenty of pleasure to its rivals in the cholesterol market. Analysts at Morgan Stanley said the termination of torcetrapib was an "important positive" for AstraZeneca since it had been perceived as the biggest potential competitor to the latter's Crestor (rosuvastatin). Another beneficiary is likely to be Abbott Laboratories, which is acquiring Kos Pharmaceuticals. Kos markets Niaspan (niacin) and Advicor (niacin plus lovastatin), both of which are recognised as being particularly potent at raising HDL or 'good' cholesterol.
Roche has a similar product in development to torcetrapib, called R1658, which hasn't caused an increase in blood pressure like Pfizer's product. However, Denise Anderson at Kepler noted that the US Food and Drug Administration is raising questions about the safety of this class.
Abbott to pay $3.7bn for Kos Pharma
Abbott played its part in the current wave of acquisitions sweeping through the drug sector with a $3.7 billion bid for Kos Pharmaceuticals that consolidates its position in the market for cholesterol-modulating drugs.
Kos is best known for its Niaspan (niacin) and Advicor (niacin plus lovastatin) products, both of which are recognised as being particularly potent at raising HDL or 'good' cholesterol.
As most drugs for dyslipidaemias on the market work primarily by reducing LDL or bad cholesterol, Kos has done well with its two products, which contributed three quarters of Kos' revenues in the second quarter of this year, bringing in $166 million.
Adding them to its portfolio shores up Abbott's cholesterol-lowering franchise, currently represented by its Tricor (fenofibrate) product which brought in US sales of $250 million in the second quarter but is facing a patent challenge from generic manufacturer Teva Pharmaceutical Industries.
Abbott licenses US rights to this product from Belgium's Solvay and, although is not considered to be as effective as other drug classes such as statins in preventing heart attacks and strokes in patients with high cholesterol, does have the singular property of being able to lower triglycerides, another form of blood lipid linked to heart disease.
Abbott's offer for Kos is valued at $78 per share, a premium of 56% to Kos' closing price of $50.09 the previous trading day, and the news caused the firm's shares to advance by more than 50% to $76.99 in morning trading.
But big premiums are becoming the norm for acquisitions in the drug sector of late, as big pharmaceutical companies are finding themselves competing to buy up new drug candidates, products and companies to make up for a shortfall in compounds coming through their own pipelines. Last week, Merck offered a more than 100% premium when it offered to acquire Sirna Therapeutics for $1.1 billion.
Abbott made another foray into the cardiovascular arena earlier this year when it bought Guidant's cardiovascular stent business, including the drug-eluting Xience V product, for $4.1 billion. Its largest purchase in the drug sector was BASF's Knoll Pharmaceuticals unit in 2001, which provided its current top-selling product Humira (adalimumab) for arthritis and other disorders.
A new Niaspan caplet formulation with a range of dosages is currently under Food and Drug Administration review, and is designed to overcome the facial flushing that limits the popularity of current formulations of the drug.
Kos also has a fixed-dose formulation combining niacin with simvastatin, Simcor, in late-stage development. This candidate is expected to be submitted for regulatory review in the USA in the first half of 2007.
For its part, Abbott is developing a next-generation fenofibrate called ABT-335 and a combination product based on TriCor and AstraZeneca's Crestor (rosuvastatin), giving the company a range of lipid drugs that tackle LDL cholesterol, HDL cholesterol and triglycerides.
Also adds respiratory, diabetes projects
Kos is also developing a number of other products, including a combination asthma medication called Flutiform (formoterol and fluticasone), in-licensed from SkyePharma, which is currently in late-stage development for adult and adolescent asthma, and will provide an expanded presence for Abbott in the $10.0 billion asthma market.
Kos already sells asthma product Azmacort (triamcinolone acetonide) which brought in $27 million in second-quarter 2006 sales, but Flutiform could take the franchise into a different league as it will compete directly with blockbuster asthma drugs such as GlaxoSmithKline's Advair/Seretide (salmeterol and fluticasone) and AstraZeneca's Symbicort (budesonide and formoterol).
Kos is also developing an inhaled insulin product, which will complement Abbott's significant presence in the diabetes market - with its leading glucose monitoring and diabetes nutritionals businesses.
Pfizer slashes 2,200 sales jobs in USA
Pfizer says it is to reduce its US sales force by about 20%, or around 2,200 jobs, to "match the organisation's business needs"and cut costs.
However, the world's largest drugmaker claimed that the cuts will not affect the strong support it will give to big earners like the cholesterol-lowerer Lipitor (atorvastatin) and Celebrex (celecoxib) for arthritis or for "important new products" such as pain medication Lyrica (pregabalin), Chantix/Champix (varenicline) for smoking cessation and Exubera (inhaled insulin) for diabetes.
The news follows an announcement in October where Pfizer promised to undertake a comprehensive review of every aspect of its operations "with the goals of being more agile, effective and capable" and it will give further information about the review in January. The company is making a major R&D presentation to analysts on Thursday.
Chief executive Jeffrey Kindler said that the field force "will now be in a much better position to adapt to changes in our product mix" and went on to praise the sales force's efforts, saying it gives the company "a critical competitive advantage." He added that "the relationship of our representatives with physicians and health care professionals is one of Pfizer's most important assets."
Analysts welcomed the move and Pfizer's announcement may have an impact on the way other firms look at their field force. If the pharmaceutical world's major marketing power is making cutbacks, it may not be long before its rivals follow suit.
Pfizer raises forecasts on cost-cutting, pipeline hopes - 30/11/2006
Less than 48 hours after announcing plans to cut its US salesforce by 20%, marking a cull of over 2,000 jobs, drug giant Pfizer said yesterday that it is lifting its earnings guidance for the full year, largely on the back of positive sales trends and aggressive cost savings.
Shares in the group had risen nearly 2% by early afternoon trading in New York, as investors revelled in the news that adjusted earnings per share for 2006 are now expected to come in at at least $2.05, a $0.05 rise over the previous target.
In addition, the group also said a number of candidates in its late stage pipeline would be ripe in the next few years, fuelling near- and long-term growth, and helping it overcome any competition from generic rivals.
"Our fundamental objective is to create a broad and very diversified stream of new products that will, year after year, drive Pfizer's growth and enhance the value of our shareholders' investment," explained Jeffrey Kindler, Pfizer's Chief Executive. "We are developing new products for a broad cross-section of therapeutic and specialty areas with strong growth potential. The depth of our mid-stage pipeline gives us confidence that we can generate a steady stream of new products that will address significant unmet medical needs."
Late stage portfolio to triple
"We now expect that our Phase III portfolio will grow dramatically and may even triple from 2006 to 2009," added John LaMattina, President of Pfizer Global Research and Development "This will give us a steady stream of new and important products from our internal development pipeline. We are targeting four a year - starting in 2011."
The group laid out its three-tiered business development strategy at an analyst meeting yesterday, explaining that the first stage will focus on complementing its current pharmaceutical portfolio by "both addressing gaps in our existing portfolio as well as quickly seizing potential opportunistic investments." In the near term, the company plans to focus on areas such as diabetes, neurology, infectious disease and oncology, which combined have a global market potential "significantly in excess of $200 billion."
Secondly, the firm intends to go shopping for synergistic products and services to help it magnify the value of its pipeline, with potential opportunities including drug delivery systems such as the Exubera inhaler or "evidence-based medicine tools and diagnostics." And the final component of the strategy is centred on investment in novel healthcare products, such as the vaccine delivery technology it bought from PowderMed in October.
According to the company, this strategy should contribute two new externally-sourced products a year starting in 2010, which are expected to drive growth significantly, thereby helping it remain one of the world's leading pharmaceutical groups.