Headcount 110,600
Year Established 2000
Pharma Revenues $58,523 29%
Total Revenues $67,809 36%
Net Income $8,257 -4%
R&D Budget $9,413 20%
Top-Selling Drugs in 2010
Drug |
Indication |
$ |
(+/- %) |
Lipitor |
cholesterol |
$10,733 |
-6% |
Enbrel* |
inflammation (ex-N.A.) |
$3,274 |
n/a |
Lyrica |
epilepsy/neuropathy |
$3,063 |
8% |
Prevnar 13* |
pneumococcal vaccine |
$2,416 |
n/a |
Celebrex |
arthritis |
$2,374 |
0% |
Viagra |
erectile dysfunction |
$1,928 |
2% |
Xalatan |
glaucoma |
$1,749 |
1% |
Effexor* |
antidepressant |
$1,718 |
n/a |
Norvasc |
antihypertensive |
$1,506 |
-24% |
Prevnar 7* |
pneumococcal vaccine |
$1,253 | n/a |
Zyvox |
bacterial infections |
$1,176 |
3% |
Sutent |
cancer |
$1,066 |
11% |
Premarin* |
menopause |
$1,040 |
n/a |
Geodon |
schizophrenia |
$1,027 |
2% |
Detrol |
overactive bladder |
$1,013 |
-12% |
Zosyn* |
antibiotic |
$952 |
n/a |
Vfend |
fungal infections |
$825 |
3% |
Chantix |
smoking cessation |
$755 |
8% |
Protonix* |
GERD |
$690 |
n/a |
Benefix* |
hemophilia |
$643 |
n/a |
Zoloft |
antidepressant |
$532 |
3% |
Caduet |
cholesterol/hypertension | $527 | -4% |
Alliance Revenues** | $4,084 | 40% |
Account for 77% of total pharma sales, up from 72% in 2009.
* inaccurate comparison with 2.5 months’ of Wyeth revenues in 2009
** Listed as Alliance Revenues: Aricept revenues shared with Eisai, 10 weeks of Enbrel revenues (U.S. and Canada), Exforge revenues with Novartis; Rebif revenues with Merck Serono, and Spiriva revenues with Boehringer-Ingelheim.
PROFILE
Is our #1 company too big to fail, or is it too big to succeed? I asked that question when the Wyeth merger was an-nounced in early 2009, and we‚ are seeing signs that Pfizer’s top management believes the latter to be true.
In December 2010, Pfizer’s chief executive officer Jeffrey Kindler abruptly retired, citing burnout. His successor, Pfizer lifer Ian C. Read, hasn’t hesitated to put his stamp on the company, which is in the final year of U.S. patent protection for Lipitor, the world’s top-selling drug. Three months into his tenure, Mr. Read announced a shrinking of Pfizer’s R&D structure. By 2012, he said, R&D spending would be approximately $6.5 billion, a figure lower than Pfizer was spending before the Wyeth acquisition. The company will exit several areas — allergy, urology, respiratory, internal medicine and tissue repair — and focus on more profitable ones — cancer, neurology, inflammation, vaccines and immunology — while closing and consolidating several R&D sites. Mr. Read remarked, “At some point your shareholders and stakeholders demand you have a return on investment in research. We’re looking at areas where we think it’s not a competitive advantage.”
Mr. Read’s decision was immediately compared and contrasted with Merck’s move to withdraw its earnings guidance and stick with expensive R&D programs. Pfizer was cast as investor-beholden (making earnings targets) and Merck as science-driven (keeping R&D sacrosanct).
There’s more about that in Merck’s profile, but suffice to say, I think those comparisons are a bit simplistic and facile. Both companies are working to manage investor expectations and develop effective drugs. And it’s not like either of them have burned up the charts these last few years.
As surprised as observers were by the R&D cutbacks, no one was expecting the next big move.
In late March, an investor analyst reported Pfizer executives mentioning to him that they were thinking of breaking the company into five pieces, and keeping innovative pharma as a standalone. Mr. Read confirmed the possibility in May, admitting in a Bloomberg interview, “We need to fix the innovative core. Part of that may be we become a smaller company.” He said that he is reviewing the spinoff or sale of four units with more than $18.4 billion in revenues: Animal Health, Consumer Healthcare, Nutrition, and Established Products. (Pfizer previously announced that it was looking to sell its Capsugel division, and did so in April, getting $2.4 billion for the unit from KKR & Co.)
The divisional reviews will be completed and the decisions announced at the end of this year and early next year, Mr. Read said. If it goes through in its most extreme form, the remaining Pfizer will be a $35 to $40 billion company, still big enough for a Top-5 rank (barring someone else’s mega-merger). Lots of people have noted the irony of a company that has made three mega-mergers since 1999 shrinking to become more nimble and innovative, so I’ll pass.
So how did Pfizer get to the point where such a move is even being considered? The same way much of the industry got into the trouble it’s in: not enough new drugs coming out of the pipeline. This is where Pfizer’s scale actually hurts it. Since the company is so immense, new products need to be blockbusters or mega-blockbusters to get noticed. It’s a theme I’ve harped on before in relation to Pfizer and other huge pharmas; everyone pays lip service to how they’d be happy to develop several sub-billion-dollar drugs, but they need to swing for the fences just to keep up with the major products are at the end of their lifecycle. If Pfizer becomes appreciably smaller, then a “modest” success can have a bigger impact on the company as a whole.
When you get down to it, whoever runs Pfizer is in a no-win situation. Losing Lipitor’s revenues once its U.S. patent expires in November 2011 will lead to an unprecedented drop in sales (unless Ranbaxy’s manufacturing problems get so bad that it’s barred from importing generic Lipitor to the U.S.). One school of thought — illustrated by Mr. Kindler’s decision to purchase Wyeth — is to acquire so much scale in diverse fields that the Lipitor loss constitutes a smaller overall percentage of total business. Another school, characterized by Bristol-Myers Squibb’s biopharma strategy, is to get out of everything that’s not related to drug R&D, gamble on the strength of the pipeline (with strategic in- and out-licenses and partnerships, of course), and take the hit when your big drug loses patent protection. (See BMS’ profile for some idea of how they’re getting ready for the loss of Plavix revenues.)
That’s not to say that I don’t understand the rationale of the Wyeth acquisition. A close look at Pfizer’s Top-Selling Drugs list from 2010 tells the story: Pfizer’s top legacy products ($500+ mil. sales) posted a 3% drop in 2010, or $810 million. Only Sutent and Lyrica showed significant growth among Pfizer’s legacy drugs. Without Wyeth’s legacy products, things could have gotten ugly. In fact, the new Pfizer posted a 2% drop in pharma sales in 1Q11, with flat revenues overall.
After all, it’s not like Wyeth was the picture of perfect health before it was acquired either. Because of accounting quirks, there are no complete sales figures for Wyeth’s products in 2009, so we can’t compare those legacy products to their immediate past results. We do have numbers for 2008, Wyeth’s last full year of reporting. That year, Effexor brought in $3.9 billion; in 2010, it was $1.7 billion (and down 72% to $216 million in 1Q11). Zosyn also dropped more than $300 million between those years. On the plus side, Enbrel revenues have grown nearly $700 million since 2008, and the Prevnar franchise is up nearly $1.0 billion.
Despite all this rough news from the boardroom and the sales charts, I don’t want to give the impression that Pfizer is in bunker mode as it waits out the expiration of Lipitor (although I will pay cash money to see a Downfall mashup of Hitler flying into a rage over Mr. Read’s devolution plan). Pfizer has a ton of irons in the fire, both with internal R&D and through a myriad of partnerships, licensing deals and, yes, acquisitions.
Pfizer’s biggest move in the past year was the $3.6 billion acquisition of King Pharmaceuticals. That purchase set up Pfizer with a platform in the pain management segment. King had $1.8 billion in 2009 revenues, including side businesses in animal health and in EpiPen auto-injectors. In June, Pfizer and partner Acura got FDA approval for Oxecta, a version of Oxycodone with an abuse-deterring formulation that came over from King. It was previously developed as Acurox.
This being the Top Companies report, I can’t let the bad news slide, although I swear I’m not trying to harp on these things. Two weeks after the deal closed, Pfizer had to withdraw King’s painkiller Embeda, after stability problems. The drug had $67 million in 2010 sales and early estimates had it as a $300 to $400 million product.
As with every other company in the ranks, Pfizer’s R&D is a mix of good and bad news. The NDA for crizotinib, a treatment for non-small-cell lung cancer, was filed in May 2011. The drug is intended for a relatively narrow patient population, and it delivers awfully strong results in it. Some analysts estimate it could be a $1.5 billion product for Pfizer by the end of the decade. Originally developed by Sugen, which Pfizer acquired as part of Pharmacia in 2003, it received Orphan Drug status from the FDA in September 2010 and fast track in December, and the rolling submission began in January.
Eliquis, the blood-thinner Pfizer is co-developing with Bristol-Myers Squibb, was approved in the EU in May 2011 for venous thromboembolic events and recently racked up impressive results in a Phase III trial for atrial fibrillation, demonstrating superiority to warfarin, the standard treatment. The companies are hoping to have it filed in the U.S. and EU for that indication before the end of the year. Sales estimates for Eliquis range wildly, but the low-end seems to be around $1.5 billion a year. The high end? Well, then we’re getting back to excitement over the mega-blockbuster model . . .
In June 2011, Pfizer filed axtinib with the EMA for treatment of renal cell carcinoma, after a Phase III trial showed significant progression-free survival improvement over Bayer’s Nexavar. Meanwhile, Pfizer is creeping closer to filing its oral rheumatoid arthritis drug tofacitinib with the FDA, and Prevnar-13 awaits approval for adult pneumococcal disease.
On the other side of the coin, the FDA in April 2011 sent Pfizer a Refuse To File letter for the NDA for Tafamidis, a treatment for Transthyretin Familial Amyloid Polyneuropathy, a fatal neurodegenerative disease with around 8,000 patients worldwide. Pfizer acquired the drug with the September 2010 acquisition of FoldRx Pharmaceuticals and is planning to resubmit the NDA.
In December 2010, Pfizer scrapped development of Thelin, a treatment for pulmonary arterial hypertension, after fatal liver side effects turned up in two users. The drug was marketed in Canada, Australia and Europe, but hadn’t been approved in the U.S. It came over with Pfizer’s 2008 acquisition of Encysive.
Also, Dimebon failed yet another trial.
As part of its push into biologics, Pfizer and partner Protalix BioTherapeutics have submitted an MAA for a plant-cell-based protein treatment for Gaucher’s disease. The drug’s NDA received a complete response letter in February 2011, but that covered CMC data and a request for further data from a completed trial, not a new study.
In another intriguing biologics move, but Pfizer’s also making an interesting play for the insulin market. In October 2010, Pfizer acquired worldwide rights from India-based Biocon for its human insulin and insulin analogs. It’s a relatively small deal — $200 million upfront and $150 million in milestones — but it’s also “a very strong foundation stone in our biosimilar strategy,” according to David Simmons, president and general manager of Established Products. The deal covers biosimilars of Lantus (Sanofi), Novolog (Novo Nordisk) and Humalog (Lilly), U.S. patent coverage of which expires from 2015 to 2017. Pfizer’s previous play in the diabetes market was Exubera, the inhaleable insulin that nobody inhaled.
Pfizer has boosted its Established Products portfolio — which is why I’m a bit surprised by including that in the spinoff/selloff review — with several investments in the past year. In December 2010, Pfizer agreed to purchase 16 generic injectables and another six that are filed for approval from Akorn-Strides, a U.S.-Indian joint venture, for $63 million. Bangalore-based Strides will manufacture and supply the products, as well as 44 other injectables that Pfizer bought from the company in January 2010. Overall the Established Products group markets around 200 drugs from suppliers in India.
In recent months, Pfizer has signed a pair of memoranda of understanding with Chinese companies to boost business in that market: Hisun Pharmaceuticals for branded generics and Shanghai Pharma for an undisclosed (branded) Pfizer drug. Shanghai already helps promote Prevnar-7 in China, and the companies plan to boost that alliance.
As you read through the rest of this issue, you’ll notice that this profile is a bit longer than the others. I wish I could’ve kept it shorter, but this company is so complex, and has so many choices ahead of it, that I feel compelled to explore as many of them as I can. Even then, I’ve had to omit some events and trends, especially among early R&D prospects and innovative translational models. But those won’t pay off for years, and Pfizer is characterized by its more immediate concerns.
Like everyone else in the industry, I’m fascinated by the position that Pfizer is in, and can’t wait to find out how the company tries to move forward. Pfizer’s issues encapsulate much of what the rest of the companies on our list must address. But bigger. —GYR
NEWSMAKERS
Read our Online Exclusive Newsmakers Interview with Pfizer Global Supply's vice president of Strategy and Transitioning Sites, John Kelly!
For more on Pfizer's recent CRO initiatives, check out our Newsmakers Interviews with Parexel's Josef von Rickenbach and ICON's Alan Morgan!
CUT! THAT'S A WRAP!
Pfizer’s cuts and restructuring programs announced or alluded to in the past year:
June 2011: $1 billion in cuts ($500 million in 2011, $1 billion going forward), mainly from administrative costs. No layoffs announced initially, but cuts would take 5% off of the company’s selling, informational and administrative expenses, and that likely won’t come from getting rid of the free coffee.
February 2011: $2.9 billion in R&D cuts, taking R&D spend from $9.4 billion down to $6.5 to $7.0 billion in 2012. More than 5,500 people will be laid off, including 2,400 from Pfizer’s R&D facility in Sandwich, UK, best known as the birthplace of Viagra. There was some talk that one or more CROs would take over Pfizer’s R&D operations in Sandwich, UK, but nothing has been announced. In June 2011, Pfizer announced that the site is up for sale as Discovery Park. Total cost of R&D cuts: $2.2 to $2.9 billion.
November 2010: SEC filing states that Pfizer expects to exceed its original estimate of 15% workforce reduction (19,000 employees) announced at the close of the Wyeth deal. No numbers given.
Restructuring charges and acquisition-related costs:
2010: $3.2 billion
2009: $4.3 billion
2008: $2.7 billion
2007: $2.5 billion
2006: $1.3 billion
THE LOWE DOWN
There is a tide in the affairs of men, and apparently there’s one in the affairs of gigantic drug companies, too. After years and years of relentless expansion (followed by rounds of relentless cost-cutting), Pfizer is now talking seriously about divesting assets. It’s possible, they say — just possible — that the company may have grown too large to respond as quickly as it should. And perhaps the cost savings and synergies (and all the other wonderful things that were promised during the previous mergers and takeovers) haven’t quite worked out the way that they were supposed to.
Could be! And we should file this entire rethink under “Better Late Than Never‚“ although it’s definitely too late for the research organizations that have been Pfizerfied over the years. That’s not to say that all of them would have made it on their own — some of them, in fact, might even have been as unproductive as they’ve been since Pfizer bought them. But we’ll never know, will we?
At any rate, all speculation about Pfizer now is Pre-Lipitor Expiration, and is not yet aligned with reality. But if they do go ahead and start shrinking, watch them do it with an improbably straight face. As if they meant to all along. —Derek Lowe
ACQUISITION NEWS
Target: FoldRx Pharmaceuticals
Price: not disclosed
Announced: September 2010
What they said: “By combining Fold’s proprietary expertise in identifying and developing treatments for protein misfolding diseases with Pfizer's commercial, medical and regulatory expertise, and global strengths in patient services and reimbursement, we are taking a significant step toward potentially bringing . . . a non-surgical treatment option for underserved patients affected by the deadly disease ATTR-PN.”
—Geno Germano, president and general manager,
Pfizer Specialty Care Business Unit
Target: King Pharmaceuticals
Price: $3.6 billion
Announced: October 2010
What they said: “We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline. The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management. In addition, the revenue generated by King’s portfolio will further diversify Pfizer’s business, while at the same time contributing to steady earnings growth and shareholder value.”
—Jeffrey Kindler, chairman and
chief executive officer, Pfizer (ret.)
Target: Synbiotics
Price: Approx. $20 million
Announced: December 2010
What they said: “[W]ith its best-in-class product portfolio, promising research and development pipeline, and manufacturing capability, [Synbiotics] will bring Pfizer Animal Health closer to its goal of becoming a comprehensive solutions provider to the animal health industry.”
—Juan Ramon Alaix, president of Pfizer Animal Health
In February 2011, Pfizer acquired the consumer business of Ferrosan for an undisclosed sum.
OUTSOURCING NEWS
During the big R&D cut announced in February, Pfizer chief executive officer Ian Read noted that “an increased level of outsourcing for services that do not drive competitive advantage for Pfizer” was a key step in improving innovation and overall productivity.
In May, Pfizer announced five-year strategic partnerships with Parexel and ICON, in an attempt at whittling its clinical services provider list from 17 to two. “This new strategic partnership model is part of a comprehensive program to sharpen our research focus at Pfizer, and creates a more flexible cost base through outsourcing of certain R&D services. We are creating partnerships for activities that can be performed most effectively and efficiently outside of the company, and have selected PAREXEL because it is a leader in providing combined technology and clinical capabilities,” said John Hubbard, senior vice president, Worldwide Development, Pfizer.
We conducted Newsmakers Interviews with Josef von Rickenbach, Parexel’s chief executive officer, and Alan Morgan, ICON’s group president, Clinical Research Services, about this pact and how the strategic alliance trend between big pharma and CROs is reshaping the business, so click through to learn more!
In December 2010, Pfizer agreed to outsource its distribution and logistics from its site near Knoxville, TN to Exel, a unit of DHL. Nearly 200 workers were affected by the deal, in which Exel took over the 640,000-sq.-ft. former Wyeth plant in Vonore, TN. Pfizer decided to outsource the services after concluding its post-Wyeth network review.
Pfizer also considers its branded generics marketing deals — such as the Akorn-Strides deal — to constitute outsourced manufacturing.
Next Profile: Novartis