A few years ago, I wrote this page during a flight home from a conference in London. When I checked the news that night, I found out that Merck had withdrawn Vioxx from the market. I scrapped the column and hurriedly wrote a new one about “the neutron bomb” that had dropped on Merck.

At the end of November, I took a trip to visit some facilities and conduct some interviews (yes, I do get out of the office for occasions other than conferences). When I walked in the door at the first company, I was asked, “Did you hear the news about Cardinal?” It was then that I found out Cardinal Health had announced plans to sell off its PTS unit.

When I got home that weekend, I had an e-mail waiting for me with the subject line, “Did you hear about Pfizer?” I checked the news and found Pfizer’s announcement that it scrapped development of torcetrapib.

In a press report after the Cardinal announcement, one analyst contended that the company’s $1.8 billion business in contract manufacturing and packaging services is too “volatile” for the company to bear.

In Pfizer’s case, peak annual sales for torcetrapib – intended to be marketed as a combo pill with Lipitor – were projected at $15 billion. In addition, the loss of the cholesterol drug leaves Lipitor “unprotected” as it heads toward loss of patent protection at the end of this decade.

While Cardinal’s divestiture announcement can be interpreted as a retrenchment within a very large company, Pfizer’s can only be reckoned in terms of a catastrophe. Sometime in January, new chief executive officer Jeffrey Kindler is expected to announce major cuts and reorganization for the biggest of pharma companies.

Both of these items point to one major conclusion: drugs may be big business — Cardinal is #19 on the most recent Fortune 500 list, with $75 billion in annual sales, while Pfizer is at #31 with $51 billion — but they’re also risky business.

Eighteen months before torcetrapib was cancelled, Pfizer announced that it was beginning work on a $90 million facility in Ireland to manufacture it. The site was going to feature novel dosage form technologies and PAT, and its rapid completion was going to speed up the drug’s ap-proval process. In an announcement about the facility, Pfizer’s president of Global R&D remarked on the potentials of the development program:

“If we prove our hypothesis, torcetrapib/atorvastatin has the potential to benefit millions of lives around the world. Nothing is certain except our huge investment. Even if this fails as a new medicine, we will have advanced scientific understanding in this area.”

Unfortunately, that advanced scientific understanding has come at an immediate cost of $800 million. Then we can factor in the opportunity costs of its 15-year development program, as well as lost sales that could have added up to $100 billion. Drug manufacturing may be “volatile,” but the risks in development are beyond reckoning.

Gil Roth has been the editor of Contract Pharma since its inception in 1999. He can be reached at gil@rodpub.com