Headcount: 47,426
Pharma Revenues: $17,391+ (1%)
Total Revenues: $22,834 (+2%)
Net Income: $4,418 (-4%)
R&D Budget: $3,373+4

Account for 84% of total pharma sales, up from 83% in 2007.

* Alliance revenues include revenues from Amgen’s sales of Enbrel, King Pharma’s sales of Altace, and J&J’s sales of the Cypher drug-eluting stent, for which Wyeth makes the API of the eluted drug.

PROFILE

Last year, I wrote, “In another year or two, Wyeth may move off of our Top 20 Pharma list.” Who’s the genius now?

Actually, while I’d like to take credit for some great prescience about Wyeth getting acquired, I was just optimistic about Wyeth having so much success in biopharma and vaccines — with a corresponding slide in its small molecule lineup — that it would move over to our Top 10 Biopharma ranks. To be fair, it doesn’t look like anyone else saw this big of a move coming (except perhaps for a Pfizer director whose broker sold a boatload of his Pfizer shares a few months before the Wyeth deal was announced).

Why was I so sanguine about Wyeth’s productivity in biopharma? I suppose I was seduced by the growth rate of Enbrel, and the promise of Prevnar, the company’s pediatric vaccine that had a shot at becoming Wyeth’s #1 product in 2009. Last year, the company was developing its new 13-valent Prevnar, which was submitted to the FDA in March 2009 and received priority review status two months later. A few weeks before the deal with Pfizer was announced, Wyeth was in talks to acquire Crucell, a Dutch vaccine manufacturer that posted around $410 million in 2008 sales. Between that and its biologics pipeline, I continued to think Wyeth was in a position of strength. On the plus side, I wasn’t the only one who was impressed by Wyeth’s position in biologics.

Still, it turned out that I shouldn’t have just looked at Wyeth’s bio-vision of the future; I should’ve paid more attention to the traditional problems that pharma companies face: rapid deterioration of sales.

The (at risk) U.S. introduction of generic Protonix single-handedly made 2008 a wash for Wyeth. If you look over the company’s Top-Selling Drugs chart you can seethat the revenue growth for its big names — not including Alliance Revenue — adds up to around $1.3 billion. Protonix’s sales drop in 2008? A little more than $1.1 billion. With $154 million in net revenue growth from its top products, Wyeth was stuck running in place, and that’s not a great posture in today’s pharma world.

Still, Wyeth’s flat 2008 was better than its 1Q09, where the company posted an overall revenue drop of 6%. Pharma revenues fell at that same rate, driven by a 20% drop in sales of top-seller Effexor, which lost half of its international revenues to generic competition. In fact, of the net $275 million in lost 1Q09 revenues, $203 million came from Effexor’s decline.

Protonix sales actually rose 35% during the quarter, although part of that increase came from sales of Wyeth’s own generic version of the drug: total sales of Protonix in 1Q09 were $92 million for the branded version, and $123 million for the generic.

Wyeth also managed to bring in around $50 million in 1Q09 from its Effexor follow-up, Pristiq, after 2008 sales (beginning in April 2008) of $67 million. The company had hopes that Pristiq would help offset Effexor’s decline, but the drug ran into some bumps: Wyeth withdrew applications for Pristiq in Europe in 2008, and cancelled studies of the drug’s use against fibromyalgia late in the year. The company hopes to submit it to the FDA for use by menopausal women sometime in 2010.

Maybe Pristiq just needs a helping hand! In March 2009, Impax Pharmaceuticals, the specialty brand products division of Impax Laboratories, announced that it would co-promote Pristiq starting in July. Impax will promote Pristiq as a treatment for adult patients with major depressive disorder (MDD) with its 66 neurology-focused sales force.

The companies entered a three-year co-promotion agreement to detail a Wyeth product-to-be-named-later for neurologists. Impax will receive a “fee for each detail delivered,” according to its press statement, but wouldn’t disclose any other terms of the agreement. Which makes sense, since the July 2008 agreement resulted from a patent infringement suit after Impax attempted to launch generic of Effexor XR.

Relying on Pristiq — a very similar (chemically speaking) drug to Effexor — to replace that drug’s revenues, was a gamble for Wyeth. But the company’s biggest R&D gamble is in Alzheimer’s disease, a notoriously tough field. In April 2009, the company and co-developer Elan disclosed bad news from a trial of bapineuzumab, their MAb treatment for the disease. Evidently, there were signs of brain swelling in some patients at higher doses of the drug. The problem is, the early Phase II results were so promising that the companies had already begun enrolling patients for Phase III trials. Enrollment had to be curtailed in some regions in Europe last October, and the companies ultimately concluded that patients who carry a certain version of a gene can’t receive the highest dose of the drug.

If that Alzheimer’s drug — or either of Wyeth’s two others in Phase II — manages to reach the market, its new owner is going to be very happy. If not, then it’s going to own some high-end biologics and vaccine expertise.

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Headcount: 50,527
Pharma Revenues: $17,179 (+10%)
Total Revenues: $22,399 (+10%)
Net Income: $4,616 (+10%)
R&D Budget: $3,257 (+5%)

Account for 80% of total pharma sales, up from 79% in 2006.

* Alliance revenues include revenues from Amgen’s sales of Enbrel, King Pharma’s sales of Altace, and J&J’s sales of the Cypher drug-eluting stent, for which Wyeth makes the API of the eluted drug.

PROFILE

In another year or two, Wyeth may move off of our Top 20 Pharma list. This isn’t (necessarily) a sign that the company is in free-fall; rather, it’s an indication of how well its Biopharma unit is performing. With vaccine and Enbrel revenues still climbing, Wyeth may soon gain more than half of its pharma sales from biologic products.

The company’s biggest success is its Prevnar pediatric vaccine. A recent study determined that, since the introduction of Wyeth’s 7-valent vaccine against invasive pneumococcal disease (IPD) in 2000, incidents of IPD in infants and young children dropped 77% by 2005. The company anticipates that its 13-valent version, fast-tracked by the FDA, will file for approval early next year. Prevnar passed the $2.4 billion mark in 2007 and posted revenues of $706 million (+14%) in 1Q08.

Meanwhile, Wyeth’s non-North American sales of Enbrel (Amgen handles the market and pays Wyeth royalties) reached $2.0 billion and were up 36% to $606 million in 1Q08. Amgen’s royalties helped account for a 21% bump in Wyeth’s 1Q08 alliance revenues, which reached $369 million.

Rapid Transition

Despite that success, the company is in a transition year, in more ways than one. In September 2007, Bernard Poussot was named president and chief executive officer of Wyeth. He replaced Robert Essner, who retained his position as chairman until June of this year, when he retired and Mr. Poussot was elected to that role.

In April 2008, Robert R. Ruffolo, Jr., Ph.D., 58, announced his retirement as president, Wyeth Research and senior vice president, Wyeth. Dr. Ruffolo will be replaced by Mikael Dolsten, M.D., Ph.D., who previously served as executive vice president of Pharmaceutical R&D/Medicine at Boehringer Ingelheim.

Dr. Ruffolo received a lot of press in recent years for his metrics-based “shots on goal” concept for R&D, but the value of that strategy isn’t clear. This is partly because of the length of the R&D cycle, but the company also seems to have had a series of setbacks with new products lately.

In fact, delays and rejections by the FDA led Mr. Essner — near the time of his departure from Wyeth — to give an interview in which he lambasted the approval process and complained that the FDA’s efficacy assessments now keep products off the market and establish de facto monopolies for first-in-class drugs. His frustration was understandable, after the agency delayed approval for Viviant (osteoporosis) and Pristiq (depression) and flat-out rejected bifeprunox (schizophrenia).

Major Depression

Without those new products on the market, Wyeth went into 2008 with a major question unanswered: How would it replace more than $1 billion in Protonix revenues? In 1Q08, the Protonix family of GERD treatments went generic (at risk), leading to a sales collapse. Teva, Sun and Wyeth’s own generic version stripped branded sales from $474 million to $159 million in the quarter.

The loss of Protonix sales is just a warmup. Further down the road, Wyeth faces the prospect of losing its top seller, Effexor. There’s already a limited generic competitor in the form of Sun Pharma’s tablet version of the product, which exploits patents that expired in June 2008. In 2010, Wyeth will likely lose most of the $3.8 billion kit-and-kaboodle, the most widely prescribed antidepressant in the world.

Given that prospect, you can understand why Mr. Essner fumed as much as he did about the FDA’s delay on Pristiq, which was intended to help Wyeth’s transition from Effexor revenues. Pristiq received its first approval in February 2008, and was launched in May for treatment of major depressive disorder in adults. It had received an approvable letter from the FDA in that indication 13 months earlier. The company is trying to expand its label to cover hot flashes from menopause, for which it also received an approvable letter.

Some contend that Pristiq’s slow approval was due in part to its me-too nature; the drug is chemically similar to Effexor, so it’s possible that the agency perceived Pristiq as more of a brand extension/life-cycle management product than a unique new product with solid benefits. If I can get someone at FDA to answer that question, I’ll let you know.

Springboard to Impact!

So how is Wyeth dealing with the potential loss of two drugs that combined for one-third of its 2007 pharma revenues? Same way that every other drug company is doing it: by restructuring!

In 2008, Wyeth transitioned from its open-ended and somewhat ambiguous Project Springboard productivity plan into Project Impact. While “springboard” followed by “impact” may evoke images of Wile E. Coyote smashed flat against a cliff face, this new initiative is intended to “adjust down our infrastructure and reduce our operating costs in response to loss of Protonix sales in 2008 [and] to facilitate long-term growth, as well as to address short-term fiscal challenges,” according to the company’s 10-K statements.

The first impact of Project Impact was a $185.6 million charge in 1Q08 for severance costs, primarily for Protonix-related personnel. The company plans to cut its total workforce by around 6% in 2008, which would add up to 3,000 employees laid off. Staff reductions may ultimately reach 10%, but a company spokesman insisted that no number is etched in stone.

The productivity initiatives for Project Springboard, which will wind down in the next several years, may incur total charges of $850-950 million.

It’s not all doom and gloom at Wyeth. Several of those FDA-delayed products are beginning to reach market. Pristiq launched in May 2008, while Relistor (opioid-induced constipation) was approved in April 2008, and Xyntha (hemophilia-A) in February 2008. Sure, Viviant is still in “approvable” limbo, but you can’t replace more than $5 billion in expiring products without getting some marketable “shots on goal.”

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