Pfizer's Ills And Cures In 2008

Sat. November 22, 2008; Posted: 07:46 AM

(RTTNews) - Dogged by patent expirations, regulatory setbacks and high-profile drug trial failures, 2008 has been a whirlwind year for Pfizer. The drug titan is seeking to cure its ills with serious retrenching measures and by shifting its research focus from heart disease, obesity, and bone health to more lucrative fields such as cancer and Alzheimer's.

With patents covering some of Pfizer's key drugs set to expire in the next few years, the company is accelerating its pipeline to plug the impending holes in its balance sheet. According to Prudential Equity Group's Timothy Anderson, drugs, which make up 41% of Pfizer's sales, are slated to lose patent protection between 2010 and 2012. The drugs going off the patent between 2010 and 2012 are Aricept, Lipitor, Viagra, Detrol and Geodon.

It remains to be seen whether the thoroughgoing changes being implemented will alter investors' ho-hum attitude towards Pfizer in the coming years?

Now, let's take a look at some of Pfizer news that graced the headlines this year.

Camptosar Runs Off Patent

Pfizer's anti-cancer drug Camptosar lost patent exclusivity in the U.S. in February of this year, significantly impacting its business. Based on IMS sales data, annual sales of Camptosar in the United States totaled $556 million in 2007. As generic drugs are priced 25% to 70% lower than their brand-name equivalents, sales of branded drugs get eroded when generic copies are introduced.

Following the loss of patent exclusivity, for the nine months ended September 30, 2008, Camptosar sales in the U.S. plunged 78% to $86 million from $397 million in the comparable period a year before. For the year-to-date period, worldwide sales of the drug dropped 37% to $451 million, compared to the year-ago period.

Cancer Drug Trial Abandoned

Early April, Pfizer abandoned a late-stage trial evaluating Tremelimumab in the treatment of advanced melanoma, a type of skin cancer, against one of the two standard chemotherapy drugs - Temozolomide or Dacarbazine.

According to researchers, Tremelimumab as a single agent failed to demonstrate an improvement in overall survival as a first-line treatment in patients with metastatic melanoma when compared with standard therapy. However, Pfizer has not written-off Tremelimumab, and studies involving Tremelimumab alone and in combination with other therapies are currently ongoing in patients with several types of cancer.

Pfizer, Ranbaxy Settle Lipitor Patent Litigation

In June, Pfizer entered into an agreement with Ranbaxy Laboratories Ltd. of India and certain of its affiliates to settle substantially all their patent litigation worldwide involving Lipitor. Ranbaxy is involved in a legal spat with Pfizer in more than 17 countries including the United States, over Lipitor's patents.

Pfizer's cholesterol-lowering Lipitor, is one of the drug industry's historical best-selling drugs with annual sales of about $12 billion. The drug accounted for 26% of the company's total sales last year.

The Lipitor patent challenge is regarded as the 'mother of all patent challenges' in the global pharmaceutical industry. Lipitor's basic patent expires in November of 2011.

Under the terms of the agreement, Ranbaxy will have a license to sell generic versions of Lipitor and Caduet in the United States effective November 30, 2011. Caduet is a medicine that combines the active ingredients of Lipitor and Norvasc and treats both high blood pressure and high cholesterol.

In 2005, Ranbaxy failed in its attempt to get Pfizer's U.S. patents covering Lipitor invalidated. Two years later - in May of 2007, Ranbaxy won the Lipitor patent suit in Norway when a Norwegian Appeals Court invalidated Pfizer's Lipitor patents.

Last year, Lipitor fetched $12.7 billion in global sales for Pfizer. For the year-to-date period, global Lipitor sales were $9.25 billion, almost unchanged from $9.24 million in the comparable period a year before. The flat or slowly growing sales of Lipitor is a tell-tale sign of a dying Lipitor franchise.

Anti-clotting Drug Disappoints In Late-stage Trial

Pfizer's pipeline hit another snag in August when its anti-clotting drug Apixaban failed to perform better than Sanofi-Aventis' (SNY | Quote | Chart | News | PowerRating) Lovenox in a late-stage trial in treating venous thromboembolism in patients undergoing total knee replacement surgery. Venous thromboembolism is a condition in which a blood clot forms in a vein. Apixaban was being developed by Pfizer and Bristol-Myers and the companies were expecting the drug to be approved by the FDA late next year.

The study dubbed ADVANCE-1 failed to demonstrate that Apixaban administered twice daily in dosage of 2.5 mg was superior to the FDA approved dose of Lovenox, 30 mg given twice daily in preventing blood clots.

However, other clinical studies evaluating Apixaban in the prevention of stroke in atrial fibrillation are underway.

Celebrex Lawsuits Settled

Ever since Merck's Vioxx debacle, the cardiovascular safety of Pfizer's arthritis drug Celebrex and the withdrawn painkiller Bextra, which also belong to the class of COX-2 inhibitors, have been the subjects of debate. Pfizer faces a number of personal injury lawsuits over Celebrex and Bextra.

Bextra approved by the FDA in 2001 was prescribed for osteoarthritis, menstrual cramps, and adult pain management. In 2005, Pfizer voluntarily withdrew Bextra from the U.S. market due to safety concerns over an increased risk of cardiovascular events in patients using the drug for acute pain treatment. Bextra came under fire and a number of lawsuits were filed against Pfizer.

Celebrex was approved by the FDA in December 1998 for relief of joint pain of osteoarthritis and adult rheumatoid arthritis. The first Celebrex lawsuit was filed in December 2004 against Pfizer, alleging that "Pfizer negligently marketed Celebrex despite the fact that the risk and effect thereof on the body were so unreasonably high and severe." In the years that followed, a number of Celebrex lawsuits were filed against Pfizer.

Early this year, the New York Supreme Court Justice ruled that the plaintiffs suing Pfizer failed to present reliable scientific evidence necessary to prove that Celebrex can cause heart attacks and strokes at 200 mg daily - the most commonly prescribed dosage of the Pfizer pain medication. A similar ruling was given by a federal court in November of 2007.

In October of this year, Pfizer agreed to pay $894 million to settle personal injury claims, state attorneys general settlements and consumer fraud class action claims involving its non-steroidal anti-inflammatory pain medications Bextra and Celebrex. According to Pfizer, the settlement will resolve over 90% of known claims alleging heart attacks, strokes or other injuries.

Merck's Vioxx was the first drug in its class to be linked to a significant increase in heart attacks and strokes. Vioxx, a blockbuster drug was pulled off the market in September 2004 and a number of lawsuits were filed against Merck for injuries caused by Vioxx. In November of 2007, Merck paid $4.85 billion to settle claims over injuries linked to Vioxx.

In August 2005, the FDA ordered that Pfizer's Celebrex should carry a black box label, warning of increased risks of heart attack and strokes. Due to the controversy surrounding COX-2 inhibitors, sales of Celebrex plummeted 48% to $1.73 billion in 2005 from $3.3 billion in 2004. However, due to educational and promotional efforts, sales of Celebrex have continued to recover, with the drug generating $2.04 billion in 2006 and $2.29 billion in 2007. In the first nine months of 2008, sales of Celebrex rose 10% to $1.8 billion.

Nearly two years after suspending its Celebrex advertisements, Pfizer commenced airing Celebrex ads in April 2007. The 2 1/2 minute TV commercial for Celebrex is five times longer than most TV ads, which explains the risks and benefits of Celebrex.

Though Celebrex also belongs to the same class as that of Vioxx and Bextra, the FDA believes that the benefits of Celebrex outweigh the risks and that is the reason for allowing the drug to remain in the market.

Otenabant - Another Headstone In Graveyard Of Obesity Drugs

Considering the changing regulatory perspectives on the risk/benefit profile of the cannabinoid type 1 class of drugs, Pfizer abandoned the development of CP-945,598 (Otenabant) for weight management in early November. CP-945,598, a selective antagonist of the cannabinoid type 1 receptor was in late-stage development when the company pulled the plug on the trial.

According to IMS, a database controller, the overall global market for antiobesity drugs in 2007 grew 19% to $1.7 billion, compared to a year before. The adverse side effects tied to the obesity drugs are hindering the development of these drugs. In October, Merck halted the development of its antiobesity drug Taranabant due to concern over side-effects.

The same month, Sanofi-Aventis withdrew Acomplia in Europe as new data from post-marketing trials linked the drug to serious psychiatric disorders. Acomplia has been sold in Europe for over two years, before being withdrawn.

Chantix - Something's Smoking

With very little competition and huge unmet medical need, Chantix was poised to be the next blockbuster drug for Pfizer, until safety concerns dimmed the drug's prospects.

There have been reports linking the company's smoking cessation drug Chantix to serious side effects like suicide and depression. In early February, the FDA issued an Alert on Chantix expressing its concern on the seemingly increasing association between Chantix and serious neuropsychiatric symptoms. At the behest of the regulatory agency, the Chantix label now carries more prominent warnings.

The well-known consumer advocacy group Public Citizen wants the FDA to add black box warning to the label of Chantix. A black-box warning is the strongest warning available for prescription drugs.

Chantix, launched in May 2006, booked sales of $883 million last year. In the third quarter ended September 30, 2008 Chantix sales declined 24% to $182 million from the year-ago quarter. In the U.S., Chantix revenues were $96 million, a decline of 49% compared with the prior-year quarter, while international revenues were $86 million, an increase of 60%. Chantix sales in the U.S. continued to be dragged down because of safety concerns.

In May of this year, the Federal Aviation Administration banned pilots and air traffic controllers from using Chantix, following a medical safety group's report warning of the drug's side effects such as loss of consciousness and seizures.

As of July, at least two Chantix lawsuits have been filed and lawyers expect many such product liability suits to be filed in the coming months. The first lawsuit was filed in July by the widow of David Collins, who committed suicide while using the drug.

With international demand for Chantix continuing to grow year over year, Pfizer is planning to launch the drug in China, Russia and Turkey in the next nine months. The drug was launched under the name Champix in Japan, Malaysia and Singapore this year.

Accelerating Drug Development Pipeline

With patent expirations creeping closer, the company has embarked on a wise move of accelerating its drug development pipeline.

In March, Pfizer announced that it intended to grow its Phase 3 pipeline to at least 24 - 28 by the end of 2009. But now Pfizer is much ahead of its schedule in drug development. As of September 30, the number of phase III programs has grown from 16 to 25 over the past six months. The pipeline now includes 114 programs, from Phase 1 through Registration.

About 15 to 20 Phase III programs are expected to start by the end of 2009 in disease areas ranging from cancer, to diabetes, to pain. Pfizer anticipates 15-20 regulatory submissions between 2010 and 2012.

Cost-cutting Measures

The company, which has been in restructuring mode since 2005, has retained its focus on cutting costs, including outsourcing and offshoring to ease the pressure on its topline.

From 2005 to the end of 2007, the company had reduced its workforce significantly. The total number of employees at the end of 2007 was 87,000, down from 115,000 in 2005. Last year alone, the company had axed 11,000 jobs. Pfizer paid $2.03 billion in severance costs in 2007, compared to $809 million in 2006 and $303 million in 2005. The sweeping cost-cutting measures are expected to result in savings of up to $2 billion by the end of 2008.

Following the pull out of the ill-fated inhaled insulin Exubera, Pfizer in early February announced its plans to lay off 660 workers at its Terre Haute plant and lay off the remaining 140 positions later. The company had spent $300 million in the past nine years to upgrade the plant at Terre Haute meant for making the inhaled insulin product. In early November, Pfizer put up its Terre Haute plant for sale.

Pfizer's aggressive belt-tightening measures continue to make headlines. In July, the company announced its plans to eliminate 275 jobs at its Kalamazoo, Michigan, facility, before the end of the year. A month later, Pfizer revealed its plans to cut 180 jobs at its Ireland operations.

A New Look

As part of its restructuring program, Pfizer has abandoned its traditional business model run on geographical lines. The company has realigned its business into three new units that will focus on primary care, specialty care and emerging markets. The new business units will commence operations at the beginning of next year.

The realignment is expected to result in smaller and more focused business units and create more flexibility.

Focusing On Emerging Markets

While on one hand, Pfizer is cutting its U.S. sales force, it is increasing its sales force in emerging markets. According to market intelligence company IMS Health, pharma revenue in emerging markets like, Brazil, China, India, Mexico, Russia, South Korea and Turkey are expected to grow at a CAGR (Compounded Annual Growth Rate) of 13% to $154 billion by 2012. So it is no wonder that Pfizer is concentrating on emerging markets. In Asia, the company is aiming to increase its market share to 6% by 2012, up from the current 4%. For example, the company plans to expand operations in China from the 110 cities it now serves to more than 650 cities.

The newly formed Established Products Business Unit within worldwide pharmaceutical operations is expected to help the company achieve its double-digit growth in the global market for established medicines. (Established products are medicines that have lost or will soon lose patent protection).

According to the company, the newly formed unit will execute growth strategies tailored to the unique needs of branded emerging markets (such as China, India, Brazil and Russia), branded traditional markets (such as Japan, Western Europe and South Korea), and intellectual-property-driven markets (such as the United States and Canada).

Shifting Focus To Lucrative Realms

As part of its new research strategy, Pfizer has decided to focus on lucrative fields like cancer and Alzheimer's, abandoning its research projects related to heart disease, obesity and bone health.

Cancer drugs are highly priced and oncology remains a lucrative market. So it's no surprise that Pfizer has decided to jump on the cancer bandwagon. Despite its investigational drug Tremelimumab, which was tested for melanoma, failing in a late-stage trial, Pfizer remains committed to investigating new treatment options for patients with melanoma.

Pfizer is the world leader in Alzheimer's disease therapy and the drug Aricept, developed by Eisai and co-marketed by Pfizer, is the number one prescribed Alzheimer's medication. Aricept is slated to go off patent in 2010. Last year, the drug garnered $2.3 billion in sales.

With Alzheimer's disease therapy being one of its highest priorities, Pfizer inked a $725 million deal with Medivation Inc. (MDV | Quote | Chart | News | PowerRating), a San Francisco-based biotechnology company in early September to develop and market Dimebon, an antihistamine that is being tested for Alzheimer's and Huntington's disease. The drug is currently in late-stage testing and the results of the trial are expected to be released in 2010.

According to some analysts, Dimebon peak sales could match or even trump the $12 billion in annual sales of Lipitor, if the drug is able to restore or generate new brain cell connections in Alzheimer's patients.

Alzheimer's is a degenerative fatal brain disorder caused due to build up of plaques containing a protein called beta amyloid in patients' brains. Alzheimer's leads to the death of brain cells and the loss of nerve connections in areas of the brain that govern memory, thinking and behavior. None of the currently marketed Alzheimer's disease drug appears to stop brain cell death and prevent or restore lost nerve connections.

The FDA-approved drugs, which are currently in the market, can temporarily relieve only some symptoms of the disease like, memory loss, difficulty in communicating, impaired judgment and a loss of initiative.

Statistics reveal that about 25 million people in the world are affected by Alzheimer's. According to the Alzheimer's Association, there are 5.2 million people in the United States living with Alzheimer's disease. About 10 million baby boomers are prone to develop the disease in their lifetime. Between 1946 and 1964, 78 million Americans were born and this generation known as baby boomers, makes up 22% of the American population. With the number of Alzheimer's disease patients set to grow with ageing population, the drug companies are vying to grab a share of this lucrative market.

Reversing Fortunes With Sutent

In international markets, sales growth of Pfizer's cancer drug, Sutent continues to outpace its growth in the U.S. In the third quarter ended September 30, 2008, Sutent sales in the U.S. were up a mere 4% to $62 million, while international sales of the drug rose 79% to $164 million, compared to prior year quarter. Overall Sutent sales in the third-quarter of 2008 were $226 million, an increase of 49% compared with the year-ago quarter. For the full-year of 2007, Sutent raked in $581 million in sales, an increase of 166% over 2006.

Safety concerns over Sutent began to crop up after reports linking the drug to heart failure, heart attacks and hypertension, appeared in a medical journal The Lancet in December 2007. Sutent is approved for kidney cancer and gastrointestinal stromal tumor.

Analysis of the study, published in The Lancet, showed that 35 of the total 75 patients with gastrointestinal stromal tumors treated with Sutent, developed hypertension, 2 had heart attacks and 5 had heart failure. The study was supported by Children's Hospital Boston; the Dana-Farber Cancer Institute; Thomas Jefferson University; the U.S. National Heart, Lung, and Blood Institute; the Finnish Heart Foundation; and the American Heart Association.

According to the results of small study of patients with renal cell carcinoma (a type of kidney cancer) and gastrointestinal stromal tumor, which were presented in the first bi-annual Genitourinary Cancers Symposium, early this year, Sutent causes heart failure more often than previously recognized. Of the 48 patients, who were treated with Sutent, seven (15% | Quote | Chart | News | PowerRating) had symptoms of heart failure during treatment.

But according to Pfizer, the risk-benefit profile of Sutent has been "well established" and in larger studies Sutent showed lower incidences of heart effects, including heart failure, high blood pressure and reduced pumping function. In addition the cardiovascular events are acknowledged on current FDA approved labeling for Sutent, which suggests monitoring in patients with cardiac risk factors.

Sutent is being studied alone and in combination with other medicines as a potential treatment for a number of other solid tumors, including breast, lung, prostate, and colorectal cancers.

Will It Be Third Time Lucky For Fabyln?

In October, the FDA extended the review period for Pfizer's investigational osteoporosis drug Fablyn by another three months, buying time to review the five-year data from the pivotal trial of the drug, dubbed PEARL (Postmenopausal Evaluation and Risk-reduction with Lasofoxifene). The drug is under review for the treatment of osteoporosis in postmenopausal women at an increased risk of fracture.

Fablyn, a selective estrogen receptor modulator, or SERM was developed by Pfizer with the help of screening technology licensed from Ligand Pharmaceuticals Inc.(LGND | Quote | Chart | News | PowerRating)

In September, an FDA panel voted 9 to 3, endorsing Fabyln. According to the panel members who voted in favor, the benefits of Fabyln outweigh the risks. Though study results of Fabyln have demonstrated its efficacy of treating osteoporosis in postmenopausal women, according to the FDA Administration advisory board briefing document, Fabyln increased the chances of cancer or stroke-related deaths. Other side effects included blood clots and invasive gynecological visits in patients taking the drug.

This is Fabyln's third go-around with the FDA. In September 2005, the FDA had rejected Fablyn as a medicine for the prevention of post-menopausal osteoporosis and in January 2006 for the treatment of vaginal atrophy on concerns that the drug may lead to cancer in the lining of the uterus.

Blues Of Blue Pill

On November 20, Pfizer relinquished its long-standing quest to sell its erectile dysfunction drug, Viagara of 50 mg strength without a prescription in Europe as it withdrew its application seeking to reclassify the drug to OTC (Over-The-Counter) status. The company decided to withdraw its application due to "concerns" expressed by the EMEA's advisory committee.

A switch from 'prescription' to 'OTC' status would have given a huge boost to Viagra sales.

Viagra, also known as the blue pill or sildenafil citrate, is considered a breakthrough treatment for impotence in men or erectile dysfunction. Viagra, which was approved by the FDA in 1998, has two patents, a chemical molecule patent that expires in 2012 and a field-of-use patent in the U.S. till 2019.

Since its introduction over a decade ago, Viagra has been used by more than 35 million men worldwide. Last year, the Viagra juggernaut ringed in $1.8 billion in sales. For the year-to-date period, sales of the drug rose 13% to $1.43 billion from the prior year period.

Closing Thoughts

With patent expirations looming large, Pfizer certainly needs blockbusters to fill the impending revenue gap. A tall order indeed! No doubt, Pfizer is making serious efforts to accelerate its new product productivity.

The bellwether stock, which had a good run from 1994 through 1998 and reached its peak in July 2000, hitting $50, is now languishing around $15. The stock has lost nearly 32% of its value thus far this year, and at last count was around $15, near its 52-week low.

As yet another year goes by, all eyes are on Jeffrey Kindler, the CEO of Pfizer. Will the legal beagle be able to script a new play book at Pfizer in the coming year? Will he be able to get Pfizer back to its prime? Let's hope so!

For full details on Pfizer Inc (PFE) click here. Pfizer Inc (PFE) has Short Term PowerRatings of 5. Details on Pfizer Inc (PFE) Short Term PowerRatings is available at This Link.

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