A look at Pfizer Inc.’s pharmaceutical sales last year suggests one major reason for its offer to buy Wyeth Pharmaceuticals for $68 billion: sagging revenues from its current drug offerings.
Last year’s overall pharmaceutical sales were off $250 million, or about 1 percent, from the year before, according to Pfizer’s unaudited year-end report. Wyeth, on the other hand, reported an increase in revenues of about 2 percent, or more than $400 million.
Still, both drug companies face a near-term problem with expiring patents on some of their leading compounds.
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For Pfizer, the elephant in the room is Lipitor, the leading medicine in the world, which will be subject to generic competition in 2011, taking a huge bite out of sales numbers that totaled $12.4 billion last year, or more than a quarter of the company’s revenues. Pfizer acquired Lipitor when it bought out Warner-Lambert for $90 billion nine years ago.
”It’s the world’s biggest drug ever,” said health care analyst Les Funtleyder of Miller Tabak & Co. in New York. “No one drug is going to replace it.”
Yet Lipitor isn’t the only problem for Pfizer: Analysts project that about half of the company’s drug sales would dry up because of patent expirations if the company’s research and development operation, headquartered in New London, doesn’t find replacements in the next five years.
Wyeth also has its drug-development issues, with two top compounds facing patent expirations: depression medication Effexor in 2010 and heartburn drug Protonix in 2011. Meanwhile, a promising new Alzheimer’s vaccine that Wyeth has been developing with Elan Pharmaceuticals has been slowed by unexpected results from a clinical trial, and the FDA last year denied two of the company’s other drug candidates.
”R&D is not linear,” said Funtleyder. “More money does not necessarily equal more drugs. There are those eureka moments. It’s cyclical.”
The cycle has been running against major pharmaceutical companies for some time now, and Pfizer has become a poster child for those who believe major R&D investments don’t necessarily guarantee a better drug pipeline. An article on Forbes.com Tuesday, typical of the skepticism regarding the Wyeth deal, noted that in the past decade “Pfizer has launched only one medicine with annual sales surpassing $1 billion, despite plowing more than $60 billion into research and development.”
Indeed, even Pfizer’s one blockbuster drug, Lyrica, traces its roots to Warner-Lambert. Other Pfizer best-sellers include arthritis treatment Celebrex, overactive bladder medication Detrol and cancer compound Sutent, all of which came out of the purchase of Pharmacia in 2003.
Sutent, Detrol, Celebrex and Lyrica are all performing relatively well for Pfizer – particularly the pain medication Lyrica, which showed a sales increase of more than 40 percent last year, launching it into the No. 2 position among the company’s top sellers.
But several other drugs counted on to help shoulder the burden of Lipitor’s loss showed weakness, and Pfizer’s older pharmaceutical pipeline is beginning to show cracks.
”Pfizer is in the most desperate state of anyone in the industry in terms of patent expirations,” Standard & Poor’s analyst Herman Saftlas told Business Week magazine.
As an example, blood pressure medication Norvasc, which once accounted for 10 percent of Pfizer’s bottom line, lost a quarter of its sales last year compared to the year before after facing generic competition for the first time in 2007. And cancer compound Camptosar, which went off patent last year, saw 42 percent of its sales dry up last year.
Other negative performers last year included Chantix, the once-ballyhooed anti-smoking drug that lost its luster in the United States after it was tied to concerns about suicidal thoughts; pain medication Neurontin, which got bad press when Pfizer was accused of suppressing studies showing the drug didn’t help with diabetic nerve pain; and Diflucan, an older anti-fungal drug whose patents expired some time ago.
Pfizer also lost more than $250 million in sales with the patent expiration of Zyrtec, an allergy medication.
On the plus side, psychiatric medication Geodon and antibiotic Zyvox reached $1 billion in sales last year, while erectile dysfunction pill Viagra, still going strong after 10 years on the market, neared the $2 billion mark. But Pfizer’s biggest rising star, on a percentage basis, was cancer drug Sutent, which finished with nearly $850 million in sales, 46 percent more than last year.
Pfizer will need more compounds like Sutent, a chemotherapy drug expected to gain more traction with an aging population of baby boomers. But analysts said there appear to be few if any blockbusters in Pfizer’s pipeline to make a dent in the loss of Lipitor – a situation that caused Forbes.com to headline an article on the Wyeth deal “Big Pharma’s Death Spiral.”
”It’s not necessarily a death spiral, but you have to have new drugs,” said analyst Funtleyder.
Pfizer seems to be staking its biggest hopes on Alzheimer’s disease medicines, including bapineuzumab, which Wyeth has partnered with Elan Pharmaceuticals on and is currently in late-stage trials. It’s unclear, however, whether the partnership will continue once Pfizer takes over Wyeth.
Pfizer has its own Alzheimer’s pipeline, but its current top medication, Aricept, loses patent protection at the end of next year. Pfizer had five Alzheimer’s drugs in development, but its acquisition of Wyeth would triple that total.
”If Wyeth delivers on Alzheimer’s, it will be all worthwhile,” said Funtleyder. “Who knows? Maybe drug development will go into an up cycle, and it will be good to be big.”
Source: TheDay.com
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