David's New Book

Sunday, March 27, 2011

Pfizer Update etc.

NEW YORK - JANUARY 26:  A Pfizer sign hangs on...Image by Getty Images via @daylife

OK.  I’m back and swamped.  But during my absence, several pieces of information have filtered in regarding Pfizer.  First, Bernstein Research reported that Pfizer was planning to reduce its overall revenue base from $67B to $35-40B by spinning off or selling much of its non-pharmaceutical portfolio including its animal health business.  The strategy seems to be a logical one to increase growth as a percentage of revenues.  The idea is that the pharmaceutical business core of Pfizer is the one that brings in most of its revenues.  Therefore, from a lower base of $35-40B, it is theoretically more likely that they would be able to grow the business by 5-10% annually. Of course, this still will require existing product sales to grow enormously plus the introduction of new blockbuster products to offset the loss of Lipitor. But at least the hurdle will be less daunting.

In terms of antibiotics, it seems that Pfizer wants to milk its cash cow franchise of piperacillin-tazobactam (Zosyn), linezolid (Zyvox), and tigecycline (Tygacil) as long as possible.  But the Zosyn patent has run out and generics are already creeping into the marketplace around the world.  Zyvox becomes generic in 2015 and it looks like Tygacil will start to go around 2015-2016.  Pfizer is probably currently spending something like 25% of product revenues to sell these antibiotics including the cost of the sales force and other marketing outlays.  According to the latest numbers from Pfizer, the 2010 sales from these three products totaled about $2.5B (4% of revenues) and falling. By the time Pfizer completes its spinoff/sale of non-pharma units, these revenues will have fallen further to say $2B.  This will represent just 5% of their projected total revenues at the point in time where they have completed their spinoff process.  This point in time will probably occur just when both Zyvox and Tygacil are getting ready to jump over the cliff.

Pfizer says that they are moving their antibiotic discovery to China.  I have finally been able to confirm that they do actually have an address in Shanghai and that they are hiring scientists.  But what does this mean exactly?  China does not have a tradition of antibiotic discovery.  They do not have the same sophistication of approach.  This new unit will require years to establish themselves.  They will require sophisticated and careful supervision in order to actually accomplish anything.  Is Pfizer planning to provide for this?  I see no evidence of that.  I can only suspect that this is more about getting a tax break in China or some other business oriented edge in Asia than about actually discovering and marketing new antibiotics.  To me, this move is essentially an abandonment of antibiotic discovery and development. 

Since Pfizer has essentially decided to get out of the antibiotic discovery business, they will rapidly lose their internal expertise to evaluate external products.  Therefore they will not be able to bring in products from outside the company or they will exercise poor judgment in their choices. Therefore, I suggest, plead, beg them to be smart and include their antibiotics franchise or even a portion of the franchise in their spinoff plans.  I would love to help make this happen.  I am sure that appropriate investors could be identified and that an acceptable royalty plan could be negotiated.



Two other quick updates –

I will be speaking to the FDA on the 30th regarding their HAP/VAP Draft guideline.  For those of you who have sent me comments already – many thanks.  If anyone does want to send me additional comments that I can use to help the FDA improve their guideline, please send them on.

Along with my co-author, Matt Cooper, I will have a perspective appear in Nature in April – more later.
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