Pfizer Continues Transformation; Stakes Future on New Direction

OBTNNovember 2008
Volume 2
Issue 10

Several months ago, Physicians' Financial News covered Pfizer Inc's aggressive move into the oncology market and the strategic and tactical refocus that accompanied its paradigm-changing shift in priorities. Since then, Pfizer has continued its profound efforts to reorganize in earnest pursuit of a larger berth in the cancer marketplace.

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Several months ago, Physicians’ Financial News covered Pfizer Inc’s aggressive move into the oncology market and the strategic and tactical refocus that accompanied its paradigm-changing shift in priorities. Pfizer took several early initial steps in this direction, which included

• Forming a specific oncology department;

• Creating new positions and filling them with various industry experts with decades of collective oncology expertise;

• Recommitting to oncology R&D;

• Streamlining company operations to prioritize oncology and a few other key disease states;

• Rechanneling resources into oncology;

• Signing in-licensing deals to purchase the rights to oncology drugs and drug candidates; and

• Pursuing acquisitions and collaborative agreements that would strengthen Pfizer’s oncology marketplace position.

Since then, Pfizer has continued its profound efforts to reorganize in earnest pursuit of a larger berth in the cancer marketplace. In September 2008, Pfizer announced that it is abandoning early stage research on heart drugs as part of its strategy to narrow its focus to ailments such as cancer, where the opportunities for profit are greatest. The move raised some eyebrows on Wall Street: It is one thing for a new company to rebrand and change direction, but the New York City-based Pfizer is the largest drug-maker in the world and a household name. When asked about the changes, a Pfizer spokesperson explained that the company is being proactive about repositioning itself, expanding its outlook to include the future business landscape as well as the present one. Pfizer “is in a rush” to develop new medications to compensate for the expected loss in revenue when its blockbuster cholesterol pill Lipitor (atorvastatin calcium) loses patent protection in 2011. A quarter of Pfizer’s revenue last year came from sales of Lipitor, which reached $12.7 billion.

In making this transition, the company plans to sell or share rights to at least 11 medications in the early testing stages for disease states the company feels are no longer profitable enough, according to Martin Mackay, president of Pfizer’s Global Research & Development division. This includes treatments for heart failure, high cholesterol, and obesity. Ultimately, Pfizer plans to curtail early stage research on anemia, all forms of heart disease, bone health, liver disease, muscle disease, and some osteoarthritis compounds. This intensified focus on oncology and other targeted disease states will not affect drugs in the last of 3 stages of testing prior to submission for FDA approval, however.

Boston Globe

Boston Globe

The company will instead pursue remedies for higher-yield disease states such as cancer, chronic pain, and schizophrenia. Jeffrey Kindler, CEO, Pfizer, affirmed this shift in a March 2008 interview with the , stating that Pfizer would place more focus on developing drugs to treat cancer and pain. In October 2008, Mr. Mackay elaborated, explaining to the , “These are the disease areas with a higher medical need where the science is really breaking. From an opportunistic point of view, we see greater opportunity to fight cancer.” Pfizer’s research budget of ~$7.2 billion is unlikely to change next year, Mr. Mackay disclosed, although the allocation of that budget is likely to change significantly.

Prior to the September announcement, Pfizer shares had dropped 19% in 2008, compared with a 16% decline for the Standard & Poor’s 500 Pharmaceutical Index. On the news of Pfizer’s organizational overhaul and strategic shift, its stock rose 4.5% in a single day. Clearly, investors approve of the plan.

Moving into the Unknown

By halting its heart-disease research, Pfizer abandons the area of medicine that propelled its rise. In 2000, Pfizer acquired Lipitor from Warner Lambert Co, when the drug generated less than $1 billion in annual sales. Pfizer quickly transformed Lipitor into the best-selling pill in history. Sales of Lipitor have slumped since 2006, however, when generic versions of a similar drug (Merck’s Zocor [simvastatin]), hit the market.

Drugs for cancer and pain typically are more profitable because drug makers can charge higher prices and there is less competition. Currently, about 22% of Pfizer’s research funding goes toward cancer, but this proportion is expected to increase significantly over the next several years.

Pfizer reported that the number of projects in final human tests has doubled since March 2008—faster than projected—to 25. Pfizer added just one wholly new compound, the drug CP-751871, which is in the testing stages as an agent to treat lung cancer. The remaining increase in projects constitutes new uses of drugs already in late-stage testing or on the market. Mr. Mackay cautioned that though things were going well, Pfizer “clearly [has] a lot more to do” to secure FDA approval to sell the new drugs.

Components of Reorganization

Pfizer began reorganizing its research division in 2007, after halting development on its most promising experimental drug, the cholesterol pill torcetrapib. Torcetrapib had been expected to reap more than $13 billion in annual sales before disappointing trial results caused Pfizer to pull the plug on the product.

Since then, the company closed research laboratories in Ann Arbor and Kalamazoo, Michigan; Nagoya, Japan; and Amboise, France. They let more than 10,000 employees go. Pfizer has previously said it will cut as much as $2 billion in costs this year companywide. No one from Pfizer has specified how many additional jobs will be lost, and, according to the company, the restructuring plans will seek to minimize job cuts.

A key component of Pfizer’s repositioning initiative includes emphasis on consumer outreach. In an effort to increase the company's responsiveness to consumers and to modernize systems of physician and patient interaction, Pfizer has implemented a major new online initiative, accessible at medicinesafety, for healthcare professionals and patients. A Pfizer spokesperson explained the rationale behind the site: “Amid the deluge of drug advertising and news about safety issues, plenty of patients are bewildered over how to weigh the risks and benefits of a medication, or even how to find out what they are.”

Pfizer’s new Website on medication safety will help patients weigh drug risks versus benefits. Pfizer plans to promote the site through its work with medical and patient advocacy groups and by advertising on Websites that target medical professionals and patients. Pfizer’s detailed Medicine Safety Education site includes features targeted specifically toward patients and others just for health professionals. In-depth sections include a timeline covering the steps taken to monitor a drug’s safety from initial testing to well after it is on the market; and one on how the pharmaceutical industry, regulatory agencies, and health professionals work with one another and with patients to ensure the safety of patients taking prescription medications. Gretchen Dieck, head of safety and risk management, Pfizer, explained that Pfizer decided to create the site after focus groups of doctors, patients, regulators, and others expressed interest in being able to access this kind of information.

This effort comes on the heels of recent steps taken by Pfizer to address widespread concerns about industry behavior. This includes changes to how Pfizer funds doctors’ continuing medical education programs, such as eliminating commercial aspects and supporting an updated policy from the industry’s trade groups to limit gifts from sales representatives to doctors.

Pfizer also plans to increase its engagement with various partnerships and collaborations (eg, other pharmaceutical and biotechnology concerns, healthcare providers, governments, local communities around the world dedicated to providing better quality healthcare and health system support) to enhance Pfizer’s marketplace presence in oncology.

According to Mr. Kindler, the company also plans to expand through acquisition, purchasing other companies to gain rights to additional experimental medicines and infrastructure. Recent Wall Street rumors have linked Pfizer to a number of major pharmaceutical and biotech companies, and there is speculation that Pfizer’s acquisition of various concerns is imminent. Some industry insiders have speculated that Pfizer may initiate a takeover attempt for Bristol-Myers Squibb Company. Other “in-the-know” whispers concern a potential merger between Pfizer and Bayer. Ray Kerins, a Pfizer spokesperson, said Pfizer does not comment on market rumors or speculation.

The Pfizer Oncology Pipeline

Pfizer Oncology currently has 22 compounds in clinical development across 4 platforms. Pfizer’s heavy emphasis on oncology and its methodical “pipeline acceleration initiative,” which is its stated commitment to channel resources into oncology R&D and get these compounds from the laboratory to the market as quickly as possible, has already begun to yield results. Pfizer’s pipeline acceleration has outpaced projections given to investors in March 2008. At that time, the company said its goal was to grow its phase III pipeline to at least 24—and possibly as many as 28—new molecular entities or indications by December 2009.

Already the company is targeting 15 to 20 regulatory submissions for 2010-2012. Additionally, the company is vigorously driving its biotechnology investments and has 16 biotherapeutics in development.

Pfizer’s pipeline now includes 114 programs in various stages, from phase I through registration. Over the past 6 months, the number of programs in late-stage phase III development has grown from 16 to 25. In total, 31 programs advanced to the next stage of development, 13 were discontinued, and 1 was withdrawn from registration. The majority of the advances (19) were in Pfizer’s identified high-potential disease areas, including oncology.

The company has 7 other cancer programs in phase III, including 2 potential new indications for Sutent (sunitinib malate) in the treatment of hepatocellular and prostate cancers. Sutent is also in phase III trials as a treatment for breast, lung, and colorectal cancers. A potential renal cell carcinoma indication for axitinib (AG-013736) is also advancing to phase III, and findings from a phase II trial on axitinib in the treatment of advanced thyroid cancer recently concluded that it demonstrated “compelling antitumor activity.”

Mr. Mackay said that Pfizer is making “significant operational improvements” as it works to refocus its investments, accelerate development of new therapies, and improve the execution of clinical trials. “We are investing in the most promising disease areas, where there is strong unmet medical need, favorable markets, and an opportunity to advance medical science.”

Pfizer recently announced updated safety and efficacy results from a phase II trial involving its investigational compound CP- 751871 in patients with advanced (stage III/ IV) non—small cell lung cancer (ANSCLC). CP- 751871 is a fully human monoclonal antibody and a highly specific inhibitor of the insulinlike growth factor 1 receptor (IGF1R) pathway. The IGF1R pathway is one of the key signaling pathways in cancer cells that leads to uncontrolled growth and survival of tumor cells. The randomized noncomparative study of patients with treatment-naïve ANSCLC showed that 54% receiving a treatment combination consisting of CP-751871 plus carboplatin/paclitaxel (n = 97) experienced objective responses compared with 41% of patients who received carboplatin/ paclitaxel alone (n = 53). Pfizer currently has a global phase III clinical trial registration program for CP-751871 in ANSCLC underway. In addition, Pfizer is sponsoring clinical trials to study CP-751871 as a potential treatment for many other cancers, including prostate, breast, colon, and Ewing’s sarcoma.

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