A loss of exclusivity, strong competition and a changing market led Pfizer Inc. to cut its U.S. sales force by 20 percent last week, yet analysts say the move should have little impact - if any - on the biotech community.
The New York-based pharmaceutical firm markets biotech drugs such as Exubera and Sutent, but has pledged its support for both those products and several others.
"I think most of where they're going to cut is in the primary care market," said Ian Sanderson, a senior pharmaceutical analyst with SG Cowen & Co.'s Boston office, "and Exubera primarily is being marketed to specialists."
Pfizer's U.S. sales force was just shy of 12,000 people when the company decided on the reduction that would leave it with about 8,800 representatives. Both Sutent and Exubera received FDA approvals in January. Sutent, a multi-tyrosine kinase inhibitor discovered by Sugen Inc. and now owned by Pfizer, was cleared for gastrointestinal stromal tumors and advanced kidney cancer, while Exubera got the go-ahead as a rapid-acting, dry powder insulin for Type I and Type II diabetes. It was developed in collaboration with Nektar Therapeutics Inc., of San Carlos, Calif. (See BioWorld Today, Jan. 30, 2006.)
Joyce Strand, a spokeswoman for Nektar, said her company does not believe Pfizer's sales force reduction will negatively affect Exubera sales. Nektar receives manufacturing payments from Pfizer for the powder and inhaler used with Exubera, as well as an undisclosed royalty on all sales. The product also is marketed in Germany, Ireland and the UK. It earned Nektar $26.9 million in the quarter ended Sept. 30.
Sanderson said Pfizer's entire sales force of 8,800 still keeps the company "very competitive," and added that he thinks "what Pfizer is responding to is more that portion of their business that is managed care, and those chronic-use, primary care drugs that may not require the typical sales force support."
Biotech drugs typically are specialty products, and those climbing the ranks toward approval probably won't be any more affected by a slimmer Pfizer sales force than Exubera will be.
Biotech partners "should not be worried there will be a diminution of support for those types of products," Sanderson told BioWorld Today.
Wilmington, Del.-based Incyte Corp. signed a worldwide development and commercialization deal worth up to $803 million with Pfizer a year ago for its CCR2 antagonist program, but a spokesperson there said the products are still very early stage, several years away from reaching the market. The licensing deal includes rights to indications such as rheumatoid arthritis and obesity in patients resistant to insulin. (See BioWorld Today, Nov. 22, 2005.)
During Pfizer's R&D analyst meeting in New York Thursday, the company's CEO Jeff Kindler said that Pfizer's "fundamental objective is to create a broad and very diversified stream of new products" to drive growth and increase shareholder value.
It has been moving in that direction for a while, and in June sold off its consumer health care business to Johnson & Johnson, of New Brunswick, N.J., for $16.6 billion in cash. The proceeds are allowing Pfizer to purchase up to $17 billion of its common stock through 2007. In addition, the company also plans to spend $17 billion on acquiring new products and technologies over the next two years.
Last week the company dropped a collaboration with NV Organon, of Oss, the Netherlands. The two had been developing asenapine to treat schizophrenia and acute mania associated with bipolar I disorder, but after conducting a commercial analysis, Pfizer decided it didn't fit with its overall portfolio.
The decision to reduce the U.S. sales force also resulted from a cost-reduction initiative announced in October with the company's third-quarter results, which had revenues at $12.3 billion, a net income of about $3.4 billion and a diluted earnings per share of 46 cents.
While all figures were an increase over last year, Pfizer recognized that changing market conditions, including decisions made on access and pricing in several large European markets, as well as the loss of U.S. exclusivity on products such as Accupril, Diflucan, Neurontin, Zithromax and Zoloft within the last few years, required the company to transform itself.
Kindler said the company expects to dramatically increase its Phase III portfolio by 2009, making Pfizer "a significant player in a broad cross-section of therapeutic and specialty areas with strong growth potential."
In September, Pfizer made major investments in companies like TransTech Pharma Inc. and Quark Biotech Inc., and acquired specialty vaccine company PowderMed Ltd.
In the TransTech deal, the High Point, N.C.-based company licensed its portfolio of compounds targeting the receptor glycation endproducts (RAGE), including a Phase II small molecule against Alzheimer's disease and diabetic nephropathy, in a deal worth up to $173 million. (See BioWorld Today, Sept. 19, 2006.)
Later in the month, Quark Biotech, of Fremont, Calif., licensed to Pfizer RTP-801, a human gene involved in the development of pathologic blood vessels that accelerate the progression of age-related macular degeneration, and molecules that modify its expression of function.
In October, Pfizer acquired PowderMed for an undisclosed amount, advancing into the vaccines field. The Oxford, UK-based company has a portfolio of products, including a lead DNA vaccine against seasonal flu. (See BioWorld Today, Oct. 11, 2006.)
If anything, the investments confirm Pfizer's commitment to biotech products, as do the announcements at the R&D meeting of a major collaboration in the field of antibodies signed with the Scripps Research Institute, and the launch of a biotechnology incubator at the company's La Jolla, Calif., facility.
"We intend to be a significant player in biotechnology, and these initiatives are just some of the steps we have and will take to accelerate that plan," Kindler said. "Our message to institutions and scientists around the world is very simple. We want to collaborate with you, and we want you to bring us your ideas and your suggestions so we can work together to prevent, treat and cure disease."