Echosoftom
10-18-2007, 06:13 PM
By ALEX BERENSON (http://topics.nytimes.com/top/reference/timestopics/people/b/alex_berenson/index.html?inline=nyt-per)
Published: October 18, 2007
Pfizer (http://topics.nytimes.com/top/news/business/companies/pfizer_inc/index.html?inline=nyt-org) said today that it would stop selling Exubera (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/exubera_drug/index.html?inline=nyt-classifier), its inhaled insulin, less than two years after introducing the drug. Despite Pfizer’s heavy promotion, Exubera’s sales had been miniscule, with prescriptions amounting to less than 1 percent of the insulin market.
Pfizer will take a charge of $2.8 billion for costs associated with Exubera, making it one of the most expensive flops in the history of the pharmaceutical industry.
Exubera’s failure is another black eye for Pfizer, the world’s biggest drug company, which has sustained a series of recent reversals. The abrupt discontinuation also calls into question whether inhaled insulin — once viewed as a potential multi-billion-dollar market worldwide — will ever be able to compete with conventional injectable insulin as a treatment for diabetes.
Several companies, including Eli Lilly (http://topics.nytimes.com/top/news/business/companies/lilly_eli_and_company/index.html?inline=nyt-org), are investing in expensive programs to develop inhaled insulin. But Pfizer said it would not try to develop a replacement for Exubera, ending its inhaled insulin research after more than a decade of work.
Dr. Joel Zonszein, a diabetes specialist at Montefiore Medical Center (http://topics.nytimes.com/top/reference/timestopics/organizations/m/montefiore_medical_center/index.html?inline=nyt-org) and a longtime skeptic about Exubera, said that the problems that bedeviled Exubera would probably plague other inhaled insulin treatments under development.
Inhaled insulin is “just not a practical way to treat this population,” Dr. Zonszein said.
In a statement, Pfizer said it would work with physicians to move all patients off Exubera within three months. The company said it has not yet decided what to do with plants in Germany and Indiana where it makes the drug.
“Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians,” Jeffrey Kindler, Pfizer’s chairman, said in a statement.
Pfizer made the announcement as part of its third-quarter earnings release, which was generally bleak. The company said that its pharmaceutical sales fell 4 percent worldwide, to $11 billion for the quarter. They would have been worse — sales in the United States fell 16 percent — except for the weakening dollar, which helped prop up international revenues.
Sales of another drug, Lipitor (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/lipitor_drug/index.html?inline=nyt-classifier), a cholesterol-lowering medicine that is Pfizer’s most important product, plunged 13 percent in the United States, as more patients were switched to generic simvastatin, a much cheaper competitor. Pfizer also said it had cut 11,000 jobs so far this year, reducing its workforce to 87,000.
Still, Wall Street was apparently expecting even worse. The shares fell by a penny today, to close at $24.54.
Exubera’s sales were only $12 million during the first nine months of 2007, the company said. And despite heavy promotion this summer, the drug had less than 0.3 percent of the market for insulin, according to A.G. Edwards, a brokerage firm.
Pfizer declined to say how much money it had spent promoting the drug. But in a sign of just how badly it had misjudged demand, it said it would write off $661 million of Exubera inventory as part of the $2.8 billion charge.
When federal regulators approved Exubera in January 2006, analysts and Pfizer predicted that the drug would become a blockbuster, easily topping $1 billion in sales annually. Pfizer was so bullish on Exubera’s prospects that just a few days before the approval, the company paid $1.4 billion to Sanofi-Aventis (http://topics.nytimes.com/top/news/business/companies/sanofi_aventis/index.html?inline=nyt-org), the French drug maker, to buy out Sanofi’s share of Exubera.
Even a few months ago, with Exubera’s sales lagging badly, Pfizer insisted that it still believed the drug could reach blockbuster status. And for much of this year, Pfizer has heavily promoted Exubera to physicians and patients.
But Exubera was not able to overcome questions about its safety, efficacy, convenience and cost.
Clinical trials showed that Exubera marginally decreased patients’ breathing ability, although Pfizer said the declines reversed if patients stopped taking the drug. Further, regulators required that patients take a lung function test before starting on Exubera, and another test after taking it for six months. The tests were an inconvenience for patients and for busy doctors.
Physicians also said that they worried about the possibility that patients would receive more — or less — insulin than they expected because of the natural day-to-day variability of lung function. Too little insulin can lead to uncontrolled high blood sugar, while too much can produce hypoglycemic shock.
In addition, the needles that are used to inject insulin have shrunk over the last two decades, making injections less painful. The size of the Exubera inhaler, variously described as looking like a tennis can or a bong, was also an obstacle.
Finally, insurance companies were reluctant to pay for Exubera, or the required lung function tests, since Exubera does not control blood sugar better than ordinary insulin. Exubera has cost about $5 a day, compared with $2 to $3 a day for injectable insulin.
Analysts said they were surprised that Pfizer had acted so quickly but that the company had probably made the right business decision.
“The product was underperforming, the company is challenged to begin with, and in that circumstance this type of program is at risk,” said Robert Hazlett of BMO Capital Markets.
Mr. Hazlett said that the cancellation would hurt Nektar Therapeutics (http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NKTR), a small publicly traded company that helped develop Exubera and received royalties from Pfizer on Exubera sales. Nektar’s shares, which traded as high as $22 after Exubera received approval, were down more than 17 percent today, closing at $6.67.
Tony Butler, an analyst at Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org), said the abruptness with which Pfizer acted was a proof that Mr. Kindler knows drastic steps are needed to stem Pfizer’s decline.
“The Exubera decision illustrates how serious they are about looking at every part of their business,” Mr. Butler said. “They wanted you to know that they were swift with their action.”
Published: October 18, 2007
Pfizer (http://topics.nytimes.com/top/news/business/companies/pfizer_inc/index.html?inline=nyt-org) said today that it would stop selling Exubera (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/exubera_drug/index.html?inline=nyt-classifier), its inhaled insulin, less than two years after introducing the drug. Despite Pfizer’s heavy promotion, Exubera’s sales had been miniscule, with prescriptions amounting to less than 1 percent of the insulin market.
Pfizer will take a charge of $2.8 billion for costs associated with Exubera, making it one of the most expensive flops in the history of the pharmaceutical industry.
Exubera’s failure is another black eye for Pfizer, the world’s biggest drug company, which has sustained a series of recent reversals. The abrupt discontinuation also calls into question whether inhaled insulin — once viewed as a potential multi-billion-dollar market worldwide — will ever be able to compete with conventional injectable insulin as a treatment for diabetes.
Several companies, including Eli Lilly (http://topics.nytimes.com/top/news/business/companies/lilly_eli_and_company/index.html?inline=nyt-org), are investing in expensive programs to develop inhaled insulin. But Pfizer said it would not try to develop a replacement for Exubera, ending its inhaled insulin research after more than a decade of work.
Dr. Joel Zonszein, a diabetes specialist at Montefiore Medical Center (http://topics.nytimes.com/top/reference/timestopics/organizations/m/montefiore_medical_center/index.html?inline=nyt-org) and a longtime skeptic about Exubera, said that the problems that bedeviled Exubera would probably plague other inhaled insulin treatments under development.
Inhaled insulin is “just not a practical way to treat this population,” Dr. Zonszein said.
In a statement, Pfizer said it would work with physicians to move all patients off Exubera within three months. The company said it has not yet decided what to do with plants in Germany and Indiana where it makes the drug.
“Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians,” Jeffrey Kindler, Pfizer’s chairman, said in a statement.
Pfizer made the announcement as part of its third-quarter earnings release, which was generally bleak. The company said that its pharmaceutical sales fell 4 percent worldwide, to $11 billion for the quarter. They would have been worse — sales in the United States fell 16 percent — except for the weakening dollar, which helped prop up international revenues.
Sales of another drug, Lipitor (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/lipitor_drug/index.html?inline=nyt-classifier), a cholesterol-lowering medicine that is Pfizer’s most important product, plunged 13 percent in the United States, as more patients were switched to generic simvastatin, a much cheaper competitor. Pfizer also said it had cut 11,000 jobs so far this year, reducing its workforce to 87,000.
Still, Wall Street was apparently expecting even worse. The shares fell by a penny today, to close at $24.54.
Exubera’s sales were only $12 million during the first nine months of 2007, the company said. And despite heavy promotion this summer, the drug had less than 0.3 percent of the market for insulin, according to A.G. Edwards, a brokerage firm.
Pfizer declined to say how much money it had spent promoting the drug. But in a sign of just how badly it had misjudged demand, it said it would write off $661 million of Exubera inventory as part of the $2.8 billion charge.
When federal regulators approved Exubera in January 2006, analysts and Pfizer predicted that the drug would become a blockbuster, easily topping $1 billion in sales annually. Pfizer was so bullish on Exubera’s prospects that just a few days before the approval, the company paid $1.4 billion to Sanofi-Aventis (http://topics.nytimes.com/top/news/business/companies/sanofi_aventis/index.html?inline=nyt-org), the French drug maker, to buy out Sanofi’s share of Exubera.
Even a few months ago, with Exubera’s sales lagging badly, Pfizer insisted that it still believed the drug could reach blockbuster status. And for much of this year, Pfizer has heavily promoted Exubera to physicians and patients.
But Exubera was not able to overcome questions about its safety, efficacy, convenience and cost.
Clinical trials showed that Exubera marginally decreased patients’ breathing ability, although Pfizer said the declines reversed if patients stopped taking the drug. Further, regulators required that patients take a lung function test before starting on Exubera, and another test after taking it for six months. The tests were an inconvenience for patients and for busy doctors.
Physicians also said that they worried about the possibility that patients would receive more — or less — insulin than they expected because of the natural day-to-day variability of lung function. Too little insulin can lead to uncontrolled high blood sugar, while too much can produce hypoglycemic shock.
In addition, the needles that are used to inject insulin have shrunk over the last two decades, making injections less painful. The size of the Exubera inhaler, variously described as looking like a tennis can or a bong, was also an obstacle.
Finally, insurance companies were reluctant to pay for Exubera, or the required lung function tests, since Exubera does not control blood sugar better than ordinary insulin. Exubera has cost about $5 a day, compared with $2 to $3 a day for injectable insulin.
Analysts said they were surprised that Pfizer had acted so quickly but that the company had probably made the right business decision.
“The product was underperforming, the company is challenged to begin with, and in that circumstance this type of program is at risk,” said Robert Hazlett of BMO Capital Markets.
Mr. Hazlett said that the cancellation would hurt Nektar Therapeutics (http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NKTR), a small publicly traded company that helped develop Exubera and received royalties from Pfizer on Exubera sales. Nektar’s shares, which traded as high as $22 after Exubera received approval, were down more than 17 percent today, closing at $6.67.
Tony Butler, an analyst at Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org), said the abruptness with which Pfizer acted was a proof that Mr. Kindler knows drastic steps are needed to stem Pfizer’s decline.
“The Exubera decision illustrates how serious they are about looking at every part of their business,” Mr. Butler said. “They wanted you to know that they were swift with their action.”