PHARMA: That can’t have been a fun management call, with UPDATE

Pfizer’s next big drug for heart disease (torcetrapib which was slated to replace Lipitor) has bombed in trials, causing sufficient deaths that the trials have been ended early and development has been stopped. This is obviously dreadful news for Pfizer, and I assume that the stock will be well done on Monday. But that’s how the pharma business is supposed to work—big bets on new blockbusters may not pan out, but others will do so.

But beyond that it is also a pointer that some of the easy “targets” such as heart disease and diabetes may be nearing their natural limits for medication therapy, and that lifestyle changes, the old “diet and exercise” may really be the best way to deal with them—allied of course with the generics which were the blockbusters of yesteryear. Almost all the growth in the drug business in the last few years seems to be in niche and very expensive biologics for virtually orphan diseases.

Which all means that the cuts in the sales-force that Pfizer announced last week are likely to be the first of many. Big Pharma is going to have to figure out how to get to a model beyond hitting every doctor and every patient on behalf of a few big blockbusters. The challenge for the rest of the system is to figure out how to use both the new niche drugs and the old blockbusters in the most effective manner.

UPDATE: Pfizer stock is off 12% in relatively early going, down to $23 and change. Ouch! Although it’s still above the lows of a year ago (Just). If you are a bitter shareholder this morning, you should thank the lobbying dollars sunk into Part D’s passage in 2003 for the industry profit recovery that’s kept it afloat this far in 2006. You should also worry about what comes next on that score!

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4 replies »

  1. http://www.businessweek.com/innovate/content/jun2006/id20060629_133435.htm
    I don’t think so. Stressful lives lead to fast food comfort and stress seems to be the way Americans want to live. I see more information but not more education. Even though stores like Whole Foods are doing well and seeing sales go up, I think it’s only the tip of the iceberg in niche markets. Maybe it’s just my proximity to Southern Culture, but I don’t see any change for the future given our trend to a low wage economy.

  2. Peter –
    I think you’re describing the mindset a generation and a half ago. I see a backlash developing. The public perception polls on pharmaceutical companies and food companies support that.
    The problem is the minority that continues to abuse the freedoms our society provides them because they just don’t care. I may sound like a broken record but the answer is education …education … education.
    The interesting thing to me is that in the information age a lot of people DO seem to be seeking out and absorbing information. Give it another decade, and I think you’ll see some pretty massive change …

  3. cary, it will be hard to tell Americans that they can’t abuse their bodies and get a pill to cover the consequences. The accepted lifestyle has been; see it, want it, buy it, use it, abuse it, disgard it. It’s worked for 200 years, why not forever?

  4. I to think that “easy “targets” such as heart disease and diabetes may be nearing their natural limits for medication therapy”. Many of the health problems today are over-medicated, and the positive results from things such as a healthy diet and daily exercise are overlooked and under-utilized.

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