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Tag: Pharma

PHARMA: The Industry Veteran takes on Crestor and the Anonymous Cardiologist

I didn’t think that the Industry Veteran would just ignore the comments from the Anonymous Cardiologist or the Anonymous Academic, and he doesn’t disappoint.  Unlike the Academic, at least he’s convinced that the Cardiologist is a doctor not a Crestor bag-carrier! I don’t know about you but I’m learning tons from these exchanges! So here’s the Veteran’s question:

    Was the anonymous cardiologist on the grassy knoll?

    The efforts of AstraZeneca’s partisans to free up your time with conspiracy theories and riffs on Pfizer must be gratifying, but their notes appear questionable.  In particular, your cardiologist may know how to complain about declining capitation rates for performing angiograms, but his knowledge of the pharmaceutical industry’s business side remains poor.

    In particular, his perceptions relative to stain marketing are typical of office-based physicians.  Practitioners are not so much biased or uninformed about tactical details as they are arrogant grunts trying to pontificate on the war’s trends from foxholes.  Specifically, he adduces Pfizer’s panic over Crestor from the fact that they are cross-training their Women’s Healthcare sales group on Lipitor.

    In the first place, it is often standard practice in the industry for companies to cross-train virtually all their reps on the big PCP products.  For example, specialty reps from Merck who only detail neurologists on the migraine drug Maxalt also carry Vioxx in their bags.  In the case of Pfizer reps carrying Lipitor to OB/GYNs, it remains a fact that a large segment of women who do not suffer some chronic condition receive their primary medical care from their gynecologists.  As Pfizer will next year launch Caduet, a fixed-dose combination of Lipitor and Norvasc, it is entirely appropriate that they would try to recapture some of $4 billion they will lose to generic amlodipine with an all-hands-on-deck sales effort for the new product.  Former CEO Bill Steere was an especially strong advocate of cross-training; when products such as their antibiotic Trovan hit the crapper, it allowed Pfizer to redeploy the reps they had hired for that launch into other areas.  If one is to impute panic, I hear from sources far more reliable than the umbrella man or three tramps in the railroad yard that Dave Brennan and Tony Zook (Note: respectively President & Senior VP, AstraZeneca in the United States) are running out of toilet paper in the executive bathroom due to Crestor’s slow start.

    Your cardiologist’s second error consists of his effort to suggest Pfizer’s panic is leading them to make underhanded payoffs as a result of Crestor’s greater potency at reducing LDL.  Pfizer has known Crestor’s clinical profile for several years and they adopted a well conceived marketng strategy to defend against it.  Two years ago Karen Katen (Note: Kate is Exec VP, & President of the Pfizer Global Pharmaceuticals) responded to the superstatin tagline that AZ was trying to pin on Crestor with the reply, "Superstatin or superfluous statin?"  Pfizer’s idea, then as now, was that for all but the more refractory patients, Lipitor produces good LDL reduction with a demonstrated safety record.  If some self-styled lipidologist needs a Hail Mary pill to use on a familial homozygous patient before going to plasma aphoresis, then he can try Crestor until the Zocor-Zetia or the Lipitor-torcetrapib combinations appear on the market.

    Your cardiologist’s main contention — that Pfizer paid the Lancet’s editors for their rant on Crestor — is really where he emulates Arlen Spector and propounds a magic bullet theory.  While conclusive proof of this would neither shock or surprise me, I tend to be highly skeptical of your man’s allegation for four reasons.

    Pfizer has lawyers crawling all over it from the Neurontin whistleblower suit that the Department of Justice joined.  Any e-mail or note hinting at this sort of payoff to the Lancet could easily come up as a by-product of discovery and would seriously jeopardize the entire Lipitor franchise.  The downside risk far outweighs even the worst consequences of the Neurontin suit that involve disgorgement of all profits from off-label Neurontin sales.

    My second reason for doubting a Lancet payoff is based on the fact that since the Warner-Lambert takeover, Pfizer has been a fairly disorganized company.  The two organizations were not well integrated and this problem was further exacerbated by the Pharmacia acquisition.  Unless there was a rogue contingent there operating entirely beyond control, I doubt Pfizer could exercise the coordination required for such a black bag job.

    My third reason for skepticism comes from experience with the Lancet editors.  They constitute some of Big Pharma’s fiercest critics.  If Pfizer had approached them with a bag of cash, it would have become the lead story for every news outlet around the world.

    Last but not least, the Lipitor people knew that a payoff was unnecessary.  When Arnold Relman comes out and says that Crestor is a me-too drug and Sidney Wolfe predicts it will prove worse than Baycol, Pfizer couldn’t buy such PR for any amount of money.

    Your academic contributor stands on much firmer ground when she notes Pfizer’s impending loss of big product sales to generics.  This does not, however, substantiate any implication that Pfizer is going ballistic over Crestor.  McKinnell and his people have in place some well articulated strategies (fixed-dose combinations, co-development deals, marketing structure, others) that seek to cope with this.  I have my doubts that they’ll be able to carry it off without their sales and stock price going into a trough similar to Merck’s current one, but we’ll have to see.  Deducing current panic and payoffs from this possible scenario is too farfetched.

    Alas, while I don’t care for your cardiologist’s style of thinking or his blithe ignorance of the industry, I do come down beside him in predicting that Crestor will eventually sell $2.5 billion a year as a result of hypolipidemic market growth and patent loss for Zocor and Pravachol.

I’ll step in to referee this soon, but let it be known that I’m with Oliver Stone and believe that there was more than one shooter in Dallas in 1963. And I’m somewhat with Noam Chomsky when he says that the Media "manufactures consent" based on knowing which side its bread is buttered, and he wouldn’t be quite as comfortable as some with the chinese wall between The Lancet‘s editorial board and its advertising business manager.

PHARMA: More on Pfizer from another new source.

So we’ve had an industry veteran, a cardiologist and now the Anonymous Academic makes his (or her) way onto the THCB platform to talk about, what else, statins. I barely have to write or think about this subject any more! (My limited comments are in the text in plain text not italics):

    The really important upcoming development in the statin market is the fact that both Pravachol and Zocor are losing patent protection in the U.S. within the next 2 years. Once that happens, it will be interesting to see what happens to sales of Lipitor and Crestor.  My guess is that a lot of people will switch to the generics.

    I think both companies (Pfizer and A-Z) have a very tough road ahead, especially Pfizer. It’s remarkable that they have been able to turn Celebrex into a $3 billion drug given that it is no better than naproxen or ibuprofen in preventing GI bleeding. (see this post from yesterday) It is even more remarkable that they have been able to turn Norvasc into a $4 billion drug even though it is no better that generic diuretics that cost a few cents per pill. However, all of Pfizer’s blockbuster products (which together account for more than 80 percent of PFE’s pharmaceutical sales) are going to face a lot of new competition in the next few years:

    — Dr. Reddy’s Norvasc knockoff, AmVaz, is expected to come to market in 2004;
    — Celebrex and Bextra will face increased competition from Novartis’s Prexige and Merck’s Arcoxia in 2004-05;
    — Zoloft’s U.S. patent will expire in 2005;
    — Generic versions of Neurontin are on their way very shortly in the U.S.;
    — Viagra is facing increased competition from Cialis and Levitra;
    — Zithromax’s patent will expire in 2005.
    — Zyrtec will face competition in the U.S. market from generic Allegra in 1Q 2004. It already faces competition from OTC Claritin; and
    — Diflucan loses U.S. patent protection in 1Q 2004.

    Pfizer will be OK for the next year or two, but after that it will be virtually impossible to maintain double-digit sales growth, as it did throughout the 1990s. In fact, I think they will be lucky to have any growth. Their only hope is a bailout in the form of a new government program called "Medicare prescription drug benefit."

Well our Anonymous Academic is a little snide about that Medicare program, which I don’t think gives the pharmas so much a big new market as protects their back from price controls in the medium term.  But the information about Pfizer is pretty interesting.  It’s not of course just Pfizer among big pharma which is in some trouble. Merck has its own patent problems and as Derek Lowe reports at In the Pipeline, it also seems to be having problems with its pipeline too. But Pfizer’s performance in dealing with all these patent and competitively related pressures–particularly in the statin market–is key in determining if the pharma company as "marketing machine" that we saw in the 1990s has a long term future. Given, though, the success it’s had so far persuading both doctors and patients to do what’s good for Pfizer (and often good for patients too, let’s not forget), don’t write this company off quite yet.

PHARMA: Yet more views on Crestor v Lipitor v The Lancet

Ooh, this is getting fun.  I have a new mole on the Astra-Zeneca, Crestor, Lancet, Lipitor et al issue that I’ve blogged about here and here.  The story so far is that AZ’s Crestor is selling more slowly that some observers expected, and The Lancet has suggested that its safety profile was such that it was not sufficiently researched to be on the market. But there’s still more going on here, as The Anonymous Cardiologist writes:
(Note: links and the odd clarification to keep the flow are from me)

    AZ isn’t fluffing that they were expecting slow uptake, Tom McKillop said 4 months ago in the Economist that in other markets it was after 20 weeks that Crestor sales took off, and he was expecting the same in the US. Reps are giving me enough samples so that I don’t have to write any statin right now, I can sample most people through February. Lipitor is loading in the stock bottles, I can get all I want, if I just pressure them a little by saying, "I can put them on Crestor for free." I received the 30 day stock bottles and then a large amount of one week samples, around 60 weeks, and I’ll get more, when I utilize them.

    Here’s the news though. If you have the number 1 drug in the world (Lipitor), why do you run scared at the launch of "dangerous" competitor? I don’t know, ask Pfizer.  They are taking an entire Female Healthcare team and training them on Lipitor this week. Why do they need them, they are #1 and Crestor is killing people? The truth is in the pudding, Pfizer is worried. AZ has a study called Stellar, the authors are the same MD’s that led the Lipitor CURVES study (used at their launch) and the comparitor’s are the same, except for one thing, statistical power. Lipitor compared itself vs. all the competitors, enrolling only 500 pts total. Crestor enrolled 2,400 pts in its comparison to other statins.

    Crestor reps just received copies of Stellar and I got one last week. I’ve already read it in the AJC but most Dr’s haven’t heard of it. Basically, it says 10 mg of Crestor is ABOUT the same in efficacy as 40 mg of Lipitor. 40 mg of Lipitor is $125.00, 10 mg of Crestor is $80.00. That is what caught my eye. Obviously, it caught Pfizer’s eye too and they decided they needed more people selling against Crestor. The data is not all in yet, we still need to see some usage but my partners are now starting to give all their statin failures to Crestor and that is a lot of patients. The 20% of the market is probably realistic considering Zocor and Pravachol are going generic in the next 18 months. There will be ADR reports of Rhabdo with Crestor, just as there are with Lipitor, Zocor and a few with Pravachol. It’s a crap shoot in the Pharma Industry, who would of thought that Iressa would have been approved after all of the deaths in the trials? Or that the FDA would allow Bendectin back on the market? Or, that Premarin, the #1 prescribed drug in the world would be found to cause cancer in post-menepausal women?

Then The Anonymous Cardiologist raises an issue that I’d missed and it appears everyone else in the blogging world did too.  The Lancet‘s motives are called into question. He writes

    As to The Lancet, what credible physician could find that to be an honest analysis? First of all, the Lancet broke all FDA rules last month when they sent most of the physicians in the US a free copy of the Lipitor study Supplement, whether they had a subscription or not. Who paid for it, Pfizer? (maker of Lipitor). Second, the editor is upset that AZ published an article about how greater lipid lowering could equate in to a greater reduction in events. Finally, Pfizer is obviously trying to protect their #1 franchise with this negative publicity towards Crestor. Don’t put it past Pfizer to do anything negative these days. Pfizer’s package insert is probably the least clean of all the statins, including albumiuria, different blood plasma levels of the drug for men, women and the elderly and as to the time of day the drug is taken. This is not going to go away when you consider how much money is involved.

This is one to watch with interest, especially in a month or two when all those samples are used up and we’ll see who really goes on what drug in the ongoing statin wars. In any event the Anonymouse Cardiologist is right that this "is not going away" considering that Pfizer is defending an $8bn product and A-Z needs Crestor to become a $3bn one.  For context, and so that you realize what’s at stake here I’ve complied a quick list of are some huge companies you may have heard of that have lower revenues than just Lipitor, and of course their margins are nothing like as good!

    PNC Financial Svcs. Group $7.6bn
    PPG Industries $7.7bn
    Unysis $7.5Bn
    Aramark $6.7bn
    Mellon Financial Corp. $6.0bn
    Comcast $6.2
    Air Products & Chemicals $5bn
    Starbucks $4bn
    Bethlehem Steel $3.9bn

PHARMA: Lucky old MedImmune…

A company called Aviron developed FluMist, a nasally-delivered live flu vaccine. My friend (and now top VC) Vera Kallmeyer was the CFO during Aviron’s early stage and she rather cleverly did a deal that sold rights to FluMist in Korea for about enough cash to get Aviron public in (I think) 1996. In yet another tale of appalling stock trading on my part and "defensive medicine" on hers, she told me that buying their stock was kind of risky (what, a small-tech biotech company years away from phase III risky?). So I didn’t buy it at $5.  When Medimmune bought them a few years later they paid 10 times that!  However, because of FluMist’s higher price and the change in third party reimbursement, it hasn’t been selling that well.  That is, not doing too well until the current awful flu season as the NY Times reports that with flu shots dwindling, nasal spray vaccine surges. I of course have avoided FluMist again (this time the product not the stock) and have had pretty bad flu twice already this season!

PHARMA: Pfizer Begins Limits on Sales to Canada

Pfizer is a client of Harris, who I told you last week confirmed my suspicions that seniors in the US were demonizing the pharma industry. Well having said it would act Pfizer is now ignoring Harris’ warnings and is putting limits on sales to Canada. The NYT says that

    Pfizer told Canadian distributors in a letter that they must seek approval to sell its drugs to new customers. The distributors will also be asked to note the pharmacies whose purchases exceeded certain limits.

In other words they’re going to cut off those 47 pharmacies in Manitoba shipping over the border. But you do of course understand that this is all being done for reasons of safety! If seniors somehow don’t understand that this is all about pharma’s concern with their safety, perhaps Congress might hear about it?

PHARMA: Canadians concerned about tail wagging dog

I had a fascinating conversion with Katherine Binns, my old colleague at Harris Interactive yesterday. I’ll relay much more about it anon, but Harris surveys every player in health care in depth often. One thing that is clear from their current research is that the pharma industry’s reputation has taken a beating from their opposition to imports from Canada. So the current state of the Medicare bill which allows imports only if the FDA approves them–passed by PhRMA influenced house that knows full well that the FDA wont approve them–may not last. In fact huge majorities of seniors are still very angry at the drug companies.  And when seniors get mad, especially when most of them will have to wait 26 months for the Medicare drug program to kick in, Congress tends to listen.

However, the New York Times reported the other day that the online pharmacy business in Canada is under pressure at home as well as from the US.  While Springfield, Mass, and the states of Illinois, Minnesota and others are thinking of formally going with a Canadian import program in defiance of the law, the Canadians have problems.  The first is that big Pharma is restricting the access to product to those online pharmacies.  The second is that the government in Canada, which so far is still elected by Canadians, is concerned that the whole business of re-exporting drugs to the US may end up both causing shortages of pharmacists serving Canadians and in the longer run may make it hard for Canada to keep buying its drugs at the prices it’s been getting.

PHARMA: $1.7bn R&D for a new drug? Surely you jest, Bainies?

In an study in the news yesterday Bain, the big management consulting firm, said that the cost of bringing a drug to market was $1.7bn.  I’ve heard the $7-800m number many times before and scoffed but this one made me do some basic math.  The CMS (a newly pharma-friendly organization) put out a report this year that suggested that R&D for pharma would be $30 billion (see chart on page 13), although the same report suggested that R&D spending was 13% of revenues of branded drugs revenues of $130bn. So that actually indicates that the number was $17bn.  But let’s go with the $30 billion number and assume that it’s constant over a ten year period (which it hasn’t been).  When I last looked at this about 2 years ago there were about 500 drugs with over $10m sales in the US, and who knows how many more worldwide. In the US according to this list of the top 200 prescribed drugs some 80 odd (or 40%) were generic. So assuming that to be true for the top 500 drugs, means that there are 300 branded drugs.  Assume further that in a 10 year period there’s turnover of 80% of the branded drugs (and it’s probably faster than that), the back of the envelope calculation is that some 500 drugs of any reasonable size come onto the market every decade. Yet at its most generous assessment, R&D spending is only $300bn in decade–leading me to guesstimate that the cost of R&D per product is, at the outside, in the $5-600m range, not more than 3 times that.

Now Bain is playing both sides of this.  It’s acting on behalf of its pharma clients to keep their line about the costs of R&D in the press, but it’s also interested in frightening them into serious restructuring to combat their lack of revenue from new blockbusters and to get them to spend consulting dollars on the development of new business models.  But if you thought these numbers had me perplexed, my anonymous pharma veteran who is an occasional contributer to THCB is foaming at the mouth about it:

    What the hell; let’s do a study to show that it actually costs $2 Billion to bring each new drug to market.  Stick in all fixed costs  (maintenance, landscaping, inspections, property taxes, perquisites for senior management, depreciation, anything else we can think of.)  Yes, let’s show that Big Pharma is in a real pickle and they should get a federal bailout.  Highest return on equity of any industry? On sales?  Guys like Ray Gilmartin sitting around with $90 Million in unexercised options and Hank McKinnell getting $40 Million a year?  Nah, none of that matters.  Blame the foreigners (Old Europe, the Canucks, everyone else) for not allowing unconscionable profits the way we do.  Blame the retirees for not adequately planning for themselves, blame baby boomers for being too short sighted.  Hell, if none of that sticks, then just grease the politicians and make sure we get a bunch in there who can do business on a bought-and-paid-for basis.  It’s just like the advocates and opinion leaders we’re always buying off, only this will be easier because there’s no goddamned competitor with enough hash to pay them to go the other way.

And then he calms down, somewhat

    Oops, sorry, that was my Texas alter ego that got out of the cage.  I just stuffed him back in there, together with some crony capitalists, militarists, jingoists and religious fundamentalists.

    But his hyperbole does have a point.  I recently completed a study for a Big Pharma client who gave me the actual dollar costs to develop two, recently launched products.  Take the smaller of the two spurious figures (i.e., $800 Million), divide it by 20 and you’ll be in touch with reality.  Looking at the range of drug development costs, these products were on the low side because they’re in a category where Phase III trials enroll between several hundred and 3,000 patients.  If you go to something such as hypertension where trials often enroll upwards of 15,000 patients, costs will be higher but still within the $200 million range and not the billion dollar level.  Only by throwing in the kitchen sink and dividing all R&D costs by the number of new products do the whores at Tufts get to $800 billion.  The other whores at Bain throw in the toilet and shower as well by including costs for marketing, sales, bribery and what not.

Now the pharma veteran’s alter ego has flown off the handle somewhat, and he may not be including the costs of failed drugs in his calculations (although there aren’t that many highly expensive failures). But let’s remember what this is all about.  It’s about convincing the WTO and the US trade negotiators that price setting by foreign governments is a restraint on trade, and that far from Canadian prices coming here, ours should go to Canada, and Europe and Japan, etc!

This is not a joke.  Said the man from Merck (Ian Spatz, VP for public policy), "This is all going on in this larger context of growing unrest in the United States that other countries are not paying their share of the cost of pharmaceutical research."  And PhRMA is starting with Australia. The poor Aussies, who sent soldiers to Iraq over the objections of the vast majority of their citizens in order to get a free trade deal that would enable their agricultural goods to get onto US dinner tables, did not see this one coming! But if big PhRMA manages to convince us all that those costs are real, why wouldn’t they at least try to take them to the rest of the world? You may have thought that "growing unrest" over drug pricing here was all about American seniors taking the bus to Canada to buy drugs cheap. PhRMA thinks instead that we’re all upset about subsidizing the Canadians, and if we’re not we should be! After all the best defense is a good, pre-emptive, offense!

PHARMA: More on A-Z, Crestor, statins, heart disease . . .

And in a follow-up to Friday’s post about Crestor, I was alerted to this interview with Astra-Zeneca President David Brennan in which he claims that Crestor’s slower than forecast sales are due to an overabundance of free samples that they’d put into the market and expected (emphasis added by me) concerns about the drugs safety profile following the Baycol withdrawal. However, A-Z still believes that Crestor will get to be 20% of the statin market, and believe that their projections are on track. All of which leads the industry veteran who contributed to the post last week to comment:

    "Talk about a non-denial denial of Crestor’s lagging sales, see the Reuters article below.  I should think that if AZ’s U.S. president, David Brennan, disagreed with the Rx data or if there were any discrepancies in the performance measures, he would clearly make such points.  Not only did he fail to refute the data in the interview, but he says they were expecting this slow uptake. "We knew going into this market, based on our market research, that because of Baycol safety on uptake would be an issue." Strange, but  I don’t recall AZ ever mentioning anything like this before Labor Day!

    Brennan then launched into what I can only consider a diversionary statement about sampling. "AstraZeneca distributed around 100,000 30-day "Reach for Crestor" free sample packs to doctors at the time of launch." This is certainly far short of the 500,000 we heard about earlier, but also suggests a faulty marketing plarelativeve to sampling distribution.  If AZ has 3,000 reps promoting Crestor, the "Reach for Crestor" sample drop provides only 33 sample kits per rep.  If we assume that each rep will drop one sample kit per physician, that means each rep is only sampling 20% of his/her call list (at an average of 150 physicians/rep).  If AZ has 5,000 people on the street to promote Crestor, then they’ve given each rep only 20 sample packs.  Each 4-wk pack is still for only one patient, no matter how many weeks worth of pills are in the sample.  AZ would have been wiser to give out  400,000 1-week sample kits.  The goal consists of getting as many patients as possible to start using the product, not to give a ton of free drugs to fewer patients!

    Brennan goes on to say: "The amount of sampling in general, not just ‘Reach for Crestor’, has increased significantly with our launch. Not only our sampling, but the sampling of our competitors has gone up substantially." I knew someone here was born at night, but I didn’t think it was last night.  What he described here is basic competitive marketing behavior.  When a new product launches, it provides a wakeup call for existing competitors.  They stiffen most of their "spokes on the marketing wheel."

Personally I’m taking a more sympathetic view.  Brennan is a smart guy and he realizes that expectations here have gotten a little our of whack, and that the market needs to see the move to Crestor as evolution rather than revolution.  It’s just a pity that A-Z didn’t try to prepare Wall Street for this before the Crestor launch.  There will be a major DTC effort for Crestor next year, so we’ll see both what that does to sales and how Lipitor and Zocor respond.

Other statin news: Meanwhile theheart.org (reg req’d) reports on a British study which suggests that for patients with heart disease statins are harmful. The study’s author Dr Andrew Clark (University of Hull, UK) commented to heartwire:

    "In heart failure, the fatter you are and the higher your cholesterol, the better off you will be. This raises the possibility that statins may be dangerous in these patients, but I couldn’t state that categorically. We need controlled trials to make such definite statements." But he is not treating his heart-failure patients with statins. "My recommendation at the moment is not to use statins in heart-failure patients. I have no evidence to believe that they are good and quite a lot of suspicious evidence that they are bad," he said.

Of course this is for patients who already have heart disease who are a very small share of the target market for statins.

Theheart.org also has a round up of the letters to the Lancet supporting and opposing its recent anti-Crestor stance.

PHARMA: More on Crestor and Astra-Zeneca

One of the great fun things about doing this blog is meeting people via email who have interesting insights. Of course sometimes I feel like an investigative journalist as I can’t always reveal my sources.  That’s the case with the Crestor issue which I’ve blogged on for a while most recently yesterday, when I suggested that it might be time to short Astra-Zeneca. Well today in my email box popped this gem from a pharma industry veteran:

    I’ve noticed some people are placing bets down on AZ stock but I’ve also seen that for the past several weeks, AZ has been buying 200,000-300,000 shares of its own stock every day.  Looks to me as if McKillop and his CFO have been propping themselves up on the ropes with their left hand while trying to parry the jabs with their right.

    In any case I don’t think that some investor activity is indicative of how Crestor and Exanta will perform competitively.  My own hunch is that if (a major "if") no ADR reports surface of rhabdo for Crestor and liver toxicity for Exanta, both products will eventually do well.  I define "well" for these products in more modest terms, however, something closer to $1b-$1.5B rather than $3B for Exanta and $2.5B for Crestor.

    I honestly feel that these Big Pharma companies do substantial harm to themselves by over-inflating the market prospects for their new drugs.  A couple of years ago I closely assessed for clients the development progress of Bristol-Myers Squibb’s Vanlev.  They touted that thing as likely to revolutionize hypertension care and as a $5B drug.  Merck similarly blared the sirens for its Substance P antagonist and its PPAR, both of which they just abandoned.  In terms of marketing strategy this early hyping makes little sense.  The companies do it mainly because it gives a short term boost to the stock and the compensation of senior managers is closely tied to stock appreciation.  By the time reality hits, when the stock price tumbles and ordinary blokes lose their jobs, these boardroom Tony Sopranos are off looting some other venture.

There’s clearly a lot in that last paragraph. Pharma execs in general benefit from actions that happened before they got to the top.  Not that they don’t have huge challenges, but they benefit (or not) from bets made years before which either turn into blockbusters (or don’t). Similarly the PhRMA’s decision to go for Medicare reform will end up profiting the pharmas in the short and medium term, but will likely open them up to price controls in the next decade or so.  Of course by that stage the executives behind today’s deals will be happily in retirement.

PHARMA: Lipitor v Crestor

Forbes is running a wacky poll to see if people think that Crestor can take on Lipitor.  Lipitor should hit $9 billion in sales this year.  Early indications are that Crestor is struggling but the poll results show some support for Crestor. Meanwhile Astra-Zeneca’s stock value shows that Wall Street is certainly anticipating big things from Crestor. It’s within a couple of bucks of its all time high, and has well outstripped Pfizer’s in the last 2 years. If I ran a billion dollar hedge fund I’d buy Pfizer and short A-Z against it….but I don’t

. But these guys do and they went short of A-Z a couple of weeks ago with a price target of $40. In fairness to A-Z not much has happened since!

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