The world's largest drug firm, Pfizer, warned that 2005 would be its "toughest year ever" as the pharmaceutical company detailed restructuring plans to save $4 billion (€3.1 billion) in costs every year as well as cushion the blow of losing exclusivity of its blockbuster drugs.
The company, which makes the erectile-disfunction drug Viagra, has struggled to maintain its growth in the face of increased competition and the expiration of key patents.
The drugs losing patent protection this year include the anti-fungal Diflucan, the epilepsy treatment Neurontin, the blood pressure drug Accupril and the antibiotic Zithromax.
In the future, the antidepressant Zoloft, the blood pressure drug Norvasc and the allergy treatment Zyrtec could also be hit. Approximately $15bn worth of these drugs were sold worldwide last year.
Pfizer said in a presentation to financial analysts that its profits would fall and sales would stagnate in 2005. But the company promised strong profit growth in 2006 and 2007, saying adjusted earnings per share would rise more than 10 per cent in both years.
According to chief financial officer David Shedlarz, analysts should expect earnings per share of $2 this year, compared with the market consensus of $2.12.
Pfizer is among the world's biggest and richest companies, with $52.52 billion in sales and $16 billion in profits last year, excluding certain one-time charges. Indeed, as a reflection of the company's confidence in the growth potential of its research and development pipeline, Pfizer revealed plans to invest approximately $8 billion in R&D in 2005, compared with $7.7 billion in 2004.
Hank McKinnell, Pfizer's chairman and chief executive officer said: "2005 will be a transition year. In addition to the loss of exclusivity on several important products, we are facing a number of uncertainties."
"These include the outlook for our Cox-2 franchise, continued pricing pressures, and market acceptance of new products. We expect our performance to rebound quickly in 2006 and accelerate in 2007 as we increasingly realise the benefits of the continued growth of major in-line products, new product launches and productivity initiatives," he added.
The firm is seeing a fall in sales of its arthritis painkillers Celebrex and Bextra, both Cox-2 inhibitors, which have been embroiled in a scare over their side effects.
Celebrex became a billion dollar earner for Pfizer in the final three months of 2004. However, that was after Merck's rival pill Vioxx was taken off the market, and before the damaging allegations about Celebrex.
Dr John LaMattina, president of Pfizer's global R&D operations, outlined the company's recent achievements across the broad range of R&D activities, pointing out the high level of productivity in just the last 125 days since the company's November, 2004 analyst meeting at its Groton, Connecticut R&D site.
"Pfizer's pipeline continues to grow he said. "Since December, our pipeline has grown to 149 new molecular entities. We have 102 candidates in early development, 33 in mid-stage development, eight in advanced development, and another six in registration. In addition, we have 78 active product enhancement projects in development. We are optimistic that this presages a gathering influx of new advanced development opportunities over the next several years."
Pfizer has filed an New Drug Application (NDA) with the Food and Drug Administration (FDA) for marketing approval of Exubera, or inhaled insulin. Exubera's European filing is proceeding. Pfizer also submitted a revised label to the FDA for the add-on epilepsy indication for Lyrica, which was approved in 2004 for the treatment of diabetic peripheral neuropathy and post-herpetic neuralgia.
According to a report by Goldman Sachs , there will be significant potential demand for inhaled insulin. While Pfizer does not have a large presence in diabetes, Exubera could be an interesting point of leverage. An NDA submission is expected in early 2005 and filing has been made in Europe. A key issue on Exubera has been determining safety requirements. Goldman Sachs estimate peak sales potential of $500 million and forecast $250 million in 2008.
Pfizer also has submitted several important supplemental NDAs for new indications for existing products including the cancer agent Aromasin, the novel antibiotic Zyvox, and the antifungal Vfend. Pfizer's medicine depo-subQ provera has received FDA approval for contraception and endometriosis.
The drug candidate torcetrapib, a novel compound designed to raise HDL, or "good" cholesterol, is being paired with Lipitor to create Pfizer's "next generation product for atherosclerosis prevention and treatment."
"The hypothesis that HDL elevation combined with LDL reduction will advance cardiovascular medicine to a new standard of care will be thoroughly investigated by a major development program that will cost approximately $800 million dollars to complete," he added.
Pfizer also added that it intended to move ahead with plans for clinical studies to further explore the benefits as well as the risks of the Cox-2 specific medicines compared to older, non-selective medicines.
Karen Katen, Pfizer's vice chairman, added that recently launched products were already increasing revenue, driven by encouraging clinical data and increasing market acceptance.
Pfizer plans to extend the antibiotic Zithromax to single-dose Zithromax microsphere formulation, which has been filed for approval with the FDA. This technology allows the delivery of a front-loaded antibiotic treatment that enhances compliance through directly observed therapy in the presence of a physician.
Pfizer claimed that the anti-schizophrenia drug, Geodon, had grown in market share and in new and total prescriptions, suggesting the market had become receptive to its benefits, including efficacy, dosing flexibility and favourable metabolic and weight-gain profile compared to older anti-psychotic agents.
Another newly launched medicine, Lyrica, has been well received in Germany, the UK and Mexico. Lyrica's early success signifies its clear benefits. It is effective with rapid, robust and sustained pain reduction across its entire dose range well tolerated and easy-to-use.
Macugen, which was approved last December for neovascular (wet) age-related degeneration, adds to a best-in-class ophthalmology franchise. Macugen is the only current therapy approved for all forms of lesion subtypes, sizes and locations, and Medicare carriers in all 50 states have confirmed coverage.
Other medicines highlighted by Katen included Xalatan, the most-prescribed branded glaucoma medicine worldwide; Aromasin, which continues to be the fastest-growing aromatase inhibitor for the treatment of breast cancer in the US, Rebif, for the treatment of multiple sclerosis; Vfend, with a new indication that makes it the only intravenous and oral antifungal with first-line efficacy in systemic yeast and mold infections; and indiplon, a drug candidate that is potentially the first medicine to be indicated for multiple features of insomnia.