Bespak to cut jobs as Exubera prospect falls short
insulin Exubera, has announced it will cut a "significant" number
of jobs as sales of the once-touted blockbuster are falling short
of expectations.
The UK-based drug delivery device manufacturer said that following the slow take-up of Exubera by diabetes patients, Nektar Therapeutics and Pfizer have revised their short term forecasts for the inhalation device, which will result in a reduction in production. Exubera is a powdered insulin product that is inhaled into the lungs before a meal, using a proprietary inhalation device made under contract on a 50:50 split by Bespak along with The Tech Group, which is part of West Pharmaceuticals Services. Bespak has been developing the inhaler's manufacturing process since July 1999 and the company's Milton Keynes facility is almost exclusively geared towards the high volume production of the Exubera device. However, the company does not disclose the amount of devices that have been made so far. Bespak said it is embarking on a consultation process with the 160 staff involved in the production of the Exubera inhaler and expects to reduce the team involved in the Exubera contract. "The procedure will take three months after which we will make a significant number of redundancies," Jonhathan Glenn, Bespak's financial director, told Outsourcing-Pharma.com The company said the costs of the staff reductions are recoverable by Bespak under the terms of its contract with Nektar, the developer of Exubera's powdered insulin formulation. But Glenn said his company was confident about the future of Exubera, especially with the huge forthcoming advertising campaign Pfizer is launching in the US, and which is expected to kick off in September. "Pfizer and Bespak expect that the direct consumer advertising operation will have a great impact on sales and will hopefully lead to a significant ramp-up in production," said Glenn. "We know that once patients use Exubera, they don't give it up so the key issue is to increase significantly the up-take." In its financial results released last month, Bespak predicted lower production levels for the inhaler and referred to "uncertainties about sales volumes" for the product over the short- to medium-term. "Bespak will, however, continue to benefit from its cost plus contract with Nektar, and given this and the favourable outlook for the company's other products, the Board remains comfortable with the market consensus for the current financial year, which began 1 May 2007," the company said in a statement. "Exubera is a significant contract for us but we have a very broad product platform and we try not to depend on one specific product, so we will weather the storm," said Glenn. This optimism was echoed by the company's chief executive as far as the company's future financial results are concerned. "In January Bespak announced a goal to double pre-tax profits over the next five years. Despite sales of the Exubera device growing slower than originally anticipated, we remain on track to achieve this goal," said Mark Throdahl, Bespak's CEO. On the other hand, Exubera could represent an expensive flop for Pfizer if it does not achieve the blockbuster status the industry had hoped for. Exubera was expected by its makers as well as many analysts, to be a revolution for the treatment of Type II diabetes and to be an important step for patients who are postponing insulin therapy to avoid injections, and thus a major blockbuster. However, as reported by In-PharmaTechnologist.com shortly after Exubera's approval in early 2006, the drug's disappointment has not come as a complete surprise. Some analysts believed at the time that its potential had been overvalued. A report published by Datamonitor shortly after the launch of Exubera in the US last July also predicted the unmet need for these newly-formulated drugs was too low to fuel a multibillion-dollar market. Indeed, it seems that the initial excitement has been replaced by the cold reality - the therapy, initially expected by Pfizer to have a market potential of up to $2bn (€1.5bn) a year, is not selling well, and doctors and analysts are now skeptical about the product's ability to recover from its stumbling start. Analysts have cut their forecasts and the figure being thrown around is around $300m in sales worldwide in the next few years. This could hit a blow for a number of manufacturers, including Pfizer and Nektar, who have long pursued the development of newly-formulated insulin as a potential money-spinner. "Presented to great fanfare to physicians and shareholders all over the world as a sure-fire blockbuster in the making, in Datamonitor's opinion, Exubera is unlikely to revolutionise insulin therapy as some might expect," said Datamonitor cardiovascular analyst Daniel Poso in an earlier interview. Datamonitor had forecasted sales of Exubera to fall well short of previous estimates and stabilise at $207m by 2015 - a figure which sounded highly pessimistic at the time, but not so much now. The scale of the impact on Bespak's business will be clearer when the company announces its full year results on 11 July
