Pfizer counts the cost of Exubera, Nektar suffers

By Anna Lewcock

- Last updated on GMT

Related tags Exubera Pfizer

With yesterday's perhaps unsurprising news that Pfizer has cut its
losses and pulled out of the inhaled insulin market by dropping
Exubera and giving up on second generation devices, the world's
biggest pharma firm is in the process of scrabbling to get back on
track and reaffirm its position at the top of the tree.

Dropping the Exubera product altogether is costing the firm a hefty $2.8bn (€1.96bn) in charges, but with revenues for the year to date only a measly $12m for the potential blockbuster and a complete failure to win over prescribers, Pfizer appears to have been fighting a losing battle from early on. As reported yesterday​, the warning signs that prophesied Exubera's downfall were well documented, with reports of limited uptake and partnering firms forced to cut jobs and scale back of production. Nektar Therapeutics, however, the company that partnered with Pfizer and developed the Exubera inhaler and powder insulin formulation, only discovered that Pfizer was walking away from the product when the company put out a press release yesterday morning. "Nektar has been very disappointed in Pfizer's performance in marketing Exubera,"​ Howard Robin, Nektar CEO, said in a statement. "Pfizer has publicly acknowledged its organisational difficulties and resulting poor performance in launching Exubera…We are evaluating all of our options with respect to Pfizer's Exubera announcement to protect the interests of Nektar." ​ Pfizer will be redeploying the workforce dedicated to Exubera to other more profitable projects, and the manufacturing activities related to the product will be phased out. Dealing with the leftover manufacturing sites in the US and Germany and their employees is a more tricky matter, however, and CEO Jeff Kindler said yesterday that the company will have to "explore alternatives for sites and employees in consultation with works councils and other appropriate bodies."​ Consort Medical (formerly Bespak) had a contract to manufacture the Exubera device, and today the UK firm estimated that the decision to drop the product will impact the company's profits by around £2m (€2.9m) next year. Despite arriving first on the market with an inhaled insulin product - an enviable and potentially very lucrative position to be in - criticisms of the Exubera device came thick and fast, particularly focusing on the impracticality of the relatively cumbersome inhaler. Pfizer was indeed in the process of developing a second generation device to address these grievances and hopefully regain some of the ground lost with the initial product. However, with yesterday's announcement the company also revealed that it would be ceasing investments in the development of a second generation device, perhaps feeling that it was too little too late, with other companies already forging ahead with their own inhalable insulin products. Ian Read, president of Pfizer's worldwide pharmaceutical operations, noted that there were two main barriers that the firm clearly underestimated and that prevented Exubera becoming the success story that the company had hoped for. The resistance from physicians and patients to going on to insulin any earlier than they might have done previously was seen as a particular hindrance to the uptake of Exubera, coupled with "the burden the Exubera technology represented to the practice,"​ in terms of lung function testing, training with the device as well as the size of the inhaler itself. The Exubera debacle seems to be just the latest in a series of blows for the pharma heavyweight. Financials released yesterday told a sorry tale of generic competition that has seriously eroded profits from the likes of Zoloft (sertraline) and Norvasc (amlodipine), down 73 per cent and 47 per cent respectively for the quarter. Discounting these two products, however, would show a 5 per cent increase in worldwide pharmaceutical revenues, the company was keen to point out. The impact of generic competition for these products, however, is just the warm-up act for the full scale performance in 2011, when Pfizer faces "loss of exclusivity on the largest product in the history of the pharmaceutical industry,"​ Lipitor (atorvastatin). This, combined with the loss of the anticipated blockbuster sales from Exubera, and the crushing disappointment of torcetrapib (another longed for potential billion dollar cash cow) in December last year, has shaken Pfizer to its foundations, removing two of the possible shields to help buffer the Lipitor losses and help Pfizer maintain its position at the top of the pharma tree. Jeff Kindler said yesterday that when he became CEO of Pfizer last year, that "it was very clear…that this business needed to be fixed in a lot of ways.""This is tough work and there are no quick fixes…we all know very well that we face in 2011 loss of exclusivity on [Lipitor] and that while we are fixing the foundation of this business, while we are improving our operational performance, we have to be not just thinking about, but taking actions to prepare ourselves for that time." ​ These actions have included a swathe of job cuts and site closures (nine manufacturing sites and six research sites so far), but with yesterday's Exubera news and the resulting impact on activities, the future of yet more plants and jobs has been thrown into question.

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