Pfizer to focus R&D programs on more ‘valuable’ diseases
In an effort to deal with impending generic competition and boost its lackluster pipeline, Pfizer Inc. said last week it will end early-stage programs for obesity, heart disease and bone health and shift its R&D focus to oncology and five other therapeutic areas it has deemed more “valuable.” Pfizer also announced this week that it will replace its current geographical divisions with three focused units that will move certain drug development functions out of the traditional research arm and into the commercial groups that also handle sales and marketing.
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NEW YORK—In an effort to deal with impending generic competition and boost its lackluster pipeline, Pfizer Inc. said last week it will end early-stage programs for obesity, heart disease and bone health and shift its R&D focus to oncology and five other therapeutic areas it has deemed more "valuable." Pfizer also announced this week that it will replace its current geographical divisions with three focused units that will move certain drug development functions out of the traditional research arm and into the commercial groups that also handle sales and marketing.
In a internal memo distributed to employees Sept. 25 and confirmed last week, Pfizer said it will focus its $7 billion-plus R&D budget for this year on six high-priority areas: cancer, pain, inflammation, diabetes, Alzheimer's disease and schizophrenia.
Pfizer said it will drop early-stage programs in four areas of cardiac disease—hardening of the arteries, high cholesterol, heart failure and peripheral artery disease—as well as anemia, bone health, gastrointestinal disorders, muscle diseases, obesity and osteoarthritis. According to Pfizer's most recent pipeline list, the New-York based pharma had 102 drugs in development, including 47 in the first stage of testing and 37 in the second phase. Pfizer said the changes will not affect Phase III programs in these disease areas.
Pfizer's plan appears to be an effort to shield itself from an expected revenue loss when its blockbuster cholesterol drug Lipitor, which saw $12.7 billion in 2007 revenue, loses patent protection in 2011. According to the Pfizer memo, products for cancer and pain are typically more profitable because drug makers can charge higher prices and there is less competition.
"We are making significant operational improvements and driving our strategies to accelerate development, refocus investments and further improve execution, including trial design and cycle times," said Martin Mackay, president of Pfizer Global Research & Development, in a statement. "We are investing in the most promising disease areas, where there is strong unmet medical need, favorable markets and an opportunity to advance medical science."
Earlier this week, Pfizer added that it will replace its current geographic divisions with new ones centered on primary care, specialty care and operations in emerging markets. The changes will take effect in January.
Pfizer's R&D reshuffling plan is part of a restructuring strategy the company announced last year. Although these recent changes are expected to include job and spending cuts, they reportedly will not result in facility closings, and many employees will be shifted to other areas of research.
Immediately following the announcement, Pfizer rose 79 cents to $18.44 in New York Stock Exchange composite trading. The shares have dropped 19 percent this year.
Pfizer is not the only pharma feeling the pressure of market challenges. Many large firms have deployed strategies to improve R&D efficiency, most of which have involved job cuts or outsourcing. Most recently, GlaxoSmithKline announced it will cut up to 850 R&D jobs–about 6 percent of its total R&D staff—in the U.S. and England in an effort to "compete effectively in what is a rapidly changing and challenging environment for pharmaceutical companies." Other firms have responded to market pressure by entering into risk-sharing partnerships with other firms—as in the case of Eli Lilly and Co., which sold its Greenfield Lab to CRO Covance in August—or combining areas of operation.
John Paul, a research analyst at Frost & Sullivan, told MarketWatch that Big Pharma is taking the appropriate measures to protect and boost its R&D investment, although time will tell whether these strategies will achieve their desired outcomes.
"Be it layoffs or outsourcing, the pharmaceutical industry is geared up to fight the decline," Paul told MarketWatch. "For the moment, the pharmaceutical industry has to be in fighting trim until the investments in R&D start producing results." DDN
In a internal memo distributed to employees Sept. 25 and confirmed last week, Pfizer said it will focus its $7 billion-plus R&D budget for this year on six high-priority areas: cancer, pain, inflammation, diabetes, Alzheimer's disease and schizophrenia.
Pfizer said it will drop early-stage programs in four areas of cardiac disease—hardening of the arteries, high cholesterol, heart failure and peripheral artery disease—as well as anemia, bone health, gastrointestinal disorders, muscle diseases, obesity and osteoarthritis. According to Pfizer's most recent pipeline list, the New-York based pharma had 102 drugs in development, including 47 in the first stage of testing and 37 in the second phase. Pfizer said the changes will not affect Phase III programs in these disease areas.
Pfizer's plan appears to be an effort to shield itself from an expected revenue loss when its blockbuster cholesterol drug Lipitor, which saw $12.7 billion in 2007 revenue, loses patent protection in 2011. According to the Pfizer memo, products for cancer and pain are typically more profitable because drug makers can charge higher prices and there is less competition.
"We are making significant operational improvements and driving our strategies to accelerate development, refocus investments and further improve execution, including trial design and cycle times," said Martin Mackay, president of Pfizer Global Research & Development, in a statement. "We are investing in the most promising disease areas, where there is strong unmet medical need, favorable markets and an opportunity to advance medical science."
Earlier this week, Pfizer added that it will replace its current geographic divisions with new ones centered on primary care, specialty care and operations in emerging markets. The changes will take effect in January.
Pfizer's R&D reshuffling plan is part of a restructuring strategy the company announced last year. Although these recent changes are expected to include job and spending cuts, they reportedly will not result in facility closings, and many employees will be shifted to other areas of research.
Immediately following the announcement, Pfizer rose 79 cents to $18.44 in New York Stock Exchange composite trading. The shares have dropped 19 percent this year.
Pfizer is not the only pharma feeling the pressure of market challenges. Many large firms have deployed strategies to improve R&D efficiency, most of which have involved job cuts or outsourcing. Most recently, GlaxoSmithKline announced it will cut up to 850 R&D jobs–about 6 percent of its total R&D staff—in the U.S. and England in an effort to "compete effectively in what is a rapidly changing and challenging environment for pharmaceutical companies." Other firms have responded to market pressure by entering into risk-sharing partnerships with other firms—as in the case of Eli Lilly and Co., which sold its Greenfield Lab to CRO Covance in August—or combining areas of operation.
John Paul, a research analyst at Frost & Sullivan, told MarketWatch that Big Pharma is taking the appropriate measures to protect and boost its R&D investment, although time will tell whether these strategies will achieve their desired outcomes.
"Be it layoffs or outsourcing, the pharmaceutical industry is geared up to fight the decline," Paul told MarketWatch. "For the moment, the pharmaceutical industry has to be in fighting trim until the investments in R&D start producing results." DDN
