Friday, September 28, 2007

Pfizer gets some adult supervision

According to this press release, Pfizer has elected two new directors to its board: James M. Kilts (former CEO of Gillette) and Suzanne Nora Johnson (former head of research at Goldman Sachs).

Pharmalyst's own view is that it is high time that Pfizer's board saw some changes of this nature. The previous board tolerated their previous CEO McKinnell for too long and let him walk away with an obscene pension package. At one time, their board included people like Frankin Raines (former CEO of Fannie May and who according to many had a key role in the accounting scandals in that Pfizer's credit, Mr. Raines didn't stand for re-election once the scandals at Fannie May emerged).

If you look at Pfizer's current board (see here) it is clear that this board could use people like Mr. Kilts and Ms. Johnson. The board does have eminent scientists, academics and policy wonks. However on the corporate side (corporate strategy, finance, governance etc) it does seem to lack heavyweights with the notable exception of William C. Steere Jr. (he was their CEO before Mr. McKinnell). Based on what Mr. Kilts did at Gillette (& later the deal with P&G) and what Ms. Johnson did at Goldman, Pfizer's CEO could get some real adult supervision now.

These changes coupled with a few other things such as the ones below bode interesting times for Pfizer ahead.
  • Selzentry being studied for RA
  • Neurontin patent litigation heading to the supremes
  • Chantix sales are smokin' hot :-)
  • New CFO announced
  • New head of R&D (To be announced)

Friday, September 21, 2007

Sanofi opens the R&D kimono

The WSJ Health Blog recently had an interesting post on a recent presentation made by Sanofi brass in Paris featuring their R&D pipeline. Besides rethinking their Accomplia strategy, Sanofi revealed a couple of interesting products.

One of these is a smoking cessation drug called dianicline. Perhaps Pfizer's Chantix/Champix will see competition from this drug before other products in this category (such as the Novartis/Cytos nicotine vaccine deal). Meanwhile, WSJ Health Blog just reported that the sales of Pfizer's Chantix are "on fire" in the US.

Another interesting product is a Zetia like compound - AVE5530. Sanofi wants to sell it separately and pair it with a statin. Sanofi plans to file the drug for approval in 2010. Given that Vytorin has been such a huge success, Sanofi ought to be selling the statin combo from day one. If they plan to file in 2010, they probably have already selected the statin to pair this with - either Lipitor or Crestor (Sanofi are unlikely to pair it with the generic simvastatin given the competetive positioning of this product wrt Vytorin). Since AZ is already working on other combo options for Crestor (with Abbott's Tricor), it is quite likely that this drug will be sold in combination with Pfizer's Lipitor. Exactly how much such a combo drug would benefit Pfizer is unclear to Pharmalyst given that Lipitor's patent is set to expire in the US in 2010. Merck and Schering have already announced that they will sell the Zetia Lipitor combo once Lipitor goes generic.

Wednesday, September 19, 2007

Chantix's Foibles

Yesterday Pharmalyst caught the tail end of what appears to be a teaser ad for Pfizer's smoking cessation drug Chantix. The ad aired around 7:50pm on the ABC networks in the US. The ad showed some thing like a hare and a tortoise & then the imagery of a cigarette being crushed with the Pfizer logo on the screen. The word Chantix wasn't mentioned & looked like some sort of a play on the well known Aesop's fable. Pharmalyst wasn't too impressed...but its early days with just the teaser ad being out there. The ad mentioned a website with the word fable in it. After some googling, Pharmalyst thinks it is Looks like a crappy website...the website insisted on installing some software before Pharmalyst could view it and for a moment Pharmalyst wondered if someone was trying to install some hacking software on Pharmalyst's computer.

Meanwhile ABC news featured a rather unusual & bizzare story on Chantix here.

Tuesday, September 11, 2007

Isentress (Raltegravir) Pricing

We know that Pfizer's Selzentry (maraviroc) costs $10,585 per year (see Pharmalot's posting here). Any thoughts on what Merck's new integrase inhibitor Isentress will be priced at? Given that it doesn't have any kind of tropism test issues, perhaps Merck will price it higher than Selzentry. Further looks like Isentress does not have some of the safety issues Selzentry has (though the incidence of cancer in the trials was slightly higher). Will be interesting to see if Merck prices it like Roche's Fuzeon (20K per year) or whether they match Selzentry or end up somewhere in between. Pharmalyst welcomes reader comments on this.

Pharma Sector - In Private Equity's Crosshairs?

A while back, Pharmalyst had argued the case for big pharma to take on more debt. Today, reports that private equity groups now have their eyes on the pharma sector. The article quotes a leading industry consultant who states that these groups "are in discussions that could lead to the takeover of a large quoted drug company". He further revealed that "there was discussion about how to sell the research functions of pharmaceutical groups, boost their sales and efficiency, gear them up and run them for cash".

If so, this is very interesting news. So far most of the private equity interest has been in the generics sector where the risks of new drug discovery & development are non-existent and the cash flows very predictable. However, after years of treading water, perhaps big pharma investors and these private equity groups are taking a second look.

One way to make sense of a private equity deal for a research-based big pharma is to spin off parts that are less risky and have predicable cash flows. Take for instance GSK. Even if one ignores the consumer health biz, they sell nearly 50 products. Out of the 23.2 billion pounds of 06 revenues, roughly 20 billion came from the pharma biz (rest from consumer health. See here.). The top ten drugs (such as Avandia and Advair) accounted for almost 10 billion implying that the 40 or so smaller products almost generated 10 billion. Arguably not much research or new risky development work is going on for many of these smaller products and they generate very predictable cash flows.

Unlike GSK's consumer health biz, these 'boring' products will not have much of a strategic fit with other buyers like a P&G & so would be ideal candidates for a private equity shop to take over. These private equity firms could really pay a premium to current GSK shareholders, load up the spun off company with debt, cut the fat and almost run it like a utility company. They could then use the strong cash flows to pay off debt. Of course even half of GSK's pharma biz is probably still too big for the private equity players to do a club deal....they probably are looking at a player much smaller than GSK. Also while with the sub prime & other issues while floating debt may have become difficult, looks like AZ was able to issue $9 billion worth of bonds last week. Interesting times ahead indeed!

Thursday, September 6, 2007

Chantix/Champix - International Pricing & PR Scams

Pharmalyst had previously speculated on the pricing of Chantix/Champix overseas. My speculation was that Pfizer would perhaps target the upper income segment and therefore price it similar to US/Europe levels ($300 for 12 week course). Recently I checked with some fellow students (who were international and had the opportunity to visit their home country over the summer) whether Champix was being sold in their countries. Turns out that Pfizer (at least in some South American markets) is casting a wider net and targeting on both the upper and middle income segments. The price in a couple of markets appears to be around 60% of the US price according to my survey (n=2). That works out to $180 and correlates roughly with the cost of cigarettes in those countries. In the US this is priced roughly at 60 packs of cigarettes (pack a day for two months). Pricing in Latin America is using a similar approach it seems.

Meanwhile it looks like the Asian launch of this drug is under way and the PR arm of Pfizer is in full swing. Take a look at this puff piece in a UAE newspaper. According to this article:

"Dr Bassam Mahboub, incoming head of the national anti-tobacco committee, advised smokers against attempting to quit on their own."

Rather strange given that in most countries (US CDC Survey, UK NHS Surveys etc) cold turkey is the most effective method and with that method you don't deal with the side effects. Here is the head of the "national anti-tobacco committee" recommending that people don't try cold turkey and instead implying that they try stuff like Champix. And look at the Pfizer spokesman giving quotes that are not really backed up by the data. According to him/her:

Smoking is not only a habit like many people would think. It is a real addiction and the smokers need medical help to be able to successfully quit," he said, promising that varenicline tartrate would "multiply your willpower (to quit) by four."

Gee I wonder if the UAE package insert makes that claim.