Pharmalyst (Pharmalyst@gmail.com)

Pharmalyst RIP

2007-11-17T05:19:00.000-08:00

Pharmalyst just came off the campus recruiting season and this explains the lack of any posts prior to this one in November.

Well, it looks like all good things must come to an end and perhaps it is now the turn of Pharmalyst's blogging career. During the recruiting season Pharmalyst interviewed with a few pharma firms. One offer was made and Pharmalyst has decided to accept the offer. So starting this summer, Pharmalyst will be one of the unwashed masses toiling away at a big pharma.

Pharmalyst wants to thank all his readers, other pharma bloggers and the many people who corresponded with him. All your insights really gave Pharmalyst a good understanding of the Pharma industry. While this may be the end of this blog (unless the blogging bug bites Pharmalyst again :-)), you may still see Pharmalyst lurking in the comments area of the many fine pharma blogs out there.

Thank you all again (and for those in the US - wish you a happy thanksgiving! Pharmalyst definitely has many things to be thankful for). Cheers.

Over and Out!!

Sanofi Ad: Please dump your Januvia etc and take our Lantus insulin

2007-10-27T06:22:00.000-07:00

A reader (presumably outside the US) e-mailed asking for more details re the full page Sanofi ads referenced in Pharmalyst's previous post. Below are some pics of their full page ad (sorry about the quality but if you click on the image, you can read the verbiage better) from today's WSJ. Wonder how much these ads are costing Sanofi and whether Lantus has seen a bump.

ExHubris: Post game analysis

2007-10-24T03:37:00.000-07:00

The demise of Exubera has received a lot of insightful & funny coverage in various blogs that Pharmalyst reads (PharmaGiles, PharmaGossip, Pharmalot, Pharma Marketing Blog etc). Pharmalot's redaders have voted it a "Kindlerberg Disaster". In doing so they were perhaps voting for PharmaGiles clever play on the Hindenberg disaster rather than pinning the blame on Pfizer CEO Jeff Kindler. However there are some hints that Mr. Kindler hasn't completely escaped the consequences as evidenced by this quote from a post on The IN VIVO Blog:

"For Kindler, this hardly seems like a fair shake for his first year as CEO. Will investors view him as a stoic leader making tough decisions to clean up someone else's mess? They may. However, this could be the last time Kindler gets the benefit of the doubt."

Pharmalyst's own view is that Mr. Kindler should not get any of the blame. In fact if anything, this is perhaps the one gutsy move where Mr. Kindler has shown that he is a "fact-based manager" rather than a "faith-based manager" or a "hubris-based manager" like his predecessor. Pharmalyst's very first blog post (on March 25, 2007) expressed the view that "with the benefit of hindsight, this product should never have been launched". It seems that Mr. Kindler has recognized that sunk costs are sunk and that there are other projects with prospects of a better RoI that could use the dollars that Exubera was sucking up.

Pharmalyst was even more impressed with Mr. Kindler's decision to kill their NextGen Exubera.This was supposed to address some of the issues of Exubera version1 - such as a bulky inhaler. In light of this decision, it is time that Lilly/Alkermes, Novo & others re-evaluate their inhaled insulin projects very carefully...if these are not viable, then these companies should pull the plug early and avoid PFEs fate of having to do a $2.8 billion write-off later. The following factors in Pharmalyst's view, bring the viability of these inhaled insulins into question:

1. Lung Function Tests: Just yesterday Alkermes reported that their product also showed slightly reduced lung function. This alone may be enough for NICE etc to deny reimbursement. In the US, private and medicaid insurance will have a zillion complications with the billing codes for the tests etc and physicians will view this as a hurdle. There are also concerns around lung cancer etc over the long term.

2. Dosing: Looks like some of these products are providing better options here than Exubera but this too may be a challenge

3. Cost: Exubera had a higher price point than the injectable versions.So it was not a viable product in emerging markets (some of which do have a high prevalence of diabetes). The payers in Europe will not reimburse unless clear economic value (higher compliance etc is demonstrated and Pfizer seems to have failed in this area). In the US, the insurers force customers to pay higher co-pays or will not cover the costs for the inhaler. So in both developing and developed markets, the price point of these inhaled insulins will be a critical factor.

4. Using insulins early: Witness the full page ads that Sanofi has been taking out in US newspapers asking patients to consider insulin early....this has proved to be a hard sell.

5. Finally there is the prospect of being blindsided by some other way of delivering insulin. Look at this BBC report showcasing a project by UK company Diabetology and Cardiff University - apparently they are exploring ways to deliver insulin in a pill.

Bong hits for Pfizer!

2007-10-18T11:43:00.000-07:00

In response to a comment on this post on the WSJ health blog today, Pharmalyst had the following comment:

Mannkind and Lilly inhaled insulins may be better but this is not a sure bet. Though inhalers here may be much smaller than Exubera, several problems remain:
1. Continued hassles of checking lung function test; reimbursements for these etc
2. Precision dosing/titration of an inhaled powder always a challenge
3. Still not cost-effective in Asia and other developing markets
These are perhaps the reasons that Pfizer decided to abandon Exubera part deux and Lilly & Mannkind better take a critical look at their inhaled insulin programs.

Thoughts?

Yo Pfizer! You talking to moi?

2007-10-14T04:19:00.001-07:00

The rumored Pfizer plans of a stake in Sanofi have been widely covered in the press and elsewhere. Pharmalyst read one interesting article in Forbes magazine (alas he can't find the link any more) which made the right case that Pfizer should not buy Sanofi but instead should form an alliance with them.

Buying a French "national champion" is never easy politically & given Sanofi's size this is no cakewalk for Pfizer. From an alliance perspective though a number of planets line up:

- Sanofi is coming up with a Zetia like molecule. This could present some interesting combination opportunities with Pfizer's Lipitor?

- They could leverage Pfizer' s US sales & marketing machine for their smoking cessation treatment dianicline

- Both companies are also researching obesity/diabetes compounds (similar class as Accomplia). Perhaps there exist some opportunities to pool risks.

Mega mergers haven't worked but alliances in the industry seem to have (Schering - Merck on Vytorin, Bristol - Sanofi on Plavix, Pfizer - Eisai on Aricept, J&J - Bayer on rivaroxaban(perhaps?) etc). Time for Pfizer to consider such an alliance with Sanofi.

The Cluster**** at Pfizer R&D

2007-10-14T03:58:00.000-07:00

So Pfizer finally settled on its lead internal candidate Dr. Martin Mackay, to lead its research labs (PGRD). But looks like their CEO Jeff Kindler hedged his bets a bit. Pfizer is going to run a biotech startup out of San Franciso headed by Dr. Corey Goodman. According to Pfizer's press release Dr. Goodman will also report to Mr. Kindler. Dr. Mackay's leash however was shortened a bit by Mr Kindler. Dr. Briggs Morrison from Merck was hired as Dr. Mackay's top deputy overseeing all of clinical development. Should Dr. Mackay screw up, Dr Morrison will be ready, willing and able to take over.

Mr. Kindler may be hedging his bets with a structure like this but Pharmalyst thinks that with this approach, Mr. Kindler is being more of a lawyer than a manager. This convoluted cluster of their R&D organization has no single point of accountability - no one head of R&D with whom the buck stops. Dr. Mackay was probably hired so as to not upset their mid-stage pipeline which if they are to be believed, is looking strong (it probably also helped that no outsider was willing to step into this clusterf***).

Mid-stage pipeline aside, there could be serious problems longer term. The biotech in San Francisco could blame the R&D organization for not supporting its ideas enough & the R&D group could blame the biotech. Two strong executives in this sort of a role is ripe for ego clashes etc. A powerful strong deputy like Dr. Morrison could also end up looking over the shoulder of his boss & second guessing him all the time. So from an organizational theory standpoint, this new approach could have serious problems.

PharmaFraud hits his stride

2007-10-14T03:53:00.000-07:00

I've got to say PharmaFraud has been posting a lot of interesting, informative stuff. Pharmalyst reads this blog every day. Check it out if you haven't already.

Isentress Pricing: $10K a year

2007-10-14T03:49:00.000-07:00

Story.

The secret plan of Andrew Witty?

2007-10-14T03:29:00.000-07:00

A long time ago, Pharmagossip had this interesting post about investors clamoring for a GSK consumer division spin off (See Pharmalyst's posts on the same here). The BreakingViews column (subscription required) of this past wednesday's WSJ makes a string case for a divestiture of GSK's consumer biz. They point out that branded consumer goods companies like P&G and Reckitt Benckiser are trading at higher multiples than GSK. New consumer brands are not easily built and so GSK's division should fetch a good multiple should their new CEO Mr. Witty consider a spin off or sale. By BreakingView's math, this division will earn about $1.5 billion in operating profit this year and should fetch $25 billion in a sale!!

That is a huge multiple indeed and GSK will probably not miss brands such as Tums and Horlicks. Horlicks to Pharmalyst's amusement is an improbably named "malt beverage" (no...not the kind readers in the US are thinking) that is well liked among the UKs senior set (supposedly useful in getting a good nights sleep).

If GSK brass consider such an option they have to weigh whether to float the new subsidiary (lower taxes) or sell it to another buyer (taxes on capital gains will accrue). Pharmalyst thinks that there are plenty of buyers like P&G who will be willing to pay a premium to make a sale worthwhile.

Option traders betting on BMS takeover/merger?

2007-10-03T18:48:00.000-07:00

Tuesday's Wall Street Journal had an interesting article (subscription required) regarding some trading activity involving BMS options.

To quote a couple of excerpts:

"About a month ago, we heard some rumors and there was some [options] activity and then it stopped," said Joe Kinahan, chief derivatives strategist for thinkorswim. Now we're starting to hear again that Bristol-Myers might be in play, that a few of the other drug companies are starting to take a look at it, and that seems to be bearing out in some of the activity we're seeing," he said.

Almost 26,700 call options on Bristol-Myers changed hands yesterday, compared with only 2,800 puts, according to Track Data. Investors focused on November calls that convey the right to pay $30 a share for the stock in the weeks ahead.

BMS of course didn't comment and Sanofi's name was widely bandied. Given all the negative news regarding Accomplia, Sanofi does need something like Bristol's Apixaban to shore up its revenues (Plavix LoE in a few years and serious competition for Lovenox).

BMS is probably looking to stay independent given that they have all these new compounds in the pipeline (oncology, Factor Xa & DPP-4 compounds). They have certainly spread the co-promote deals around to reduce their attractiveness to potential suitors (with AZ for DPP-4 & with Pfizer for Factor Xa development). AZ is unlikely to do an M&A deal with BMS given that they just paid 15B for MedImmune.

That pretty much leaves Sanofi & Pfizer as the two most likely candidates interested in an M&A deal. Sanofi as a European company will probably have to pay a premium to Bristol's American shareholders compared to Pfizer - but that shouldn't be a problem at all given the weak dollar & the consequent appreciation of Sanofi's stock & cash position. Pfizer on the other hand may be more desperate. PFE probably needs all of the potential Apixaban revenues to offset its LoEs (Lipitor in 2011, Norvasc, Zoloft etc) & Bristol's heritage in the oncology area would be a good fit with Pfizer's emerging oncology pipeline. Other BMS products (Sustiva, Orencia) may also offer interesting combo molecule opportunities. According to some IMS data Pharmalyst has seen, Abilify too is seeing some commercial success. Certainly a BMS+Sanofi or BMS+Pfizer deal makes more sense than say a Pfizer+Wyeth deal. However it would have to be a friendly merger rather than an acquisition and that leaves the amount of efficiencies that can be extracted from such a deal in question.

Pfizer gets some adult supervision

2007-09-28T04:32:00.000-07:00

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 company...to 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)

Sanofi opens the R&D kimono

2007-09-21T04:08:00.000-07:00

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.

Chantix's Foibles

2007-09-19T17:19:00.000-07:00

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 http://followthefable.com. 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.

Isentress (Raltegravir) Pricing

2007-09-11T14:08:00.000-07:00

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?

2007-09-11T11:36:00.000-07:00

A while back, Pharmalyst had argued the case for big pharma to take on more debt. Today, FT.com 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!

Chantix/Champix - International Pricing & PR Scams

2007-09-06T14:21:00.000-07:00

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.

Medical financing: Subprime loans part deux?

2007-08-31T01:30:00.000-07:00

The New York Times yesterday ran a fascinating story about how banks, insurers and doctors are now extending loans to people for various healthcare-related issues. You can read the full article here (registration required). To quote an excerpt:

"Zero-interest financing, a familiar sales incentive at car dealerships and furniture stores, has found its way to another big-ticket consumer market: doctors’ and dentists’ offices.

For $3,500 laser eye surgery, $6,000 ceramic tooth implants or other procedures not typically covered by insurance, millions of consumers have arranged financing through more than 100,000 doctors and dentists that offer a year or more of interest-free monthly payments.

Of course, going into debt to pay for medical procedures is nothing new for many people. And this type of financing is still only a fraction of the nation’s $900 billion market for consumer revolving credit.

But as the price of health care continues to rise and big lenders pursue new areas for growth, this type of medical financing has become one of the fastest-growing parts of consumer credit, led by lending giants like Capital One and Citigroup and the CareCredit unit of General Electric.

Big insurers, too, are devising new financing plans with various payback options. Upstart players have also aggressively cut deals with doctors."

As the movie "Sicko" and others have illustrated, besides large number of uninsured people, we Americans also have a significant number of under insured folks. Will this new lending market take off given such large numbers of the un and under insured? What is the next step for the Wall Street lenders in this? Securitize these loans like mortgages, auto loans and credit card debt and sell them off as CDOs to investors worldwide? Start selling credit default swaps on these :-)?

If this market were to grow, much of that growth would have to come from the subprime sector (the more wealthy are well insured and/or don't need the loans). In the event of rising defaults, it will be fun to watch say a bunch of Australian hedge funds trying to foreclose on a bunch of dental crowns in New Jersey!

As the NYT reports, banks, insurance companies and doctors are getting into the lending act. May be big pharma (which is sitting on buckets of money) too? Perhaps big pharma can extend its "patient assistance" programs to include loans. If your insurance company won't reimburse that $10,000 a year drug, big pharma can lend you the money if you are above a certain income level and don't qualify for their assistance. I'm kidding........but the way big pharma has invested its money lately, may be this is better for both patients and big pharma investors. I'm hoping that this "phoni patient assistance program" will be the subject of a future post on PharmaGiles.

And finally what happens when these loans go bad? Will there be a federal bail out? Boy that would be one convoluted way to expand govt subsidized health care!

Pfizer + Wyeth = ?

2007-08-24T03:42:00.000-07:00

First things first - Thanks to insider for the hilarious picture on the left illustrating the trouble with mergers. As most readers of this blog have already read, there has been increasing talk in the egosphere and elsewhere regarding the potential merger of Pfizer and Wyeth (see here for the posting from Pharmalot). The genesis of this discussion was a note by Credit Suisse analyst Catherine Arnold suggesting that the lack of overlap between the two companies, the Alzhiemer's & other Wyeth pipeline products and the biologics capabilities of Wyeth would be well worth it for the Pfizer pfolks to splurge on.

A couple of semesters ago, Pharmalyst took a course in corporate strategy & the Professor had some interesting insights on why most mergers fail. According to her, most companies tout the cost savings that any proposed merger is likely to generate (by reduction of overlapping functions, facilities etc). However most of these cost savings barely cover the premium that the acquiring company pays. Then there are the merger related costs (integration of systems, severance packages etc). Once you add it all up, most mergers end up destroying value. She had a few interesting case studies to illustrate this (like the merger of Diamler and Chrysler). According to her, the only merger that generates value is the one that has what she called "unique synergies"...above and beyond the usual cost savings.

With that insight, Pharmalyst would like to present some numbers from Feb 2000, when Pfizer acquired Warner Lambert. This merger was has widely been viewed as a success.

Deal Size: $90 billion

Premium Paid: $30.6 billion (34% premium). There was also a break up fee paid to Wyeth (AHP then) of $1.8 billion

Combined market cap of the entity after the merger: $230 billion

Recent market cap of Pfizer: $170 billion (that is some amazing value destroyed over the years..don't forget that this includes Pfizer gobbling up Pharmacia and some other small companies & just one big divestiture of its consumer health business)

Annual Cost Savings Generated by Merger (from 2002): $1.6 billion

As you can see from the figures above the cost savings is hardly the factor that made this merger work. The redeeming factor for this merger was the drug Lipitor. Around the time of the merger, Lipitor had annual sales of around $5 billion. In seven years, this has grown to around $12 to $13 billion (though it is on its way back to 5!). This growth in Lipitor revenues was the unique synergy and the sole thing that justified the $30 billion premium paid.

I haven't had time to google the Pharmacia data but doesn't look like any Pharmacia drugs saw that kind of a spike in revenue (in fact Pfizer probably had similar expectations for the COX-2 franchise but that turned out to be quite the opposite!). Not sure what in Wyeth's current set of products can show the Lipitor kind of growth if Pfizer were to acquire them...unless Pfizer feels there are some gems in the Wyeth pipeline that it could grow dramatically and that the current valuation of Wyeth doesn't reflect those prospects, it is a safe bet that any such merger will destroy value.

At least the PR arm is working well at Astra Zeneca!!

2007-08-16T07:46:00.000-07:00

Thanks to this post on Experimental Chimp blog, Pharmalyst recently became aware of how someone on the Astra Zeneca corporate network (someone in PR perhaps?) made some mods to the wikipedia entry on Seoquel.

Here is the before version:

"Quetiapine has the United States Food and Drug Administration (FDA) and international approvals for the treatment of schizophrenia, treatment as an adjunct to either Lithium or Divalproex, and acute mania in bipolar disorder. Quetiapine was first approved by the FDA in 1997. In October 2006, Seroquel was also approved by the FDA for the treatment of depressive episodes associated with Bipolar I (or Bipolar-II) Disorder and is the only agent approved for this indication as a single agent monotherapy. Despite a general National Institutes of Health recommendation against its use in children or those under 18, as well as a known risk that teenagers taking the drug “may be more likely to think about harming or killing themselves or to plan or try to do so”, Seroquel is controversially marketed to parents of moody and irritable teenagers in magazines such as Parade and TV Guide…"

Now here is the after version:

"SEROQUEL is indicated for the treatment of schizophrenia as well as for the treatment of acute manic episodes associated with bipolar I disorder, as either monotherapy or adjunct therapy to lithium or divalproex. SEROQUEL received its initial indication from the FDA for treatment of Schizophrenia in 1997. In 2004, it received its second indication for the treatment of Mania associated Bipolar Disorder. Seroquel is controversially marketed to parents of moody and irritable teenagers in magazines such as Parade and TV Guide…"

Wikiscanner reports, you decide. Wikiscanner is a new app started by a UCal graduate student that attempts to match Wikipedia edits to the networks those edits originate from. NPR's morning edition did a good segment on this today morning which you can listen to here.

Novartis, Glivec & the Indian Patent Board: Curry in a hurry version

2007-08-14T15:10:00.000-07:00

If you want to read one blogger's insightful and interesting take on the Glivec issue in India, please read this post on the SpicyIP blog. Looks like the patent board rejected NVS application on the basis of some opaque definition of efficacy - which they refuse to clarify any further. Also looks like someone in the Patent office is now sitting on the panel that will hear Novartis' appeal thru the Indian patent process....so much for conflict of interest etc. Regardless of how sound the courts rationale in India, Pharmalyst does think that this could hurt their own pharma companies in the long run.

Hat Tip: Pharmalot

Can't build a better mousetrap in India?

2007-08-12T13:31:00.000-07:00

So the Indian Patent office has refused to grant IP protection to the beta crytsal form of Glivec (Gleevec). Recently the high court in India refused to rule on a motion filed by Novartis stating that NVS should pursue the matter with the WTO appeals process (for which the Swiss government would have to become involved) rather than the Indian courts (Novartis can proceed with an appeal with India's Intellectual Property Appellate Board). More details can be found here.

While the beta crystal form may be marginal innovation at best, India should have granted patent protection to the initial version of Glivec - however at the the WTO rules had not kicked in at the time and the government there was pretty much looking out for their generic drug makers.

However sound the Indian Patent Office's judgment regarding incremental innovation in this matter may be - it better be prepared to face the unintended consequences of its decision. Under the new WTO IP regime, Indian drug makers are bracing for more competition from western multinationals. Many generic drug makers are trying to develop new molecules instead of making copycats of big pharma's gems. Take the intriguing case of Sun Pharma Advanced Research (SPARC). According to this Economic Times (an Indian newspaper) article, many of this company's Phase II molecules are incremental improvements on compounds from big pharma. For instance these guys are working on new forms of the anti-epilepsy medication Neurontin. The Indians could get a taste of their own medicine, if say the Swiss government were to deny IP protection to SPARC's "innovative" version of Neurontin or if SPARC's patents were challenged in India itself on the basis of the treatment Glivec has received there.

Has Pfizer lost its marketing mojo?

2007-08-10T04:22:00.001-07:00

Quite a few blogger guns have been trained on the marketing arm of the drug giant recently. The Judge (John Mack) has added them to his league of undistinguished DTC advertisers. PharmaGiles has penned a funny post titled "Rigor Marketis". Yahoo's seeking alpha blog, references a Derek Lowe post and headlines that "Exubera Proves It: Pfizer's Marketing Can Get It Only So Far". Even the cafepharma boards have some postings regarding the departure of some high profile sales and marketing pfolks at Pfizer.

So, has Pfizer lost its marketing mojo? Exubera has some fundamental issues that no amount of marketing could fix (and to be sure Pfizer's management has cited bad market research as the cause of their flawed initial projections). Setting Exubera aside, Pharmalyst looked for other indicators of Pfizer's marketing prowess and below is a summary of what he found:

Chantix/Champix: As this post from Pharmalot shows, this drug is really generating a lot of prescriptions. Smoking cessation has historically been a category where initial high expectations have subsequently been dashed (Zyban, NRTs etc). Pfizer's low key unbranded campaign coupled with reps pounding the pavement has so far worked. Pharmalyst gives their marketing & sales group an A here.

Sutent: Perhaps the performance of this drug is best compared to Bayer/Onyx's Nexavar. Nexavar was approved before Sutent and Bayer just reported Nexavar's Q2 sales at $82.4 million (up 161%). Now compare that to Sutent's Q2 sales which according to their Q2 earnings release stood at a whopping $141 million - up almost 300%. This despite the fact that Nexavar has lots of good stuff going on for it in areas like liver cancer. Here their marketing & sales group gets an A+.

Viva Viagra: Their new ad has come under a lot of criticism and Viagra is losing market share to Cialis. Pharmalyst agrees with most bloggers that the Viva Viagra ad (which you can see here) is definitely not an "ethical pharmaceutical" ad. But as an ad for a "recreational" drug, it is really good. Catchy tune, all American roadhouse, macho imagery all provide tonnes of self expressive benefits to the target audience (in this case somewhat young men who do NOT have ED). Their marketing prowess is the sole reason that this drug has not become another Levitra against the "Le weekend" pill Cialis. An A grade here too (not for ethics but for marketing).

Lipitor: This may be the one place where the marketing pfolks get a C. A semester ago, Pharmalyst took a marketing class where the Professor offered an interesting insight...according to him, increasingly in all categories there is a tendency towards bifurcation - one set of brands finds success in the low-cost/value end of the spectrum and the other set of brands finds success in the premium end of the spectrum. Any brand that tries to straddle the middle gets creamed (one of his examples was the retail sector where brands like Target have done well on the low end and brands like Nordstrom's have done well in the premium segment but a brand like a Sears or a JC Penney in the middle gets clobbered). Since simva going generic, this appears to be the case with Lipitor. Simva owned the value end of the market and Vytorin/Crestor owned the premium end. Pfizer did not lower the price of Lipitor & they did not do any licensing deals to make a Vytorin like compound. They pretty much played in the middle. Also all their talk about 5 new indications & outcomes did not really differentiate the product. These new indications did not offer them a sustainable advantage as all the benefits were perceived to be a class effect. The Robert Jarvik DTC campaign was also vague and did not really make Lipitor stand out. In contrast the Vytorin ads really hammered home the point that it works against two sources of cholesterol & was a home run.

So in general looks like Pfizer still has plenty of marketing juice left but the longer the drought of good products to market, the faster the erosion of sales & marketing talent. They may lose their marketing mojo unless they can bring promising products like apixaban to market faster.

Rheoscience & Dr. Reddy's: Brass Cojones?

2007-08-04T04:01:00.000-07:00

Sure looks that way. The IN VIVO blog reports that they have just dosed their first patient for phase III trials for their partial PPAR gamma agonist balaglitazone.

Given all the issues with Rezulin, Avandia, Pargluva etc, that does take some solid cojones. What the IN VIVO folks did not report in their post was that Novo Nordisk (an almost pure play diabetes company) had previously decided to stop developing balaglitazone (this is one Dr. Reddy's first forays into original molecules). See press article on Novo's decision here ). Either Rheo sees the partial agonism aspect as truly unique with this compound or they are just desperate.

Correction: In Vivo did reference Novo's decision in their post. The link is fixed too. I'm sorry

Image Courtesy: Wall Street Bull by Jermany on Flickr.

Lilly, Pfizer: The new "Pet shop buys"

2007-08-01T04:23:00.000-07:00

People (including yours truly) have previously commented about Eli Lilly's doggie prozac. WSJ health blog, Pharmalot and others have also featured Pfizer's Slentrol & Cerenia. (Update: See Pharmalot's postings here, here and here . Ed - thanks for links via comments).

The latest issue of BusinessWeek has some staggering statistics on the pet market. No wonder Lilly & others are gravitating to this market. You can read the full BusinessWeek article here. Here are some select stats:

Neuticles - A patented testicular implant for neutered pfidos has sold over 240,000 pairs at $900+ a pair

Americans spend $41 billion a year on pets (more than what they spend on movies and video games - about 10 to 12 billion each)

42% of dogs sleep on the same bed as their owners

77% of dogs have been medicated in the past year

71 million US homes have at least one pet

Bet big pharma especially likes the last two of those stats.

In a related note, everyone has been receiving loads of spam e-mails for Viagra, Xanax, Prozac, Vicodin etc. etc....This morning however Pharmalyst was amused to receive this spam for pet medications. When the spammers have caught on, you know that this is a big trend.
That doggie picture at the top was due to courtesy of the WSJ health blog & flickr.

PharmaFraud comments on Pharmalyst among others

2007-07-27T13:35:00.000-07:00

Thanks to Dr. Peter Rost's blog, I just became aware an interesting blog called PharmaFraud. S/he has written a rather interesting and provocative rant about some pharmablogs. About the PharmaBlogosphere s/he comments that

"Same stories as every other Blogger, shameless self promotion, a lot of stories are just copied and pasted from other sites, questionable knowledge of the Pharma Industry, would sell-out to Big Pharma in a second."

Then he proceeds to rate PharmaGossip, BrandweekNRX and Pharmalyst as "A small step above Pharmablogosphere".

To Jim Edwards (of BrandweekNRX) and Insider (of PharmaGossip): Pharmalyst is honored to be lumped together with your blogs. As for the other charges leveled, I would like to address each one of them here.

Shameless self promotion: Guilty as charged. I guess self promotion is always one of the many sub-conscious motivating factors influencing any blogger....and that includes you PharmaFraud.

Questionable knowledge of the Pharma Industry: Guilty as charged. As this post from Pharmalyst indicates, the purpose of writing this blog is to learn more about the industry through comments and e-mail from readers (many of who appear to be from the industry and have graciously shared their insights via comments and e-mails)

Would sell out to big-pharma in a second: You betcha. From the same post as above, Pharmalyst wants to work in business analytics or finance related fields in the pharma industry. When you have the loans and commitments that Pharmalyst has, you would sell out to big-pharma in a second. And what about you PharmaFraud? Looks like you were selling out to big-pharma till you got your gag orders and (hopefully soon) some settlement monies.....

Pharmalyst thinks that there may be a grain of truth in PharmaFraud's rant on all blogs but blogging is inherently about linking, commenting etc. Pharmalyst was also curious as to why s/he reviewed Pharmalyst and not other fine and more knowledgeable blogs like PharmaGiles, In Vivo, Pharma's Cutting Edge, Clin Psy etc etc

What about the rest of PharmaFraud's blog? Pharmalyst read a few posts and here is Pharmalyst's take.....hey everyone can be a critic sometimes...

PharmaFraud looks like a pharma insider who probably used work in the business development or wholesaler management or some such department of a big pharma (J&J or Pfizer perhaps). Looks like s/he departed after some serious litigation which is still ongoing and there is a lot of pent up angst and frustration that is all bottled up and waiting to come out. As for the posts themselves, looks like PharmaFraud is not above 'cutting and pasting' as this posting shows. Many of the other posts (like this one) appear to be a bit rambling and lack focus....in fact it almost appears that PharmaFocus knows of so much and hence knows so many problems that s/he doesn't know where to strike first. Also while some posts have lots of inner workings of the industry that people like Pharmalyst enjoy reading, many others seem to be pure vendetta (understandable given PharmaFraud's apparent situation). Most of PharmaFraud's attempts at humor also fall flat in the eyes of Pharmalyst - s/he is no PharmaGiles or PharmaGossip.

All that being said, PharmaFraud is an interesting blog that Pharmalyst will follow (and hopefully will get better once some of PharmaFraud's angst & rage subsides as whatever litigation s/he is involved in unwinds).

Alcohol addiction market

2007-07-27T13:21:00.000-07:00

With regard to Pharmalyst's previous post regarding news articles pertaining to the use of Chantix for treating alcohol addiction market, a reader e-mails that

"my initial hypothesis is that it is a huge market that looks very attractive (large numbers etc), but that the market will be very, very challenging to commercialize. Compare the people who buy smoking cessation drugs (by choice, out of pocket) to the people who would need anti-alcoholism drugs. These patient groups are very different, leading to very different market dynamics. So I do not think the alcoholism market would be 1/4 of the smoking cessation market, even if the patient numbers give that break. If anyone could 'create the market', I suppose Pfizer could."

S/he then proceeds to note that the launch of Vivitrol by Cephalon has not followed a great trajectory. Does anyone have any further thoughts on this market? If so please comment or e-mail Pharmalyst. Many thanks in advance.

Earnings Season

2007-07-19T10:26:00.000-07:00

While Pharmalyst has been sampling some fine Aussie products like the ones shown, big pharma earnings season is in full swing. J&J & Novartis tempered their outlook while Abbott handily beat the street. Abbott seems to be riding the Humira wave and presumably their pipeline has other gushers or else they will be in a Pfizer like situation.

The big news appeared to be Pfizer's poor earnings. The extent of the decline of Lipitor's US sales surprised some. Time for Pfizer to move beyond Lipitor (they appear to be doing so if their new measure of earnings for non-patent expiry products per this post from Dr. Peter Rost is any indication). Dr. Rost also raises the issue of Lipitor channel stuffing by Pfizer.

Pharmalyst tries to listen in on all the analyst call webcasts and did listen in on the Pfizer call day before yesterday. Many of the analyst questions were precisely regarding this issue. Unlikely that Pfizer did any channel stuffing like BMS though sure looks like they may have indirectly & unintentionally forced wholesalers to buy more by their price increase schedules etc (some analysts were asking questions around this yesterday). In any case Pfizer clearly disclosed the impact of the channel inventory in both Q1 and Q2 earnings releases and their vice chairman David Shedlarz indicated during the call yesterday that lower inventories may be a hint of wholesaler's expectations of future Lipitor sales. Can't get any clearer than that and so they can hardly be accused of channel stuffing like BMS.

Rivaroxaban, Apixaban - Meeting unmet needs and prospects (parts 2 and 3)

2007-07-19T10:12:00.000-07:00

Pharmalyst had previously posted re oral factor Xa inhibitors. Pharmalyst had promised readers parts 2 & 3 outlining unmet needs in this market and the prospects for Rivaroxaban and Apixaban - two molecules in this class. While googling this topic, Pharmalyst found this presentation from Dr. C Michael Gibson of Harvard U which pretty much covers the above. Selected excerpts are here:...These have been removed as the clinicaltrialresults.org site does not allow posting of the slides/excerpts. However readers can follow the link above to view the presentation.

Erratic posting warning

2007-07-11T14:17:00.001-07:00

Pharmalyst is heading down under for a few days. Erratic posting ahead mates!

Making of a quiet blockbuster - New Indications?

2007-07-11T14:06:00.001-07:00

Some of you may have read Pharmalyst's previous posts regarding the prospects of Chantix, Pfizer's drug for smoking cessation. Now ABC news and others are reporting on a new study that offers the possibility, that this could be used to treat alcohol addiction as well... and perhaps other types of addiction too.

How big could the alcohol addiction market be? Pretty big (though not as big as the smoking market). According to this source, there were an estimated 12 million alcoholics in the US in 1993. That is roughly one fourth of the number of smokers....presumably this alcohol addiction market size will be a fourth of the smoking cessation market? Though the number of alcoholics is fewer than the number of smokers, Pharmalyst thinks that the % of alcoholics who want to try Chantix will be higher than the % of smokers.....This of course supposes that the product is effective in treating alcohol addiction and that is a big if.

PAH drug pricing - update

2007-07-11T13:47:00.000-07:00

Pharmalyst had previously posted about the wide range in the pricing of PAH drugs approved currently (summarized below).

Thanks to all the comments and some direct feedback via e-mail, there is better clarity on the issue. Here is a synopsis:

1. Flolan: Well worth its 100,000K+ costs. It is very effective and very inconvenient (frequent infusions, injection site pain etc). This class of drugs is the only deal for stage IV PAH patients.

2. Letaris & Tracleer: Comparably priced at 40K plus. Effective but has liver tox issues and needs frequent monitoring. Letaris claims much lower liver tox than Tracleer. Is effective in patients with stage II and stage III PAH.

3. Revatio: Cost wise, it can not be more than Viagra (since Revatio is same as Viagra). Common dosing is 20mg three times a day. At Viagra's cost of $8 per pill it works to approximately 10K per year. Also many physicians want to use higher doses. However safety at much higher doses and over much longer periods of time under chronic use conditions has not been studied. Suitability in more advanced stages of PAH has also not been studied.

Consensus Opinion: Revatio will be the initial choice for phase I patients. Phase II and III patients will probably use Revatio and Letaris in combination therapy. However if long term safety of Revatio in chronic and high dose setting is established, it will capture more share from Letaris and could be used as monotherapy in Phase II and Phase III patients. Other PDE 5 drugs like Cialis are also doing studies for PAH.

Lovenox's rear view mirror - "Warning: Objects are closer than they appear?"

2007-07-09T14:11:00.000-07:00

Pharmalyst's previous post on June 30th had mentioned that Bayer/J&J's Rivaroxaban could be a looming threat to Sanofi's LMWH Lovenox (which had 06 sales of almost 3 billion Euros)

Today we read from this Reuters article that:

Bayer's blood-clot drug beats Lovenox in key study

"Sunday July 8, 3:41 am ET By Ben Hirschler LONDON (Reuters) - Bayer AG's (XETRA:BAYG.DE - News) experimental pill rivaroxaban is significantly more effective than standard injections of Lovenox in preventing blood clots after knee surgery, researchers said on Sunday.

new class of oral anticoagulants to market.

Results of a large Phase III trial showed only 9.6 percent of patients given rivaroxaban experienced venous thromboembolism (VTE), or blood clots, following total knee replacement against 18.9 percent of those on Sanofi-Aventis SA's (Paris:SASY.PA - News) Lovenox.

Major life-threatening VTE occurred in 1 percent of rivaroxaban patients against 2.6 percent for the Lovenox group."

BMS/Pfizer also had encouraging news on Apixaban. According to CNN Money:

Bristol-Pfizer anti-clotting drug clears hurdle

"July 8 2007: 7:58 AM EDT

NEW YORK (Reuters) -- An experimental anti-clotting medicine from Bristol-Myers Squibb Co. and Pfizer Inc. met its main effectiveness and safety goals in a mid-stage study, researchers said Sunday, positioning it as a future option over current popular but problematic drugs.

Patients treated with apixaban, a pill, had comparable rates in two main measures to those on the standard of care - an injected therapy plus one drug from the class that includes the widely used warfarin. The measures included rates of blood clots and dangerous bleedings."

Prospects for Oral Factor Xa Inhibitors Rivaroxaban, Apixaban - Part 1 of 3: Trifecta for Sanofi?

2007-06-30T03:49:00.000-07:00

During the past couble of months, many of you have found Pharmayst's little blog by typing in phrases like "rivaroxaban peak sales" and "apixaban sales projections" in your Google search boxes. Therefore Pharmalyst decided to start studying these compounds and found a rather interesting market. Based on what Pharmalyst has read, these drugs could easily generate $2bn-$3bn of revenues by 2011 if (a big IF given that the anticoagulation market is the a very challenging one to crack) all goes well with the current clinical trials underway.

Both Rivaroxaban and Apixaban are Factor Xa inhibitors. Rivaroxaban will probably be the first drug on the market in this class and is being developed by Bayer and J&J (which owns the US rights). They expect to file for approval in 2008. Apixaban was discovered by BMS and is being jointly developed by BMS and Pfizer.

Both Rivaroxaban and Apixaban are expected to be indicated for Venous Thromboembolism VTE (Both prevention and treatment) and for stroke prevention in atrial fibrillation. There could be additional indications like acure coronary syndrome. So how big is this market? In a word - HUGE. According to the CDC, every year, thromboembolic disease is a leading cause of mortality in the US with Actute MI leading to 171,000 deaths, Ischemic Stroke leading to 139,000 and Pulmonary Embolism leading to 29,000 deaths in 2006. Perhaps one can expect similar numbers for Western Europe.

Courtesy: JNJ Investor Relations Site

The current US anticoagulant market is estimated to be $3.1 billion annually. Looks like J&J and Decision Resources expect this market to grow to $8.4 billion by 2014....a compounded growth rate of 13%. Some of the current therapies like Warfarin and Heparins have been used for over 50 years.

Courtesy: JNJ Investor Relations Site

If Rivaroxaban and Apixaban are successful, one company that will be hurting is Sanofi, given that their low molecular weight heparin Enoxaparin, generated 3 billion euros in sales last year (it maybe a trifecta for Sanofi with Ambien going generic and Zimulti/Acomplia being rejected by the FDA).

Stay tuned for parts 2 & 3

Part 2 - Unmet needs in the anticoagulation market
Part 3 - Factor Xa inhibitors value proposition

Spirit makers take a page from big pharma's DTC ads

2007-06-24T07:56:00.000-07:00

Hat Tip: The Daily Dish

Dr. John LaMattina's view of PFE stock

2007-06-20T19:15:00.001-07:00

From the Associated Press yesterday:
Pfizer Senior Vice President John L. Lamattina Sells 36,066 Shares NEW YORK (AP) -- A senior vice president of drug maker Pfizer Inc. sold 36,066 shares of common stock, according to a Securities and Exchange Commission filing Monday.

In a Form 4 filed with the SEC, John L. Lamattina reported he sold the shares Friday for $26.48 apiece.

Today we hear that:

1. Pfizer Stops Developing Coley Cancer Drug

2. FDA Delays Ruling on Pfizer AIDS Drug

Pharmalyst is sure that the timing is purely coincidental (but is interesting nevertheless). These sort of setbacks coupled with other failures such as Exubera and torcetrapib are probably the reasons that Dr LaMattina is being eased out of his current position as the head of R&D at Pfizer.

PAH Drug Pricing

2007-06-20T12:49:00.000-07:00

Recently WSJ had an interesting article regarding the pricing of Gilead's new drug Letaris for Pulmonary Arterial Hypertension (PAH).

It is estimated that 75,000 to 90,000 people in the US have PAH (half of them undiagnosed). The annual costs for various FDA approved drugs for the treatment of PAH is provided below.Interesting that there is such a huge range. Gilead claims that their drug has lower liver toxicity than rivals. Revatio (which actually is just re-branded Viagra) is the cheapest option. Given that the other drugs are priced much higher, Pharmalyst is guessing that it probably is not as effective - let me know if that is not the case because then then this sort of range in pricing can not be easily explained.

PS: Of late, several visitors have found Pharmalyst by typing phrases like "rivaroxaban sales forecast" or "apixaban peak sales" in their Google searches. Pharmalyst has been researching these products and guesstimates of sales will be the subject of a forthcoming post. Stay tuned.

GSK Consumer Division Sell Off?

2007-06-15T15:03:00.000-07:00

Pharmagossip has an interesting post regarding some GSK investors clamoring for a divestiture of GSK's Consumer Healthcare business. Pharmalyst thinks that this might be a good idea, especially if GSK can get the kind of multiple that Pfizer received for the sell off of their consumer division to JNJ (Approx 4 times revenues. See here).

Insider (author of PharmaGossip) has expressed his view: "It could all come down to "alli" and its performance in the US.
If early sales reports are correct and lots of people suffer "treatment effects" the bottom could fall out of GSK's market!"

Pharmalyst thinks that if Alli sells well (Day one sales look encouraging), then the pressure to sell this division will be greatly amplified due to the higher valuation that this division could command.

Who could pony up that kind of cash? Some of the folks who lost out to JNJ in the bidding wars for Pfizer's Consumer division would be interested in this....though Pharmalyst tends to doubt it. GSK's consumer division is much bigger than Pfizer's and the likes of Reckitt Benckiser can't probably afford it. However there are other players like P&G, Unilever and even Novartis, who may be interested in paying that kind of change and could afford it. Another probability of course is private quity (may be this will be one of ex AZ CFO Jon Symonds' early deals)....though looks like the private equity boom is ending given higher interest rates and the likes of Blackstone trying to cash out by dumping their shares to the public.

Will be interesting to see what kind of shareholder pressure the brass at GSK will face in the coming months.

Phat Phighting with PharmaGossip

2007-06-13T14:08:00.000-07:00

PharmaGossip has an interesting poll regarding the winner of the weight loss wars one year from now. The contestants are 1.Accomplia/Zimulti 2. Alli 3. Xenical 4. Slentrol (woof) 5. Crack

Currently Crack and Alli are winning. Pharmalyst has voted for Alli. Please cast your votes here if you haven't already. Pharmalyst's rationale for pulling the lever for Alli is as follows:

1. Accomplia/Zimulti - May not be approved in the US. Even if it is approved, there is enough concern regarding safety. Plaintiff lawyers are another force to be reckoned with here (see how Lilly is complaining about lawyer ads here).

2. Alli - Prior to fen-phen's withdrawal, it was one of the fastest drug launches...on track to generate $1b (see here). Granted Alli has worse (superficially!) side effects....however GSK will provide good DTC messaging on how these can be mitigated. If GSK's campaign is effective anyone (ranging from those needing to lose 5 pounds to those needing to lose 50) may be tempted to try Alli.

3. Xenical - Too strong a dose...and so side effects much worse than Alli. Only those really really in need will try. Past performance is best predictor of future results.

4. Slentrol - Woof! Barc! - Pfizer claims that 17 million dogs in the US have "excess baggage" (Hat Tip to Pharmalot for the phrase). Even if 0.5 million owners try this at around $300 a year, the numbers may not be enough to catch up with Alli.

PS: Congratulations to PharmaGossip and Pharmalot for being named the Top 50 business blogs by the Times of the UK.

PPS: As Pharmalyst was posting this, Pharmalot just reported that the FDA panel has rejected Zimulti.

Christopher Lydon talks to Dr. Marcia Angell

2007-06-12T16:13:00.000-07:00

Nothing new for pharma regulars...but a few good sound bites nevertheless...

"FDA: Lapdog instead of a watchdog"

"Caduet (Norvasc+Lipitor) is like Shampoo and conditioner in one bottle"

"Pharma has bought Congress....and politicians need the money.....but the only thing they need more than money is votes."

Download mp3 here (also available on iTunes - Radio OpenSource Podcast).

Site URL: http://www.radioopensource.org

Maraviroc - "to be formally approved by the FDA on June 20"

2007-06-09T04:11:00.000-07:00

Speaking of things premature (see previous post), is it OK to announce ahead of time that a drug will be approved on a given date by the FDA? Unless a Pfizer spokesman was misquoted, this does appear to be the case. According to this AFP article, "The new drug, which will be taken orally, is set to be formally approved by the FDA on June 20, a spokesman for the company said.". They are talking about maraviroc, Pfizer's new HIV drug which was recommended for approval by an FDA advisory panel previously. Granted that the FDA probably has informal communications with companies a few days prior to official announcements...but doesn't announcing the same to the public defeat the purpose?....maybe AFP just mangled the quote. Hat Tip: BrandweekNRX blog.

JNJ's Dapoxetine

2007-06-09T03:51:00.000-07:00

Jim Edwards over at BrandweekNRX recently blogged about JNJ's Dapoxetine (being tested to treat premature ejaculation). This drug had been rejected earlier by the FDA. However after additional trials, JNJ plans to file for this in Europe later this year (and they will re-evaluate their US plans). Here is the money slide from their recent investor relations presentation (you can download the full set of presentations here).

A casual Google search reveals that the prevalence of this condition is anywhere from 11% to 70% with most estimates around 29-30%. JNJ reports (from an American Urological Association study) that only 4% of patients seek treatment. So this drug, if approved, could be a big deal for JNJ (if there are no safety concerns - this is a differentiated SSRI).

Also the "recreational" use segment for this will be sizeable. If this product gets approved in the US, the DTC campaigns should be interesting. While JNJ's advertising will initially start with sober clinical definitions of this condition and the need for treatment, it is only a matter of time before they take the "downward" spiral that ads for Viagra etc have taken (see here and here).

CFO Exodus

2007-06-06T14:27:00.000-07:00

The exodus of big pharma CFOs has received wide coverage in various blogs (Pharmagossip, WSJ, Pharmalot). While the reasons for the exit of CFOs at AZ, Merck and Amgen are ostensibly known, the departure of those at Wyeth and Pfizer is somewhat of a mystery.

Wyeth is really coming out of a rough patch and it would be an odd time for the CFO to leave (good news on the HRT/Diet Pill litigation front, approval of new molecules etc). If anyone has any theories on this one, please comment or e-mail.

Pfizer's CFO's departure too is somewhat of a mystery. One theory is that this is due to the shenanigans at Pfizer India (as reported by Dr. Peter Rost). Pharmalyst agrees with Dr Rost that it does appear that Pfizer India's top brass was involved in some sort of a kickback scheme (selling a plant for $3million which was subsequently valued by Indian tax authorities at $40 million is definitely suspicious). However looks like most of the wrong doing here rests with the people at Pfizer India. Unless the CFO (who if Pharmalyst's recollection is right was not the CFO when these events occurred) was directly responsible for overseeing the sale of plants in India, it is hard to see howthis could have precipitated in the CFO's departure.

Others have speculated that Pfizer's new CEO Jeffrey Kindler is looking for a CFO with more visibility and "Wall Street" experience. Pharmalyst believes that this is perhaps the more likely reason for their CFO's departure. One pure speculation on the part of Pharmalyst is whether the CFO was forced to resign because Pfizer lost the bidding war for MedImmune? Pharmalyst has no evidence of this but Pfizer brass have expressed an interest in acquisitions (esp biologics) and looks like there was another bidder at $51 for MedImmune (which was of course beaten by Astra's offer of $58 per share). Pharmalyst wonders if this had something to with the departure of Pfizer's CFO. Let me know what you think about this speculation on Pharmalyst's part.

Novartis share of hypertension market

2007-06-04T14:00:00.000-07:00

If anyone has some early IMS/other numbers on how Tekturna is doing, please e-mail. Looks like Novartis is making some waves in the hypertension market with the launch of Tekturna.

They also recently received approval for Exforge (combination of their Diovan and Pfizer's Norvasc molecules). Exforge may do well....What Pharmalyst has read so far from Novartis is that the combo offers better hypertension control than either component individually.

Many of these combo molecules though have one component which is still under patent (Vytorin - Zocor and Zetia, Caduet - Norvasc and Lipitor, Exforge - Norvasc and Diovan). Can anyone let me know if these things are still patented once both the constituents of the combo come off patent? If so, it will be interesting to watch the incentives PBMs offer for people to take the pills individually.

Pfizer and GSK shares can only go up from here?

2007-05-31T18:55:00.001-07:00

Story here on bloomberg.

End of the evergreening trend? WSJ blog handicaps Xyzal

2007-05-31T18:25:00.000-07:00

Pharmalyst had previously posted about the faltering of some of big pharma's evergreening efforts. Per this post on the WSJ health blog, looks like UCB & Sanofi's Zyrtec to Xyzal switcheroo efforts are likely to stumble.

Chantix Pricing in China

2007-05-31T18:02:00.000-07:00

Well, my little poll was not of much help in guesstimating the price of this product in China (too few & scattered responses - but thanks anyway!). Pharmalyst was initially thinking that the price would be lower due to lower incomes and lower costs of cigarettes in China. Also in markets like China & India one has to look at the fakes that will inevitably enter. If the product were priced at $40 in China, then presumably fewer counterfeiters would be tempted to enter the market.

However after considering the poll and other factors, Pharmalyst believes that Pfizer will price this product at the $300 level in China (at least initially). The Cutler & Gleaser study points out that smoking rates tend to decline with increasing incomes. However this only happens on the upper part of the income scale. On the lower part of the income scale, smoking rates actually rise with increasing incomes given that the product suddenly becomes more affordable. Given GDP and other figures, a majority of China's smokers will presumably fall in this bucket. So the customer segment that is most likely to want to quit is the really high income segment and this segment will probably try Chantix if things like quitting cold turkey fail. And this upper income segment will probably be willing and able to pay the $300 for 12 weeks price tag.

From a counterfeiting standpoint too, the $300 pricing may not be so bad. If the product were priced at say $50, it would make it a mass market product and would still be attractive to counterfeiters given the larger volumes. Finally, pricing the product at the same levels as in Europe & US ensures that incentives for arbitrage/parallel trade/re-importation are minimized.

The US figures show that roughly 10% of smokers are likely to try Chantix over the next couple of years. Given lack of DTC and lower income levels the percentage of people in China who may try this product will be a fraction of the US/Europe figures. Even if only 0.1% of China's smokers were to try this product by say 2010, that works out to roughly $90 million in revenues if this product is priced at $300 (given that China has 300 million smokers!).

Chantix Pricing in China: Pharmalyst Reports....

2007-05-18T04:56:00.000-07:00

....You decide by taking the poll at the end of the post.

Hat Tip: Pharmagossip for link to survey widget.
Data Sources:
1. WHO Tobacco Atlas
2. UN Human Development Index 2006
Thanks!!

End of the "evergreening" trend?

2007-05-17T07:51:00.000-07:00

The WSJ Health Blog has an interesting post today regarding how Sanofi's efforts to switch people from the now generic Ambien to the more expensive Ambien CR are faltering. A few weeks earlier, there were reports regarding the lackluster Q1 sales of JNJ's Invega.

Looks like aggressive managed care/PBM efforts are beginning to see some success in getting customers to switch to/stay on cheaper generics when the brand extensions are of marginal/questionable benefits. Besides managed care, media & bloggers like Dr. Howard Brody are actively questioning such tactics (see interesting post from Dr. Brody's blog here). Per Pharmalyst's recollection, the last really successful evergreening effort was the Prilosec to Nexium switcheroo by Astra Zeneca.

Perhaps the new evergreening model is in the form of combination molecules (Vytorin, Caduet etc). How long before managed care "manages" this? Also Pharmalyst expects more generic mfrs to launch combination generic molecules.

Chantix/Champix - Developed country sales

2007-05-16T07:04:00.000-07:00

In a previous post Pharmalyst had guesstimated that Pfizer with its field force and DTC efforts would be able to persuade around 4.5 million (out of 45 million) adult smokers in the US to try their smoking cessation drug Chantix. If 65% of these smokers take the full course, this works out to about $775 million in US sales for Pfizer. Pharmalyst estimates that Pfizer is on track to reach this figure by 2009/2010.

Obviously a big determinant of total sales for this product (known as Champix in most markets) will be its overseas sales. In this post Pharmalyst attempts to look at what the numbers in developed country markets might look like.

Pricing: Previously Pharmalyst had argued that the pricing of Chantix will be similar to the US price (though typically in many such markets prices are lower than US prices due to the bargaining power of single payer systems). This hunch is based on the fact that the product will be priced relative to the price of cigarettes. In many developed nations, cigarettes are even more expensive than those US states that tax tobacco heavily. The US average price for a pack of 20 Marlboro cigarettes is $3 to $3.99. The price is similar in most EU nations. In the UK, the price is higher than $5 (source: WHO tobacco atlas). Also Pharmalyst expects that many of the single payer systems in other markets will not initially reimburse this product or require smokers to have tried other methods before reimbursing this product (like many US insurers). Even if some of the systems do decide to reimburse, Pfizer will have some bargaining power as this is the only drug in class currently.

Market Adoption: Pharmalyst believes that in many European markets, where the smoking rates are higher than the US, the adoption rate of this product will be lower (though to be sure in recent years anti-smoking regulations and attitudes in Europe have tended to converge with the US). One very interesting paper that Pharmalyst read regarding country to country comparisons is titled "Why do Europeans smoke more than Americans?". The paper was published by the National Bureau of Economic Research and authored by economists David Cutler & Edward Gleaser of Harvard U. You can download this fascinating paper here.

The fact that smoking rates in Europe are higher than the US is somewhat paradoxical given that in most other health measures (such as obesity rates), Americans tend to have worse numbers. This is even more remarkable since American smoking rates were higher than Europe's in the sixties. According to Professors Cutler & Gleaser, almost half of the disparity is due to the differences in beliefs about the health effects of smoking. In the year 1994, 91% of the US population (and 83% of smokers) believed that smoking is harmful. In Europe by contrast, only 84% of the population ( and 73% of smokers) believed that smoking is harmful. Presumably the numbers for Europe have converged with the US in the ensuing decade but given more recent smoking rate data, differences still remain.

For each developed nation market, Pharmalyst will discount the US adoption rate by a factor proportional to the excess smoking rate in the country (over the US) to arrive at a potential market adoption rate. Further, given that the US allows DTC advertising and most other markets do not (the other exception being New Zealand) , Pharmalyst guesstimates that the general adoption rate will be about a third lower than the US (in the US, Pharmalyst's assumption was that about 1.5million of the 4.5 million customers were acquired via DTC campaigns).

Projected Developed Nation Revenues: Based on these assumptions regarding the market adoption rates and pricing, the calculations for developed nations is provided in the spreadsheet below. For existing smoking rates, Pharmalyst used the tobacco atlas data provided by the WHO. For the US, there are some discrepancies between the WHO numbers and the CDC numbers that Pharmalyst has used before. As this is just a back of the envelope calculation, Pharmalyst stuck to the CDC numbers for the US. These rough calculations reveal that the total sales in the US and other developed markets will be about 2.5 billion dollars!...Perhaps the market adoption rate in countries like France, Germany, Japan & Korea may be lower than Pharmalyst's projections. Even then this product is perhaps on track to generate north of $2 billion in annual revenues...and Pharmalyst guesses that Pfizer could reach these levels by the year 2010 or 2011. The model also doesn't include numbers from large developing nations like China and India (subject of future post).

What could go wrong with this picture: One issue is that the early success with this product in the US could be just a passing fad...perhaps after the initial success, many of the quitters go back to smoking, the reputation of the product suffers and potential new customers stop trying Chantix/Champix.

The second challenge to Chantix will come from the couple of competitors in the pipeline...for example Novartis recently paid big bucks ($500 MM) to acquire exclusive rights to market Cytos biotech's anti-smoking vaccine. If these vaccines are proven safe, they could really be Chantix killers...With Chantix, a wannabe quitter has to stay motivated to take the full course and other factors like counseling are key to success. With a vaccine, once you take the shot, then factors like lack of willpower may not be that pertinent. However the safety hurdle will be higher for a vaccine compared to a pill which can be easily discontinued if the side effects can't be tolerated easily. Pharmalyst will be eagerly watching out for any news regarding safety/side effects of the Novartis vaccine.

PS: Pharmalyst welcomes reader comments/e-mail (incl. anonymous) on this & other posts (especially the couple of readers who according to Google Analytics are from Basel & Lucerne. Pharmalyst guesses that these readers may be somehow connected to Novartis and therefore may have insightful comments...esp on the Cytos deal).

Purdue Pharma - A pusher of another kind

2007-05-12T07:20:00.000-07:00

Another rather harsh Bill Maher clip (pharma bit towards the end). Warning: Rated R.

NYT: Psychiatrists, Children and Drug Industry’s Role

2007-05-12T07:10:00.000-07:00

NYT's GREAT piece (registration) on the above topic has received wide coverage in the bloggosphere. Below is a link to what Bill Maher had said a while back on use of psychiatric drugs in children. Rather harsh but definitely a grain of truth.
Warning: Non PC and definitely non PG-13 content. Enjoy or Weep!

The making of a quiet blockbuster - Update

2007-05-12T04:41:00.000-07:00

A few weeks back Pharmalyst had posted about the makings of a quiet blockbuster at Pfizer (Chantix - their new smoking cessation drug). Based on past CDC surveys of smokers, Pharmalyst had estimated Pfizer would probably enlist 2.6 million smokers to try Chantix and perhaps 65% of them would complete the full course and generate around $447million for Pfizer (@$265 per course).

Well, Pfizer's Q1 numbers are in and Pfizer reported $162 million in sales ($145 million in the US and $17MM international). Annualizing those figures, it does appear that Pfizer will generate around $580 million in annual sales (though to be sure the Q1 numbers probably included a number of people who wanted to quit smoking per their new year resolutions - so the annualized US figure will be less than 145*4). Ever the consummate CYA artist, Pharmalyst had caveated his $447 million estimate with the following statement:

"The actual figure could easily be double that (or even more, given the total potential market size) if Pfizer's DTC advertising succeeds in a big way. "

With Pfizer on track to generate around $550 million without a branded DTC campaign (currently there is an unbranded campaign), Pharmalyst would estimate that they will probably reach around 3 million patients. If their branded campaign is reasonably successful, they might increase their patient base by 50% to 4.5million. If 65% of these 4.5 million patients complete the full course of Chantix, this works out to around $775 million in US sales alone!

Coming soon on this topic: 1.Estimates for other developed markets 2. Estimates for some large developing markets (China reportedly has 300 million smokers and looks like Pfizer wants to launch this product in China to coincide with the Olympics....at least that was Hank McKinnel's strategy)

The case for debt

2007-05-06T04:46:00.000-07:00

Sorry for not posting last week...just finished the finals....phew!

A few days back Pharmagossip had an interesting post regarding Big Pharma moving into debt. The post referenced the following Reuters item which talks about Astra Zeneca's decision to go into permanent debt following the chunk of change they plunked down for MedImmune. The move was praised by many financial types such as David Beadle, analyst at UBS who said:
"Astra are partly responding to what they are being told by the investment community, that you need to be progressively geared". The same article also quotes GSK CEO Jean-Pierre Garnier saying "Yes, some investors would like us to gear up our balance sheet."

The case for levering/gearing: The case for leverage is clear to anyone who has flipped a condo before the recent bust. You borrow at low rates, buy real-estate and flip it in a couple of months for a substantial gain. Use part of the proceeds to pay your debt and keep the rest for yourself...all for a very low initial investment of your own money.

For Big Pharma majors like GSK, J&J, Merck, Pfizer etc, the case for more leverage is clear. If you take a company like GSK, the return on average assets was 20.84% in 2006 according to Google finance. For Merck & Co, this figure was 9.92% in 2006. Both GSK and Merck have a debt rating of AA. Only in recent months has Pfizer's rating been cut from AAA to AA. With an AA rating, Big Pharma can borrow at extremely low rates (around 0.68% higher than Uncle Sam according to this article on Bloomberg). So debt makes sense for Big Pharma. They can borrow at 6%, invest the money in their own business, and earn anywhere from 9% to 20%.

Of course the fact that Big Pharma can borrow doesn't necessarily make it good for investors. Investors could achieve the same effects of leverage by borrowing themselves and using the borrowed money to invest in the unlevered shares of Big Pharma (to make the same returns). The reason that it makes sense for Big Pharma, rather than the investor to borrow is taxation (interest paid by Big Pharma on debt is tax-deductible. For investors, only mortgage interest is tax-deductible...and only in some countries like the US). More academic stuff on capital structure here.

How much to lever: Exactly how much to lever is harder to determine. As the company borrows more, its tax benefits become greater due to greater interest payment deductions. However more borrowing will cause Pharma's debt ratings to be downgraded and will raise interest rates on debt. At higher debt levels, there are also other costs of financial distress that make borrowing unattractive. Given that there is a trade-off between positive and negative effects of debt, there is an optimal debt to equity ratio for a firm. Exactly determining this is more art than science.

That being said, based on the book value (in practice one should look at the market value), it does appear that the current levels of debt at Big Pharma are too low. According to Reuters, the average Long-Term Debt to Equity ratio at a Big Pharma company is only 0.27 compared to 0.59 for the S&P 500 companies. So it does appear that Big Pharma should lever up from current levels, if they want to maximize returns for shareholders.

Why Big Pharma doesn't like debt: Despite people like GSK's Garnier making the right statements, why has Big Pharma resisted this so far? As anyone with a student loan (or other kind of debt) already knows, debt puts tremendous pressure. Given the strong cash flows, Big Pharma managers are not really forced to take on more debt. Their thinking seems to be something like "Why take on more debt for shareholder's benefit when we can get by without debt and a lot less pressure on us?"(see here for a slightly related New Yorker cartoon).

AZ's Statement on Debt: While in general more debt is in order, Pharmalyst is not really sure about AZ. Ideally they should have increased their leverage while in a position of strength (where they really didn't need the money but were increasing debt to maximize shareholder returns). With the MedImmune acquisition though, they are being forced to take on more debt. This probably will increase the cost of debt and make it less attractive for their shareholders.

BMS: Unlocking value from late stage compounds

2007-04-30T17:04:00.000-07:00

The IN VIVO Blog has praised Bristol's moves regarding unlocking value from its phase III compounds by licensing them to other companies. The latest such move by BMS was in licensing anticoagulant apixaban for as much as $1B in upfront and licensing payments from Pfizer.

Looks like a good move by BMS under most possible outcomes. If the product turns out to be a an "Exubera", then BMS comes out ahead. If it turns out to be a medium size product, then for BMS, the value of getting $1B early (helps with dividend payments and other investments which hopefully earn a good return) probably makes it worthwhile. The only scenario where this may not be such a good deal (and even then only from an opportunity cost point of view) is if the product turns out to be another Plavix and BMS is forced to split $6B (or something in that range) with Pfizer. However given that J&J+Bayer have a similar product (rivaroxaban ) further along in development, makes it all the more unlikely that this product will be a Plavix.

One other interesting point that occurs to Pharmalyst is that BMS seems to be rotating its licensing deals among other big-pharma partners. Besides Pfizer, there was that deal with AZ a few months back and that ill-fated collaboration with Merck over Pargluva. Having so many partners is likely to keep BMS independent and these JV deals give BMS the cash to pay a high dividend and therefore a high stock price making an acquisition harder (even Sanofi is rumored to have balked at the price). These appear to be the real reason behind these deals rather than Bristol's stated intent (see this) to focus on specialty and move away from a primary care model..Pharmalyst believes that BMS - the company that sells Plavix (& previously sold Pravachol) already had a strong primary care presence. Also if you look at their financial statements (see here), their SG&A expenses have stayed not really declined - so at least their spending doesn't give any dramatic indication that they are cutting back on a lot of their primary care activities like reps etc.

Expect BMS to stay an independent company for a long time - temporary or permanent CEO not withstanding?

Rebuffing a Mack Attack

2007-04-28T09:09:00.000-07:00

Pharmalyst hopes it was just an oversight . However for the record, things must be set right. Pharmalyst generally enjoys reading John Mack's Pharma Marketing Blog, but does not have much use for John's PharmaBlogosphere (a blog about pharma blogging). This is because Pharmalyst started this blog so that he could learn about the pharma industry thru comments from readers and from researching (ok web surfing) various topics to blog on. So Pharmalyst rarely visits the PharmaBlogosphere. The dynamics of the blogging "industry" itself are not of much interest to Pharmalyst.

PharmaGiles' last post made some references to the PharmaBlogosphere and Pharmalyst had a read today. So naturally he was shocked to find the following in one of Mr. Mack's posts:

Good idea! I remember getting "bitch slapped" by Rost for asking Pharmalyst not to use my copyright logos and images to illustrate posts (see "John Mack attacks, new blog apologizes."). Pharmalyst had no problem with my request, which was designed to protect my business's reputation. Misuse of logos and registered trademarks is even a stronger no no than using an image I may have created to illustrate a post.

For the record: I have never used any of John's logos or images or posts for any of my posts and judging by the language above I probably never will!! If I am not mistaken the blogger in question was "John S" a Pfizer rep who started his Bill of Rights blog. Based on this post from John S, it looks like he was just starting out and did not really know the blogging etiquette...so perhaps John Mack was being a bit unduly harsh.

Mr. Mack: I know that it is hard to get all the facts right all the time, but please do try (especially when you yourself are involved).

Doggie Prozac featured on NPR's Morning Edition

2007-04-28T08:56:00.000-07:00

Read more & listen here. Pharmalyst nearly spilled his morning coffee when he heard that the pertinent Pfizer division is called the "Companion Animal Health" group.

Giles

2007-04-28T08:38:00.000-07:00

Pharmalyst is really sad to read that PharmaGiles has decided to hang up his blogging boots. There is some hope because Giles titled his last post "That's all for now, folks". Pharmalyst holds out some hope that Giles will be back. Besides being funny, PharmaGiles really provided one with the true sense of how things work at Phoni and other big pharma companies. By using the fictitious Phoni universe, Giles could unravel the real truth, the conscious and sub-conscious motives behind many of the moves that Phoni and other companies like it undertake....a George Orwell of the pharma industry if you will.

Pricing of Pfizer's Maraviroc - Part Two

2007-04-28T08:28:00.000-07:00

Pharmalyst wishes to thank anonymous for his/her insightful comments regarding the previous post on this topic. Anonymous highlights some interesting issues around the testing for Maraviroc:

"Speaking of tests each patient will be required to have a trofile assay from Monogram to see if they can safely take miraviroc. The cost of this test not including clinic visits will be about 1000.00 and has a 3 week turn around time. In trials about half of those who needed miraviroc were unable to take it safely due to having the x4 which shows up in advanced HIV patients. It is unclear how Pfizer intends to market this product given its close ties to Monogram and the cost of testing...who will pay for the test? will it be bundled as one product? Since the trofile test is not FDA approved or regulated it seems it should be a seperate test much like other testing that happens regularly for HIV patients. It is also unclear how often you must have the trofile test and it only works when a patient stops reponding to therapy. There is also an issue surrounding what will happen if during therapy they develop the x4 which is contraindicated for the start of therapy. "

Pharmalyst is also a bit confused regarding an apparent catch-22 situation with the product. Given that the safety issues etc haven't been fully studied, the product is only being recommended for those who have failed other treatment options etc. Yet the CCR5 pathway is used more often during the early stages and during the early stages patients have other treatment options....so unless the safety picture with this drug is clearer, it may not be used earlier and using it later may render the product less effective...no?

Pricing of Pfizer's Maraviroc

2007-04-25T13:23:00.000-07:00

The FDA advisory committee approval of Pfizer's CCR5 pathway-based HIV drug Maraviroc was widely covered in the media. While analysts and doctors seem to agree that this is a novel class of therapy, there is a wide range of estimates in terms of the product's commercial potential. According to CNN, analyst Les Funtleyder of Miller Tabak estimates 2011 sales at $200 million while analyst Barbara Ryan of Deutsche Bank estimates the same at $500 million.

Pharmalyst was curious regarding the huge variability in estimates and decided to take explore the numbers in this post. The wide range is not surprising given that Pfizer has not released any pricing information about the product. Further, as Pharmalyst read more about the product, the number of patients too could change as further trials and safety information emerge.

According to WSJ (subscription):

"Pfizer has proposed using maraviroc in patients with advanced HIV infection or AIDS who have failed treatment with other drugs, which is estimated at about 40,000 patients in the U.S."

This use of the product as a drug of last resort would suggest to Pharmalyst that Pfizer would probably look at pricing this like some of the oncology drugs (Avastin $47,000 per year, Nexavar & Sutent at $45,000 per year according to WSJ (subscription)). However this kind of pricing would definitely prevent this product from being considered for the first-line cocktail of HIV drugs. It appears to Pharmalyst that Pfizer probably would like to maximize total revenue by expanding Maraviroc's patient population. According to a background article in NYT (registration):

"About 85 percent of newly infected patients have a virus that uses CCR5 while only about half of highly drug-resistant viruses use that portal. "

To get the product adopted in early-stage patients , Pfizer will perhaps opt for much lower pricing (given that there are several alternatives for early-stage patients). From the recent Abbott v Thailand saga, we know that a years supply of Kaletra in the US costs around $7000. So Pharmalyst would like to speculate that Pfizer's initial pricing for this drug would be somewhere between $7,000 and $40,000. Despite the potential PR hit, Roche priced its HIV drug Fuzeon at $20,000.

Given that there are still safety concerns over Maraviroc and it has not been reported to be a product with manufacturing difficulties (unlike Fuzeon), Pharmalyst guesses that Pfizer will price this somewhere around $13,000 to 15,000 initially. This price is higher than the price of current therapies but will gladly represent value to patients for whom existing therapies are not working. Over time, if there are no liver/other safety issues with this drug, it could be a standard part of the early-stage cocktails for patients with the CCR5 strain. In that case, Pfizer would probably drop the price further in line with the price of existing therapies.

Pharmalyst welcomes readers opinions regarding the pricing of this drug.

This part of the game is brought to you by...the OIG!

2007-04-25T01:52:00.000-07:00

No, we're not talking the recent saga at AZ. This refers to the fascinating study done by PharmedOut's Dr. Adriane Fugh-Berman in collaboration with Shahram Ahari, a former rep. They provide great insights into how reps categorize physicians into specific types and the strategies the reps employ to manipulate/influence them. Nothing to be surprised about but a real fascinating read nevertheless. The study has received wide coverage in the blogosphere and you can view the full publication here. One interesting aspect that caught Pharmalyst's eye was the funding source for the study:

So this study was indirectly sponsored by Pfizer (from the fines Warner Lambert paid to the state AGs for off-label promotion of Neurontin)! Unlike the way many states spent their tobacco litigation settlements (earmarked for tobacco education efforts but actually used to pay interest on bonds issued by profligate state governments), it seems that these funds are being used as originally intended!

Amgen's financial engineering backfires

2007-04-21T03:16:00.000-07:00

Pharmalyst read an interesting article in yesterday's WSJ (subscription) regarding some savvy financial engineering that Amgen undertook last year. Unfortunately it looks like Amgen's Corporate Finance department was not talking to the crew that was undertaking additional clinical trials featuring Aranesp. The Aranesp-driven decline in Amgen's share price caused additional heartburn as these financial maneuvers backfired.

As most readers of pharma blogs know, results from these trials have cast a cloud over the entire Aranesp family of products which according to the WSJ article represents about half of Amgen's sales. What readers may not know is that in Feb 2006 Amgen issued about $5 billion of convertible bonds. From Amgen's press release on this topic, they used some of the proceeds for

"entering into separate warrant transactions with one or more of the initial purchasers and/or their affiliates. These transactions will generally have the effect of increasing the conversion price of the notes to $107.90 per share, representing a 50 percent premium based on the last reported bid price of $71.93 per share on Feb. 14, 2006."

Basically looks like they used the part of the money ($750m per WSJ) to buy the warrant call options associated with the convertible bond issue to drive up their price (and therefore the conversion price at which the bonds could be converted to stock). The net result according to WSJ was that their cost of borrowing this kind of money was only around 3%.

Amgen used about $3 billion from the bond issue to buy back Amgen stock in the $70 price range. Given that the stock has fallen about 12% thanks to the Aranesp trials, looks like their financial engineering moves cost them dearly!

Going to the Dogs - Part Two

2007-04-20T14:10:00.000-07:00

The wonderful Clin Psych blog recently blogged about Pharmalyst's previous post re Lilly's Prozac for dogs. Clin Psych considered my estimates of $270m for annual US sales to be a bit over the top. I agree with Clin Psych that $270m does seem to be a bit high...but as I have found out from the Clin Psych blog itself - never underestimate the power of industry to push anti-psychotics, SSRIs etc (at least in humans and may be in dogs too!).

For the record I would like to clarify that $270m wasn't my guesstimate of likely US revenues. I was merely estimating that IF 10% of the target market (of 10m dogs who are afflicted with separation anxiety - per Lilly's press release numbers) takes doggie Prozac, then Lilly stands to make about $270m. I do not know if Lilly will be able to persuade 10% of the potential market to consider Reconcile. I tried to guesstimate how many pet owners would consider such a move by looking at the income distribution of pet owners. However I was was unable to find a free source of such data..some vet association was selling such statistics for an arm and a leg...well out of Pharmalyst's reach.

Pharma industry going to the dogs?

2007-04-18T02:03:00.000-07:00

Recently we read about Lilly's reconcile, a beef flavored version of prozac for separation anxiety. Lilly's press release estimates that there are 10 million dogs in the US with this disorder. Lilly's move follows other similar moves by other Pharma majors. Pfizer launched Slentrol for canine obesity and Cerenia for motion sickness.

Lilly's price for reconcile is not yet known but Slentrol is estimated to cost $1 to $2 per day at the retail level. Assuming reconcile costs the same and Lilly gets about 75 cents of that, it could be a good market depending on how many pet owners buy into this. Pharmalyst tried to guesstimate that number based on the number of pet owners and their household income ranges but free data are hard to come by. If 1 million pet owners (1/10th of Lilly's estimate of potential market) were to try this and pay Lilly 75c a day, it works out to approximately 270 million...not too bad. Pet ownership & expenditures on care are similar in percentage terms in other countries like Australia. Could be a lucrative global market.

What's next in this segment? GSK to launch something for "Restless Tail Syndrome"? We start seeing more combination molecules to reduce pill burden? Clinical trials to justify that combo pills improve patient adherence? These will be a sure indicator that "the industry is going to the dogs" as it were!

Virginia Tech

2007-04-18T01:51:00.000-07:00

Pharmalyst & his fellow students would like to record their condolences & prayers for the victims of the senseless tragedy at Virginia Tech. Donations to Hokie Spirit Memorial Fund here.

Pharmalyst merits a mention on ...PharmaGossip!!

2007-04-18T01:40:00.000-07:00

Pharmalyst is really honored that my analysis of Casodex prices in relative terms (following up from a related post on PharmaGossip and eDrugsearch) merited a mention on the incomparable PharmaGossip. To Pharmalyst it is like being mentioned on the front pages of the NYT and Gawker at the same time!! Thank you Mr. Friday. You continue to amaze everyone with your great blog!!

Casodex International Pricing

2007-04-14T13:14:00.000-07:00

Pharmagossip and eDrugsearch have done it again. Shine a light into the murky corners of international pharma pricing that is. They have published the per tablet pricing of AZ's Casodex in a few rich nations. As perhaps expected, the US price appears to be the highest at $17.33 per tablet. However if the per capita (PPP) GDP figures quoted in Wikipedia are any good, then it appears to Pharmalyst that the citizens of AZ's home country (the UK) may be getting screwed even more in relative terms! In both absolute and relative terms, the Canadians appear to drive the best bargain. Calculations below:

Chantix: The making of a quiet blockbuster?

2007-04-14T13:06:00.000-07:00

A recent post on BrandwekNrx gave us a preview of some of Pfizer's newer products. One product that seems to be generating some buzz is Chantix, Pfizer's new smoking cessation product. Given the past performance of Zyban and other Nicotine Replacement Theapies (NRT), most analysts had modest sales estimates. Analyst Les Funtleyder of Miller Tabak estimated peak annual sales of $900M.

Now that the product is generating some buzz and given that smoking statistics are easy to come by, Pharmalyst decided to take a look at building a peak sales model. In this post, Pharmalyst presents some US numbers. However global sales will be a big determinant of peak annual sales and will be the subject of a future posting. One interesting aspect of international sales is the pricing of the product. Typically prices are higher in the US than other developed nations such as the UK, Canada, France, Germany etc thanks to the bargaining power of single payer systems. In this instance however, Pharamlyst believes that the price of Chantix (regardless of the reimbursement status) in developed nations will be comparable to the US. The reason being that the pricing is done in reference to the cost of cigarettes and most developed nations tax cigarettes heavily. Regardless of the reimbursement status, most rich nation consumers will be willing to pay high prices given the value relative to the cost of their smoking habit.

Looking at the US, a 2005 CDC survey indicates that there are 45.1 million active smokers in the US (aged over 18). The same CDC survey reports of the 45.1 million smokers, 42.5% (i.e. 19.1 million) had reported giving up smoking for at least 1 day (i.e 19.1 million would like to quit).

How many of these 19.1 million wannabe quitters might be willing to try some sort of a therapy in a given year? This is hard to estimate since many of these smokers will try to quit cold turkey. Some will opt for alternatives like NRT and Zyban (though Pharmalyst believes that most willing to try Zyban will actually switch to trying Chantix first). Given that NRTs haven't been too successful, it is reasonable to assume that the biggest "threat" to Chantix is the cold turkey method. One good set of cold turkey statistics can be found in a CDC survey in 1991. This survey reports that in 1991, there were 40.5 million smokers. Of these 42.1% (17 million) attempted to quit (by reporting that they did not smoke for at least one day). In the same survey, 2.3 million (13.8%) reported not smoking for one full month (assumed to have quit). In 1991, presumably all the cessation attempts were probably done cold turkey. The success rate of this method then appears to be 2.3million/17 million or 13.5% (i.e. 86.5% failed). Applying the same percentages as the 1991 survey to the 2005 data, Pharmalyst believes 86.5% of the 19.1 million wanna be quitters are *potential* candidates for Chantix (most quitters make multiple attempts before succeeding). This works out to 16.5 million smokers. The remaining 2.6 million would have succeeded quitting cold turkey. In coming years too, it appears that there will be 10+ millions of potential candidates for Chantix given that the US has seen very marginal reduction in smoking rates (comparing data for 1991 and 2005 in terms of % of US population).

How many of these *potential* 16.5 million therapy seeking wannabe quitters will be persuaded to try Chantix in a given year? Again, hard to say and will depend on the success of Pfizer's promotional & DTC efforts. As a bold guess, Pharmalyst takes it to be the same as the number of people as those who succeeded using the cold turkey method (2.6 million). The rationale for this assumption is rather thin. It supposes that the 2.6 million who succeeded cold turkey comprised of the most determined bunch. Presumably a bucket of similar size exists for a group that is a notch less motivated than the former and this bucket is most likely to be persuaded to try Chantix (at least it beats pulling a number out of thin air!). Please e-mail me any other suggestions you may have (Pharmalyst@gmail.com).

How much moolah does 2.6 million Chantix customers translate to? The cheapest online prices for the full 3 month course of Chantix appear to be around $330. This being the sole product in its class, the margins claimed by wholesalers and retailers on this product will be the bare minimum. The overall profit margins for wholesalers like Cardinal, McKesson etc range from 3.5% to 11% (gleaned from their quarterly reports). Assuming that there is a markup of 20% total (~10% wholesale & ~10% retail), Pfizer makes about $265 per completed course. However the prescribing information document of Chantix reports that in its pre-approval trials, only 65% of patients enrolled completed the full trial(presumably the rest dropped out due to side effects, cravings etc). Pharmalyst assumes a similar completion percentage in the general population and assumes that customers unable to continue due to side effects etc are entitled to & do claim a full refund (not sure if this is the case).

Based on these (big) assumptions, the US revenues alone work out to (0.65*2.6million*265) or about $447 million on an annual basis! The actual figure could easily be double that (or even more, given the total potential market size) if Pfizer's DTC advertising succeeds in a big way. These figures coupled with the international sales figures (subject of a future post) make it seem to Pharmalyst that Chantix is a blockbuster in the making for Pfizer.

PS: See this to get some thoughts on why Chantix may not have such a rosy outlook.

Pharma Giles: Fresh fruit from rotting vegetables

2007-04-13T03:11:00.000-07:00

Readers of this blog already know the blog Pharma Giles. In the unlikely event that there is someone who doesn't, please check it out. For someone like Pharmalyst it is an amazing source to really learn about the industry. Giles debunks the industry doublespeak in a manner that George Orwell would approve. And he does it in really funny way - a "pharma industry Dilbert in words" sort of way.

So it was quite an honor (honour) for Pharmalyst to merit a mention in one of Mr. Giles' recent posts. In it he offers some good career advice to yours truly. Using a rather ingenious empirical technique, Mr Giles mines the depths of Cafepharma to get some useful nuggets. How does he do it? Well he gives you his assumptions & techniques in his post. Based on Mr. Giles' analysis, the two best pharma employers are Wyeth & GSK. The two worst? Abbott & Pfizer (Pharmalyst must say that a casual reading of Cafepharma does leave one with the gut feel that ABT & PFE are not great places to work currently). Mr Giles confirms this with a more "robust" model. PharmaGiles is quite funny at many levels. It lampoons company memos using "phoni" company memos..in a similar vein it may be poking fun at some of the empirical techniques that Pharmalyst has recently used. Either way the entire blog is really funny!

Out of curiosity Pharmalyst also checked Fortune magazine's top 100 employers . The pharma names that figure in this list?
2. Genentech
40. Amgen
43. Genzyme
71. Astra Zeneca

Given recent news regarding Amgen & AZ, Pharmalyst suspects that Mr Giles' list is much more current and accurate!

International Pharma Pricing: All smoke & mirrors

2007-04-11T01:21:00.000-07:00

Inspired by a recent post on the very fine Pharmagossip regarding the high price of medicines, Pharmalyst set out to to compile some prices for various brand name medicines in the US and Thailand (Thailand being in the news re compulsory licensing of Abbott's Kaletra etc due to high prices). In a previous post Pharmalyst had noted that Kaletra in Thailand was priced at 30% of their per capita GDP compared to the US price of 18% (of US per capita GDP) .

Well, Pharmalyst is sorry to report that finding international prices of pharmaceuticals outside the US & Western Europe has been really hard. Pharmalyst knows that some of the readers of this blog are in Asia. Pharmalyst appeals to you to e-mail prices from your markets. Pharmalyst's research indicates that drug companies like to keep drug prices opaque; they then seem to exploit this information asymmetry to overcharge those countries that do not drive a hard bargain. Towards this point, Pharmalyst refers readers to Health Action International. Together with the WHO, they have a project to compile world medicine prices so that consumers and govts can negotiate the best prices from pharma companies. To quote from their brochure on medicine prices:

"if you have a peptic ulcer and require a month’s treatment, the originator brand version of ranitidine will cost you the equivalent of 50 days wages in Cameroon, almost 19 days of pay in Armenia and 13 days in the Philippines…That is almost two month’s pay for one month of treatment. If a partner and children get sick, then the medicine bill will rapidly devastate a household income. Of course, the medicine may be available at lower prices. Generic equivalents from public sector sources can be half of the price of the originator brand. But in some countries – e.g. Cameroon and Philippines – generic ranitidine was not found. People either pay the
full price of the originator brand of ranitidine or go without. Medicine prices vary to an extraordinary degree. The same medicine may have a different price tag in its originator or generic form, from a public clinic, a charitable agency or from a private pharmacy, in an urban or rural area. This makes it impossible for people to know what is the ‘best buy’ and where to find it."

Another interesting find for Pharmalyst was how the drug companies use free trade agreements to prevent countries (including some not very wealthy ones like Morocco) from supporting medicine reimportation. A good summary of this can be found here at the American University's website for the Project on Information Justice and Intellectual Property. It appears that these free trade agreements are anything but free trade. They probably should be called special interest agreements.

Exubera: More ammo to pull the plug?

2007-04-08T03:48:00.000-07:00

Pharmalyst recently read another post on Pharmalot informing us that analyst David Risinger of Merrill now thinks that Exubera will generate sales of $250 million in 2012 (revised downward from $630 million). Pharmalyst's own estimates under the skeptical scenario were about $284 million. Looks like most of wall street is now gravitating towards a strongly negative outlook on this product given the reported NRx numbers (even after Pfizer had pushed the product to endocrinologists).

Numbers like $250 million in 2012 would indeed make this product a spectacular bust. Pfizer brass has to make a decision on pulling the plug. Pharmalyst believes that Pfizer's current thinking is revealed by two comments (made by SMC and Superman..who look like PR people or employees of Pfizer) in response to a WSJ health blog article regarding Exubera. Their main defense of the product (and Pharmalysts comments in italics are as follows):

Needle phobia is a big deal. May be so. However even with Exubera people need to use needles to measure sugar levels. Various types of pens etc have made injecting insulin easier. Users still need to inject long acting insulin on occasion.

Presence of competitors will drive market growth (capturing 50% of insulin market). More likely that Exubera's performance will deter competitor entry. If anyone does, it will be with a better inhaler device and will capture share from Exubera.

Only insulin is effective at A1C control. May be so. However, not an inhaled one with potential for lung damage and lawsuits. Also some of those "oral agents" seem to have other benefits like weight loss.

Pfizer made a good effort in enhancing the science of inhaled medicines & Pharmalyst commends its scientists for trying. Perhaps Pfizer can benefit from its learnings for future products. However it is time for Pfizer brass to seriously think about whether they need to throw in more good money after bad or whether it is time to cut their losses. Surely Pfizer must have other projects with better odds of success, that are in need for capital and resources.

About me

2007-04-05T15:32:00.000-07:00

I wanted to thank Jim at BrandweekNRx for his kind comments on my humble (and I am sure sometimes stupid) blog. Only reason I wish to be anonymous is that I hope to graduate sometime next year and at that point I hope to apply for jobs at:

a. Many pharma companies: Specifically looking for jobs in the market research/finance area
b. Any financial type company covering the pharma sector

I am sure that if they knew my status as a blogger, my resume will go straight to the trash can. For a lot of reasons (family/friends etc), I like the pharma industry and I really respect the science & innovation that comes out of this industry..and I am also aware that there are a lot of shady practices in the industry (thanks to all you bloggers). I have been reading many of the pharma blogs for months and hopefully have absorbed some of the jargon/lingo via osmosis. I hope this will give me an advantage re the job search. I also wish to learn more about the industry by chiming in with my own 2 cents and get feedback from the 35 readers I seem to be averaging :-)

If I do get a job with one of these companies, I probably will stop blogging though I will continue reading all the great blogs out there :-)

PS: I'm reachable at pharmalyst@gmail.com

Zelnorm: Statistically insignificant to significant

2007-04-04T14:25:00.000-07:00

Someone sent me the this link from NYT (registration). This answers the question posed in my previous post as to why Zelnorm was initially approved just in women. According to the article: "Men were dropped from the initial studies because the drug did not appear to work in them at all.". This leads me to wonder if the reason that the CV events were at a statistically insignificant level in the original label was because it was not studied enough in men? (given that for people below 65, men are more prone to CV events than women)? Once the drug was approved in men and more data in male patients became available, the CV events perhaps went up from insignificant to significant level.....just wondering.

Meanwhile ads from lawyers have started showing up!

Male HPV Market Size

2007-04-04T01:43:00.000-07:00

A few weeks back, Pharmalyst had blogged on Gardasil's potential revenues among the 6th grade female students in the US (given various statewide HPV vaccination mandate efforts). So naturally Pharmalyst was intrigued when Pharmalot had this very interesting post regarding Merck's marketing efforts focusing on male college students.

Pharmalyst wondered what the potential market size for US males in the age range 18 to 24 might be. Based on the analysis below, Pharmalyst estimates that Merck stands to make approximately 148 million each year from 18-24 males in the US.

We know from the US census figures, that the number of males in the 18-24 age range is projected to be 14.543 million (2005 projections). Of these 14.543 million men, what percentage are likely to sign up for an HPV vaccine absent any mandates? Pharmalyst thinks that the percentage will be relatively low (given that they are taking this vaccine not for their own benefit but for the benefit of their current future spouse/girlfriends).

Given that Pharmalyst doesn't have access to fancy market research data like Merck does, I wondered if a proxy metric could be found. One thought that occurs to Pharmalyst is that perhaps the percentage of US males who undertake something like say vasectomy may be a reasonable proxy metric to estimate the % of males likely to sign up for HPV. The actual figure will probably be somewhat lower given that these are mostly young men not in a committed relationship(though with DTC, Merck will make it cool for males to sign up).

If the above assumptions re proxy metrics are somewhat reasonable, where might one get them? The UN and WHO have some excellent 2005 world contraceptive use stats here (data in excel format can be downloaded at the bottom). Based on this fascinating data, there are 37.550 million women aged 15-49 who are in some sort of a union in the US. Out of this, 70.5% use modern contraceptive methods (26.47 million). 13.2% involve male sterlization (4.96 milion). So 4.96/26.47 can be estimated as the % of men who will sign up for the HPV vaccine. This works out to 18.7% or 2.61 million males in age group 18-24 based on census figures. At $400 per course that works out to a cool 1.044 billion dollars. Note that this is not an annual revenue figure; once the 18-24 set is vaccinated, then one can only expect 18.7% of men who just turned 18 to get vaccinated every year. If the 2.61 million is evenly distributed among 18-24, then this works out to .37 million new males per year or $148 million each year in anualized revenues to Merck from this customer segment (US males aged 18 to 24).

Pharmalyst really really welcomes your comment and critique of this analysis. Please let me know if you can identify a better proxy metric to estimate % of 18-24 men likely to sign up for an HPV vaccine.

More evidence of shaky pharma stock research

2007-04-02T19:47:00.000-07:00

BrandweekNRx has an interesting post on how thin some of Wall Street's research really is. In the same light, Pharmalyst would like you to read this great forecast from WR Hambrecht. You can see other gems on the same topic from them here. Some of their earlier predictions are really funny!

Earnings Season & Pfizer's Prospects

2007-04-02T03:29:00.000-07:00

Earnings season is almost upon us. I think most of big pharma will continue to meet estimates. Some like Merck will probably beat the street thanks to new launches like Januvia & Gardasil. Lilly may be another name that beats the street due to strong sales of Byetta & Cialis capturing more marketshare from Viagra & Levitra. In the case of Lilly, the Zyprexa numbers will be interesting to watch given the recent issues around its metabolic effects.

One big name that will be struggling is Pfizer. I don't have access to fancy data tools like IMS but I hear from friends who do that Lipitor has lost a lot of marketshare to Simvastatin & Vytorin (perhaps the BrandweekNRx guys will be kind enough to post some NRx numbers for both Lipitor & Zyprexa). Based on all the chatter on CafePharma, it looks like Pfizer's sales force is a bit too disoriented/demoralized at this point - given all the changes that new CEO Jeff Kindler has unleashed. Expect numbers for other Pfizer brands like Celebrex, Lyrica & Geodon to miss promises. There was also the earlier than expected patent loss for Norvasc. Pfizer's Chantix seems to be the one drug that seems to have decent growth prospects based on some recent media articles I've read....but Chantix alone is not enough for a company the size of Pfizer.

Pfizer's Lipitor prospects seem to be the principal driver of its poor stock performance these days. I heard the Lipitor pitch made by Ian Read (President of Pharma Ops) during their January analyst meeting and have to say that it was quite a weak defense. His basic argument seems to be that Lipitor has proven outcomes data where as Vytorin (esp the Zetia component) & Crestor do not. This may be true but most people know that products like Vytorin are newer products and while the outcomes data will take time to emerge, they have every reason to expect them to be as good or better than Lipitor given Vytorin's LDL lowering claims. He did not go after Crestor's safety record. As to the Simvastatin threat he alluded to some contracting strategy mumbo jumbo...though CafePharma has many reps complaining about Lipitor's managed care status.

It is time for Pfizer brass to acknowledge the reality that Lipitor can not be defended as is. One good thing they have done is to launch Caduet (Lipitor Norvasc combo). How about doing a deal with Novartis and developing a Lipitor Diovan combo? What about a Lipitor Niacin combo with Abbott (Abbott is already building a Crestor Tricor combo). These combo molecules may be the way to stop the bleeding a bit till some of Pfizer's new pipeline drugs kick in.

What is Abbott's profit maximization price in Thailand?

2007-04-01T14:37:00.000-07:00

Thanks to Pharmalot, I have been following the recent spat between Abbott and the Thai govt regarding Abbott's pricing of AIDS drugs in Thailand. The Thai govt claims that Abbott charges a lot and has therefore decided to break Abbott's patent. Much of the dispute centers around Abbott's Kaletra & Sanofi's Plavix. Some online sources claim that Abbott has offerred to lower its price from approx $4000 per year to $2000 per year. Other sources say that Abbott already charges $2200 per year and point out that this is well below the US price of $7000 per year.

I have been wondering as to why Abbott chose to price this drug at the $2000 level. In our microeconomics classes, we learn that pricing in these situations is determined by the utility of the drug. For life saving drugs, the utility tends to be infinite and therefore the only limiting factors may be the availability of substitutes and the ability to pay. To gauge the Thai's ability to pay, consider the fact that their per capita GDP is about $7400 . This compares to $37,800 for the United States. Therefore at $7000 per year, Abbott is pricing Kaletra at 18.5% of the US per capita income. For the Thai people at $2200 per year, this works out to approx 30% of their per capita income.

Any ideas you have on why Abbott chose to price the drug this high relative to GDP would be greatly appreciated. I would imagine that at a lower price, more Thais would take Kaletra & Abbott would make more revenue in volume. One reason I can think of, is that they want to avoid arbitrage (if the prices fall lower in Asia, someone will find it attractive to buy in Asia & ship to the US)...Perhaps if Abbott tightens their supply chain like Pfizer & Novartis in the UK, then they may be more willing to drop prices. Please let me know if you have any other thoughts on this. Thanks

Zelnorm: The financial hit and lingering doubts

2007-04-01T13:46:00.000-07:00

Novartis recent announcement regarding the voluntary withdrawal of Zelnorm was widely covered in the media and the blogosphere. According to BrandweekNRx Zelnorm had annual sales of 541 million. The immediate financial hit to a company of the size of Novartis doesn't appear to be significant. However BrandweekNRx also reports that sales for this drug were growing at 30%. At that rate of growth, this brand could have achieved blockbuster status in slightly under 3 years. Could Zelnorn have continued to show that kind of growth? Pharmalyst thinks so. Given the range of symptoms associated with IBS & the heavy DTC spend, it is likely that in a few years the average Joe who really needs two Tums would actually end up "talking to his doctor about Zelnorm" (though to be sure for a smaller subset of the overall target market, Zelnorm will probably be greatly missed). The stock market too seems to be acknowledging the potential long-term financial hit. NVS ADRs were down $2.26 in NYSE trading, erasing over $4B in overall market cap.

Part of the market's fears surely concern litigation. Novartis press release indicated that while the risk was statistically significant, the actual numbers were small. They also noted that all impacted patients had existing CV risk factors...hinting that despite the statistical significance, Zelnorm may not be to blame (a type II (?) error). However some doubts linger. The press release also states that "A small (but not statistically significant) imbalance in cases of angina pectoris was recorded and included in the US label when Zelnorm was approved in 2002."...so the trend does appear to be somewhat consistent.

The press release also states that "Zelnorm received FDA approval for the short-term treatment of women with IBS in the US on July 24, 2002. Zelnorm also received FDA approval for the treatment of men and women less than 65 years of age with chronic idiopathic constipation in the US on August 20, 2004.".. Could anyone shed some light on why the initial approval was just for women? Were more women involved in the pre-approval trials or was there something different such that the initial approval was only for women? If so, could this have something to do with the statistically insignificant imbalance in cases of angina pectoris?
Any insights around this will be greatly appreciated.

Thanks.....

2007-03-31T04:35:00.000-07:00

Sorry was busy with mid-terms this week but I wanted to thank BrandweekNRx & Dr. Peter Rost for mentioning my blog. Also thanks to John Mack & Dr. BK for their comments. Will start posting again this weekend.

Gardasil: Merck's cold calculations

2007-03-28T12:54:00.000-07:00

A few weeks back, Merck & Co announced that they were suspending their lobbying efforts to get various state govts to mandate Gardasil (their HPV vaccine) for pre-teen girls. Prior to the suspension of Merck's lobbying efforts, 19 states & DC had already issued state-wide mandates for this vaccination. Most state mandates require that girls get this vaccination by grade 6 & have an opt out provision. Merck thru its aggresive lobbying efforts had succeeded in alienating both sides of the political divide. By the time Merck announced its decision to suspend lobbying, a consensus (albeit for entirely different reasons) was emerging between the left and right, that while this vaccine should be widely available (and perhaps priced lower), it should not be mandatory.

By suspending their lobbying efforts, it appeared that Merck was sacrificing a lot of potential revenues given that the remaining 31 states were not going to mandate Gardasil. Pharmalyst did some back of the envelope calculations and concludes that the financial hit to Merck is about $130 million per year (till Galxo & others come up with competing products). These calculations also show that this is a lucrative market and despite Gardasil not being mandatory, Merck is likely to generate about $950 million from sixth grade female students each year.

To make these estimates, Pharmalyst took US census projections for 2005 (for 50 states and DC) of children aged 14 to 17 (could not find more granular data). From these census figures, I assumed that roughly 33% are aged 14. The next assumption was to assume that the population of 11 year olds (Gardasil target 6th grade mkt) would be the same as 14 year old females (females assumed to be 50%). For each of the 19 states and DC where there was an HPV mandate, I assumed that 95% of the 6th grade females would get vaccinated each year at $400 per course. The vaccination rate in the other states would be about 25% lower (10-12% uninsured children, rest being opt-out candidates for religious, scientific or lack of care reasons).

So by stopping lobbying and letting 31 states have no mandate, Merck is losing about 20% of 6th grade female student customers in each of the 31 states. This works out to $130 million at $400 per course. Actually they stand to lose a couple of millions less once you factor in their lobbying cost savings. Forgoing 130 million in incremental revenue is a no brainer once you consider the fact that at least some of the potential jurors in the thousands of pending Vioxx cases would probably be biased against Merck due to the negative publicity around this lobbying. Merck has been accused by critics of price gouging on Gardasil to "HPV" (help pay for Vioxx)...sometimes in subtle ways indeed! Detailed calculations below:

What's in a name?

2007-03-28T03:33:00.000-07:00

Thanks to Pharmagossip, I recently read a GREAT article on how the decks were stacked in the design of the VIGOR trial (Vioxx). The article was originally written by Dr. Robert Burton & published in Salon in March 2005. You can read this article here.

Substantive matters regarding trial design aside, it appears that just the name of a trial can reveal a lot of things under the hood. We now know that VIGOR lacked some RIGOR. This leads to Pharmalyst's rule of thumb regarding trial names for pharma-sponsored trials: The fancier the name of the trial, the more likely it is that the trial design had greater influences from the marketing and biz development arm of the company rather than the scientists. Therefore in all probability, these trials are likely to be testing fancier end-points and are more likely just fodder for the sales pitch.

Don't get me wrong, Pharmalyst is all for having easy to remember names and does not want trials to be named like the inscrutable model numbers that Japanese electronics mfrs come up for their otherwise fine wares. However, the odds are that a trial called the Framingham heart study will be much more useful that something called ASTEROID or PRECISION.

Perhaps I am wrong but I can't help but look at trial names like ILLUMINATE (the torcetrapib trial). Based on some recent ACC-related articles, it looks like Pfizer may have rushed things a bit too much (by doing both the outcomes and imaging parts in parallel). A more cautious approach may have detected the toxicity at an earlier stage. Similarly Astra Zeneca had some great sales ammo touting ASTEROID until a METEOR crashed on it.

Last but not least, I am hoping that PharmaGiles will issue some guidance to pharma on how to name trials :-)

Schering Plough – Organon: Who Benefits?

2007-03-25T17:46:00.000-07:00

Schering’s recent deal to buy Organon came as a surprise to many, though the fact that Fred Hassan has been looking for deals is well known. Most analysts and the market in general (based on SGP’s price movements following the announcement) seem to be neutral (David Risinger of Merrill Lynch being the lone exception; Is Merrill vying for more business from Schering?). Most of the praise for the deal seems to be around the $500 million cost-savings that Fred has promised the street. However as a growth strategy, this does not seem to make much sense (see comments from the pipeline blog here).

In the women’s health area, Organon has good competition from J&J’s ortho division. The anti-psychotic asenapine’s prospects seem questionable too. For one, Pfizer decided to walk away from their joint development efforts. Second, by the time asenapine comes to market, many of today’s leaders would be probably go generic (Seroquel, Geodon?).Managed care will aggressively push to try Clozaril, Risperdal and these new generics as first-line therapy. Unless asenapine shows unusual value thru a great efficacy & safety profile, the prospects for this drug appear to be mediocre at best. Another promising anesthesia/hospital-use pipeline drug probably has the roughly the same market size as something like say Lilly’s Xigris.

In a nutshell, this is a neutral deal and that leads one to look at who is really benefiting from this transaction. It appears that Fred & Schering’s board would be the biggest beneficiaries of such a deal. Schering bulks up (current market cap: 36B) and makes it unattractive to acquirers by taking on more debt (which, to be sure, can be covered given the cash flows involved). Who would want to buy Schering? Pfizer and Astra Zeneca. Aside from pipeline problems, both would like to make a Lipitor or Crestor combo with Zetia. Any such moves by PFE or AZ would of course also cause Merck to enter the fray to protect its Vytorin franchise. One feels that rather than take a rich payout again (a la Pharmacia), Fred likes being Schering’s CEO.

Last but not least, Schering’s relatively low market cap & decent cash flows also probably make it attractive to private equity. While this would leave still leave Fred in control, he surely operates on a longer time frame and does not want any meddling by the private equity guys. Think branded pharma biz is too regulated, scientific, unpredictable, long-term oriented for private equity? Think again. According to the WSJ Health Blog, one of Hank McKinnell’s new wannabe areas is private equity (besides selling time-shares :-)). Another Hank & Fred pharma deal….gee I wonder how the last one turned out!

Exubera: Pull the plug or damn the torpedoes?

2007-03-25T17:18:00.000-07:00

I became interested in this topic after reading many great posts on PharmaGossip, Brandweek, Pharmalot & Dr. Peter Rost 's blog. Pfizer has taken a lot of hits on Exubera (and a whole bunch of other things!) elsewhere in the media as well. The most recent body blow came from Dr. John Buse, president-elect of the American Diabetes Association (read more here and here). The latest round of attacks elicited strong responses from Pfizer execs. They have indicated that with DTC ads and patient education, the adoption rate of the “billion dollar bong” will improve (actually it is more like a 2 billion dollar bong; 1.3 billion was merely Sanofi’s share that Pfizer bought out). According to Susan Silberman, Pfizer's senior vice president of worldwide commercial development, “Exubera is meeting expectations”.

The last quote got me wondering about the kind of expectations that the brass at Pfizer must have built up. Here is my back of the envelope profit/loss model for Exubera.

As you may imagine, the numbers are my guestimates and includes only US numbers. Global numbers will be similar (lower reimbursements but also lower/no DTC expenses). Still, this model seems to indicate that even if Pfizer were to get 1.2 million Rx’s in the year 2010, Exubera would still be a bust for Pfizer. The model of course has several assumptions. Among them is the fact that rivals will launch inhaled insulins by 2011 and by 2015, Exubera will be replaced entirely by successor products (either from rivals or from Pfizer itself; an intriguing and purely speculative thought is that perhaps Pfizer may launch a needle-free injectible insulin using its PowderMed acquisition?). Also, I did not include the $2 billion plus development costs for Exubera since those costs are water under the bridge. With the benefit of hindsight, the model seems to indicate that Exubera probably should not have been launched (unless the Rx numbers really take off to resemble the dream scenario in the model). Presumably the execs that spent the $2B in development have been “ARSE’d” (hat tip: PharmaGiles).

Unlike most pharma bloggers, I am no expert. I am a student and welcome comments on the model and other feedback from readers. Many of you are much more knowledgeable and have lots of pharma experience. Hopefully this blog will be a valuable learning avenue for me. Thanks.