Pfizer + Wyeth = ?

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!!

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

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?

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?

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?

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"

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

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

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

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)

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

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

Making of a quiet blockbuster - New Indications?

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

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?"

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."