The reason: Pfizer's reputation for being unable to chew gum and develop drugs at the same time. It's a stark example of how management's reputation can overshadow the actual strength of a company's business.
Bloomberg notes that on Nov. 10, Pfizer will unveil Phase III clinical trial results for Tasocitinib, a rheumatoid arthritis treatment. There are three existing drugs for this condition (Pfizer's Enbrel, Merck/Johnson & Johnson's Remicade and Abbott Labs' Humira), and they collectively sell about $12 billion in revenues per year. The difference between Tasocitinib and the others is that the new drug is a pill, whereas the existing ones are injections. Tasocitinib only needs to be equally as good as the others, and the fact that it's a pill will ensure its success. Pfizer could launch Tasocitinib as early as 2012.
Pfizer is also hoping to see a new blood clot preventative, Apixaban, hit the market in 2012 and it wants to persuade the FDA to allow Prevnar, a pneumococcal vaccine for kids, to be used in adults. All of these products could add more than $1 billion in sales to Pfizer's portfolio.
What could possibly go wrong? Well, everything. As Bernstein Research analyst Tim Anderson told investors in a recent note:
To be clear, there are certain aspects to the Pfizer story that still give us pause when thinking about the company's positioning over the very long term. This includes (a) Pfizer's history of doing too many things wrong, too often, over too many years; ...Ouch! Anderson is right: If you gave Pfizer a steel ball, CEO Jeff Kindler and his team would find a way to break it. Here's the track record from the last half decade:
- Torcetrapib, Pfizer's candidate to replace its biggest brand, cholesterol drug Lipitor, was spiked when it increased the risk of patients dying.
- Tanezumab, an injection drug for osteoarthritis, was killed when it turned out to make patients' bones worse. It was also an injection drug in a field crowded with oral pills -- and therefore not a promising idea.
- Mylotarg, a bone cancer drug, was pulled after data showed it increased chances of patients dying if they were also getting chemotherapy.
- Dimebon, an Alzheimer's drug, turned out to be no better than a placebo.
- Exubera, an inhaled insulin product for diabetics, was literally laughed off the market: the prodct resembled an unwieldy marijuana bong.
- Esperion, a company in which Pfizer invested $1.3 billion, failed to produce a new cholesterol drug.
- Indiplon, a sleeping pill, was abandoned after Pfizer walked away from its $100 million downpayment on Neurocrine's product.
- Pfizer has also seen five late-stage studies of different cancer drugs fail in the last two years.
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