Markets

Pfizer Is Up to Something -- But What?

By David Hamilton

Updated on: July 9, 2008 / 3:28 PM EDT / MoneyWatch

Pfizer is one of the biggest pharmas around, but it's also facing more serious trouble in the near term than just about anyone else, mostly thanks to the impending demise of its Lipitor franchise. Now it looks like the drugmaker is planning some significant changes, which may add up to something big. Consider the following hints, not all of which are confirmed:

Several reports last week suggested the drugmaker will soon lay off a good chunk of its research staff at its Groton, Conn., facility. Last year, Pfizer closed down another major research center in Ann Arbor, Mich.
Pfizer just announced it will stop funding "continuing medical education" courses offered by for-profit communication companies, although it will still pay for CME conducted by academic institutions.
Last month, AdWeek reported that Pfizer may soon consolidate its $800 million advertising account under a single agency.
As we noted at the time, Pfizer struck a deal with Indian generics maker Ranbaxy Labs that will shelter Lipitor from generic competition for an additional 20 months or so.

Now, the Ranbaxy deal is purely defensive, and the CME decision probably reflects both increased political pressure on CME funding by pharma and the fact that directing money through academia may also make it harder to trace (see the comments to an Ed Silverman post at Pharmalot for some speculation along these lines). Still, put all this together, and it suggests that Pfizer is starting to restructure itself into into a marketing-centric, research-light drug company that will most likely be looking for acquisitions in order to restock its depleted drug pipeline.

Pfizer has had terrible luck turning research findings into marketable drugs -- its recent failures include the cholesterol drug torcetrapib and the inhaled insulin Exubera -- so you can almost understand an argument that says Pfizer's R&D operations are a money-losing luxury the company simply can't afford. Of course, this sort of reasoning also undercuts the common pharma argument that high U.S. drug prices are necessary to fund all this innovative research, but Pfizer's problems are so serious that losing this rhetorical shield probably looks like the lesser of several evils.

In fact, I was intrigued to learn recently that Lipitor sales are already sagging, even though Pfizer retains exclusivity through 2011. Last year, U.S. sales of Lipitor fell by $654 million, and if anything, the plunge is accelerating; sales of the drug dropped by another $221 million in the first quarter alone, largely thanks to competition from other statins that have gone generic.