BUSINESS
U.S. PHARMA’S CHOLESTEROL WOES
terol treatment nonapprovable and then by issuing a warning letter for deficiencies at its West Point, Pa., vaccines manufacturing facility. In the aftermath, the company announced plans to cut 1,200 sales jobs in the U.S. (C&EN, May 12, page 21) FDA’s rejection of Cordaptive, a choFIRST-QUARTER EARNINGS reflect turmoil in lesterol drug that combined extendedthe cholesterol-lowering market release niacin with laropiprant, could have LISA M. JARVIS, C&EN NORTHEAST NEWS BUREAU the biggest impact on Merck’s financial well-being. The nonapproval “is clearly an important setback,” Deutsche Bank’s of their share of the cholesterol drug marRyan wrote in a note to investors. “Merck U.S. DRUG COMPANIES’ first-quarter ket. A 50% decline in market share for the had previously stated that it plans to file a results once again reflected the industry’s franchise “seems plausible,” says Deutsche new drug application for a triple combo of heavy reliance on cholesterol drugs. At Bank analyst Barbara Ryan. Cordaptive and Zocor later this year, and at this time last year, investors were preocAt Schering-Plough, however, other this juncture, we have no idea as to whether cupied with the impact of generic versions developments muted the impact of a slowthis plan will change,” she added. of Merck & Co.’s Zocor on sales of Pfizer’s down of its Zetia/Vytorin franchise. The Though Merck says it plans to submit Lipitor and other products. Now investors company benefitted from its smooth intemore data to elucidate Cordaptive’s riskare concerned about the overall health of gration of recently acquired Organon Bioto-benefit balance, the agency’s decision the cholesterol-lowering drug category. sciences, cost-cutting efforts, and healthy suggests growing caution surrounding new New data calling into question the efficasales growth for its other products. And cholesterol treatments. cy of Vytorin, a newer cholesterol drug from it enjoyed a 35% increase in first-quarter Just a week before Merck’s bad news, Merck and Schering-Plough, emerged in earnings to $862 million, based on a 56% Genzyme and Isis Pharmaceuticals said the quarter. The information is prompting jump in sales to $4.7 billion. FDA was asking for more data for their new doctors to rethink how to treat patients and Schering-Plough’s portfolio of allergy drug application for mipomersen, an antiappears to be driving regulators to toughen medicines, which includes Nasonex, Clarsense drug that inhibits the production of standards for drugs in the pipeline. inex, and Claritin, grew steadily, despite a protein responsible for the synthesis and Merck and Schering-Plough, which both competition from both transport of low-density only recently enjoyed rebounds in sales branded and generic lipid cholesterol. The and profits after several tough years, now MERCK MISFORTUNE products. Meanwhile, agency wants the comface new hurdles. During the quarter, the Cholesterol drug troubles hit its bottom line got a panies to prove that the companies finally released results from firm’s stock price this year. boost from the arthritis drug not only lowers a clinical trial called Enhance that was treatment Remicade, cholesterol but also designed to demonstrate Vytorin’s ability 2008 Stock price, $ 70 which posted a 36% actually reduces the risk to significantly lower cholesterol while increase in sales to of heart attack. The adlessening plaque build-up on the walls of 60 $507 million, and the ditional study will delay arteries—a marker for risk of heart attacks brain tumor treatment the application by a year and related diseases. 50 Temodar, which had a to 2010. Taken in sum, Instead, the study showed Vytorin was 20% increase in sales to the string of setbacks no better than older drugs at preventing 40 $236 million. has pushed Merck’s plaque from growing. The finding bucked 30 At Merck, sales were stock price down more conventional wisdom that getting “bad” J F M A up just 1% to $5.8 billion, than 30% since the start cholesterol as low as possible would transNOTE: From Jan. 2, 2008 to May 6. while earnings improved of the year. late into fewer heart events. In late March, 6% to $1.9 billion. Sales The cholesterola panel of cardiologists said that doctors of newer drugs helped. The cervical cancer lowering business continues to be the focal should put Vytorin in the back seat behind vaccine Gardasil brought in $390 million, point at Pfizer as well. Lipitor, by far Pfizstatin drugs such as Lipitor when treating an 8% increase, and the diabetes treatment er’s biggest seller, has just two years of patheart disease. Januvia took in $272 million, more than ent life left, and the company is scrambling First-quarter sales of Vytorin and its sistriple its sales for the 2007 period. to find ways to offset the looming loss. ter product Zetia were still up 6% to a comAnd Pfizer is already getting a taste of bined $1.2 billion. However, the quarterlife without Lipitor. Competition from over-quarter picture was not so rosy: the YET THE OUTLOOK for Merck is cloudy. generic Zocor and other cholesterol drugs drugs had racked up $1.5 billion in sales in Two congressional committees are investicut Lipitor’s first-quarter sales by 7% to the fourth quarter of 2007, a 34% improvegating whether Merck and Schering-Plough $3.1 billion. Sales growth in foreign markets ment over the prior year. According to mardelayed releasing the Enhance trial informahelped offset some of the 18% drop in U.S. ket analysis by Deutsche Bank, the number tion to protect their franchise. And in recent Lipitor sales, however. As a result, Pfizer’s of prescriptions for the products fell 13% weeks, the Food & Drug Administration overall revenues fell 5% to $11.8 billion, from fourth quarter 2007 to first quarter dealt Merck a series of blows by deeming a while earnings slid 15% to $4.1 billion. 2008, with the companies losing about 3% combination allergy drug and a new cholesW W W.C E N - O N L I N E .O RG
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“We have seen little that gives us confidence that Pfizer has a concrete growth plan.” “They are very much between a rock and a hard place,” Deutsche Bank’s Ryan says. Shareholders want to see the company buy assets that will provide some breathing room during the final days of Lipitor, but they will be highly critical if the company overpays for a biotech firm that can’t deliver a blockbuster.
While a number of U.S. companies are struggling with their cholesterol franchises, the British firm AstraZeneca appears to be holding steady. Sales of its statin Crestor improved 23% to $772 million, contributing to a 10% increase in overall first-quarter sales to $7.7 billion. Earnings were up 4% to $2.3 billion. But AstraZeneca’s other blockbuster did not fare as well. Sales of the heartburn drug Nexium fell 5% to $1.2 billion, and the company recently took measures to prevent the early onset of generic competition for the drug. Last month, AstraZeneca settled a patent suit with India’s Ranbaxy Laboratories in a deal that ensures Ranbaxy will not launch a generic version of Nexium before 2014. AstraZeneca is still battling patent challenges from Teva Pharmaceutical Industries and Dr. Reddy’s Laboratories. ■
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MORGAN STANLEY analyst Jami Rubin, says “We still struggle to see what Pfizer can do to grow the company post-Lipitor and the wave of additional patent expirations right after.” Rubin is encouraged by the company’s new biotech incubator program and its increased success in emerging markets but says those efforts are minor compared with the challenges it faces. “So far, we have seen little that gives us confidence that Pfizer has a concrete growth plan,” she adds.
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Higher demand in foreign markets, where sales grew 13%, propped up Pfizer’s drug sales. Several newer products also helped the company’s cause. The pain treatment Lyrica brought in $582 million in sales, up 47%; sales of the smoking cessation drug Chantix increased 71% to $277 million; and sales of Sutent, for kidney and gastrointestinal cancers, grew 86% to $190 million. The company’s profits might have fallen even more without cost-cutting measures. Pfizer is on track with its previously announced plan to close six R&D sites and shed another 13 plants. The moves would shrink its global manufacturing network to 44 plants. Its workforce was 85,000 in March, compared with 98,000 at the end of 2006. Overall, Pfizer’s goal is to shave $1.5 billion to $2 billion from its overhead by the end of the year. Despite the restructuring program and efforts to fortify its drug pipeline, Pfizer cannot offset the loss of patent protection on Lipitor in 2010, analysts say. Pfizer has admitted that it has been unable to find an acquisition that is the right fit at the right price.
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