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The handover: Pfizer reshapes itself for a new era

There is a new leader at the world's biggest pharma company - but just how much is set to change at Pfizer?

Pfizer’s incoming chief executive Albert Bourla has been quick to put his own stamp on the company, and recently unveiled a leadership reshuffle before he takes the helm in January.

Bourla

Bourla was revealed as CEO in early October, after current boss Ian Read announced he would step down from the role after eight years of service. The company is currently the pharma industry’s biggest player by revenue (earning $45.4bn in 2017), but analysts EvaluatePharma expect Novartis to overtake it by 2024.

So what are Bourla’s plans to keep Pfizer performing for shareholders and patients? As a long-serving Pfizer executive, it’s less likely that Bourla will oversee a radical departure – although the company has traditionally followed a ‘whatever it takes’ philosophy when it comes to growth.

However Bourla has made it clear that he believes Pfizer’s previous route to dominance – the mega-merger – is far down his list of preferred strategies. Pursuit of growth in key therapy areas, most especially oncology, and expansion in China are two of the established tactics which he looks set to pursue.

The recently announced senior management shake-up comprises some expected internal changes, retirement announcements and the creation of a new chief digital officer role. These changes add to the decision made in the summer for the company to split into three parts, after it deferred the idea of selling its consumer healthcare business. The new autonomous units come into effect in January 2019, and will be called Innovative Medicines, Pfizer Established Medicines and Consumer Healthcare.

The company hasn’t yet given up on the idea of selling its consumer health division, which would help its highly profitable innovative medicines division shine more clearly in the group. Pfizer has just reported Q3 sales up 1% to $13.3bn, slightly below analysts’ forecasts, but still on course for a solid performance in 2018. Innovative health revenue increased 4% to $8.47bn, lifted by sales of blood thinner Eliquis and breast cancer drug Ibrance outside the US, among others.

Pfizer’s chief financial officer and executive vice president, global supply and business operations, Frank D’Amelio, will assume the leadership of its manufacturing operations, Pfizer Global Supply. He will succeed Kirsten Lund-Jurgensen, who is set to retire at the end of the year, following 19 years of service. Current global president, worldwide research and development and medical, Mikael Dolsten, will also become chief medical officer. Executive vice president and chief development officer Rod MacKenzie will expand his responsibilities to include the company’s regulatory affairs function. John Young, group president and chief business officer, will also assume new responsibilities, which will see him focus on strategy, business development and portfolio management, following the retirement of Laurie Olson, executive vice president, strategy and commercial operations. Angela Hwang, Pfizer’s Innovative Medicines group president will take the lead on its innovative medicines portfolio and Freda Lewis-Hall, the company’s chief patient officer, will focus on delivering new therapies and vaccines.

Bourla said: “We are at a pivotal moment in Pfizer’s history, with Ian Read having positioned the company with a strong portfolio of marketed products, a deep pipeline and the clear potential to accelerate our revenue growth.

“Given this opportunity to realise this accelerated growth potential, we are creating an executive team that has a proven record of success, an unwavering commitment to the patients we serve and a clear value creation initiative.

“I look forward to working with these outstanding leaders to achieve the full potential of our pipeline and deliver our next stage of growth.”

Perhaps the boldest move revealed by the company and discussed in its Q3 analyst conference call will see the Established Medicines division relocate its headquarters from the US to China.

15 potential blockbusters

Bourla says the company has 15 potential blockbusters launching over the next five years, which it believes will fuel its growth over the period. However there has already been one casualty from this list – Pfizer abandoned its candidate for Duchenne’s disease in September after it failed in phase 2 trials. Nevertheless, despite this and the usual caveats about the unpredictability of drug development, Pfizer currently has one of the strongest pipelines in the sector.

Pfizer pipeline

One potential major product launch for 2019 will be novel pain drug tanezumab. Developed in partnership with Eli Lilly, it has already presented positive phase 3 results, with more expected in the first half of 2019, with filings expected shortly afterwards. Breast cancer drug Ibrance will be one of the biggest growth drivers for the company, as it looks likely to remain dominant, despite a number of rival products. Pfizer is now aiming to gain approval within a few years for the drug in adjuvant or early breast cancer opportunity; this would open up a population roughly double the size of the current metastatic population.

In October the FDA also approved Talzenna (talazoparib), a new treatment of deleterious or suspected deleterious germline BRCA (gBRCA)-mutated, HER2-negative locally advanced or metastatic breast cancer. However in the most valuable sub-sector of the market, immuno-oncology, the company is struggling to make major inroads. The therapy area is dominated by Merck’s Keytruda, BMS’ Opdivo and Roche’s Tecentriq, but Pfizer is hoping that combinations such as its own Inlyta and Bavencio can help it establish itself more strongly in the field. The JAVELIN Renal 101 trial combining Bavencio with Inlyta in previously untreated advanced renal cell carcinoma recently showed itself to be superior in progression- free survival (PFS) compared with Sutent. Pfizer also has a considerable stake in one of the most exciting emerging areas of innovation, cell and gene therapy. It has gene therapy deals with Spark in haemophilia and with Sangamo in ALS. In CAR-T, Pfizer is hoping to be part of a second wave reaching the market, with a development deal with Allogene. These new products will help offset the patent expiry of one of Pfizer’s biggest products, pain treatment Lyrica, which will see generics arrive at the end of December.

Making the most of China’s growth

Meanwhile, Pfizer is aiming to expand its strong position in China by relocating its Established Medicines to the country, and to make it fully autonomous. Created in the summer reshuffle, the Established Medicines division includes the majority of Pfizer’s off-patent blockbuster pills, including Lyrica, Lipitor, Norvasc and Viagra, and a number of other generic medicines.

Michael Goettler is the newly appointed global president of the autonomous business division Established Medicines and will relocate in the New Year, to be based in Shanghai. Pfizer has confirmed to PME that other members of Goettler’s team will be based in Asia, as well as in the US, Europe and the Middle East, reflecting the global interest of the division. This reflects the huge opportunity for growth in these products from China in particular. “We need to make sure that we segregate it from Pfizer by providing them substantial autonomy,” said Albert Bourla. “We need to make sure that we relocate the leadership to China where most of the growth is coming from. Right now, this is where we are.”

The Established Medicines division has seen 2018’s growth hit 24% growth in China – an extra $700m generated in just nine months. This scale of growth will add to the company’s topline growth, the main rationale for separating the divisions. The Established Medicines division’s portfolio is not all off-patent brands, but is focused on those not expected to grow in developed Europe or the US, but which have lots of room for expansion in China. The company is relocating a senior management team to China, including a new member of the executive team, in order to maximise the growth opportunity. Bourla said this would also help Pfizer “explore China as a whole in terms of the contribution to pharmaceutical innovation”.

Angela Hwang had headed the previous Essential Medicines division. She commented on the off- patent portfolio’s success in China in 2018. She says the growth was led by its cardiovascular and anti-infective portfolios, which are meeting demand, and addressing previous low diagnosis and treatment by Pfizer expanding its coverage beyond the large cities into smaller cities and county hospitals.

“It’s a combination of the continued high patient demand, coupled with our geographical expansion that is leading us to continued success and rapid growth that we’re seeing in our portfolio.”

Ian Read’s parting shot on prices

In his valedictory analyst conference call before stepping down as CEO at the end of December, Ian Read rebutted suggestions that its pricing strategy had been altered.

This was because Read had agreed to reverse previously announced price increases after being telephoned by President Trump in July. Trump had tweeted days before that Pfizer “should be ashamed that they have raised drug prices for no reason”, claiming they were “taking advantage of the poor and others unable to defend themselves”. After the Trump-Read phone call, the company had pledged to delay on any price increases until the White House had fully developed its pricing ‘blueprint’. However Read said that in January it would be “business as normal” – which would put mid-single digit US price rises back on the agenda.

“Our pricing philosophy is to price to the value of the product and price inside a competitive marketplace... At this moment in time I have no different view about how we will price our increases as we did last year.”

The Trump administration has also just floated the idea of pegging US (Medicare part B) drug prices to other countries, aka international reference pricing. For the US market, this would formerly have been seen as an outrageous idea, and US pharma CEOs and industry lobby group PhRMA have opposed the move. Read has instead reiterated his support for ending the US rebate system between pharma and pharmacy benefit managers (PBMs) as the best way of lowering prices for patients. Spelling out his views to CNBC, he commented on the reference pricing proposal and called for it to change its mind. “I don’t believe that the proposed rule in reference pricing to price-controlled markets as a way of setting prices in the US is good for innovation, patients or our industrial base,” he said. These battles over pricing and access in the US market remain among the biggest priorities for Pfizer and its big pharma peers. Albert Bourla will undoubtedly pick up the baton from Read in defending industry interests in the US, but is likely to find a more hostile environment than his predecessor enjoyed during his tenure.

Article by
Andrew McConaghie

8th November 2018

Article by
Andrew McConaghie

8th November 2018

From: Sales

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