Please login to the form below

Not currently logged in
Email:
Password:

Pfizer scraps Exubera

Pfizer withdraws its inhaleable insulin product Exubera from world markets despite spending significant amounts on manufacturing and marketing the product

Pfizer has decided to withdraw its inhaleable insulin product Exubera from world markets despite spending significant amounts on manufacturing and marketing the product.

Pfizer's CEO Jeffrey Kindler announced the withdrawal of Exubera on 18 October 2007, and the company incurred a USD 2.8bn charge for doing so.

According to a report in the Wall Street Journal, while Kindler's decision to axe Exubera has made him popular among analysts for cutting back on costs, it has also caused ructions within the company's co-marketing partner, Nektar Therapeutics, and could undermine a key aspect of Pfizer's recovery strategy.

Pfizer did not inform Nektar that it was going to remove Exubera from the market until the 18 October announcement. Nektar, understandably, has been pretty venomous in its criticism of Pfizer. The way in which Pfizer revealed the decision will no doubt make other existing and future partners nervous about doing business with the world's largest pharmaceutical company.

A Pfizer spokesman defended the company's track record of partnering, saying that it had a strong record and was committed to building more. Despite the assurances, the lack of sensitivity on the part of Pfizer may come back to haunt it, when vying for other partners to help it plug its failing pipeline.

So far in 2007, Pfizer has spent USD 775m to manufacture and promote Exubera, according to an estimate by Credit Suisse analysts. The reason is that insulin, due to its fragile small-molecule structure, costs more to manufacture than regular medicines.

Normal business practice sees pharmaceutical companies keep their slow-selling or underperforming products on the market, in order to recoup as much revenue as possible. The present case is unusual, as the removal of any drug from the market is normally reserved for cases involving significant safety concerns, or in response to regulators' demands. Neither of these situations occurred with Exubera.

For example, Pfizer's blockbuster cholesterol fighter Lipitor (atorvastatin) costs USD 0.08 for every USD 1 it sells. Exubera, on the other hand, costs Pfizer about USD 0.30 for every USD 1, according to the analysts. The company informed investors that Exubera racked up only USD 12m in sales, which was far from a break-even result.

The reason Exubera costs so much to produce is that it is manufactured in Germany, shipped to California to be sprayed and turned into a powder, packaged into blisters elsewhere and then inserted into a device in another US state. Also, promoting the drug to primary-care doctors requires a big budget spend.

Pfizer also pays licensor Nektar approximately 15 per cent of sales. It also paid the company to manufacture the delivery device and spray-dry the powder. As a result, in Q1 FY07 Pfizer paid Nektar approximately USD 60m.

Pfizer has spent in the region of USD 370m so far in 2007 to promote Exubera. Activities have included the sending of special diabetes educators to doctors to teach them how to use the new device, as well as DTC advertising investment. In comparison, say Credit Swiss analysts, the promotion of Pfizer's new cancer drug Sutent (imatinib), only cost Pfizer USD 200m.

Nektar may take over sales and marketing
Nektar is now free to market Exubera alone, according to WR Hambrecht & Co analysts.
They say that Pfizer has manufactured enough of the product to last several years, given current demand.

Because Nektar is a smaller company, its marketing costs would be much lower, so it would not have to sell as much Exubera to make a profit. Nektar could launch Exubera as a discounted product and lower the price 30 per cent or more to make it more attractive.

Nektar is developing treatments for cystic fibrosis, cancer and a treatment for constipation as a side effect of pain drugs. In 2007, German-headquartered Bayer paid Nektar USD 50m to share the rights to an inhaled antibiotic it was working on, plus up to USD 125m more should Nektar meet development milestones.

30th September 2008

Share

Featured jobs

Subscribe to our email news alerts

PMHub

Add my company
Hanson Zandi

Hanson Zandi is a Creative and Digital Healthcare Agency. We combine 30 years’ experience with the enthusiasm of a start-up...

Latest intelligence

patients
Retaining reader value in plain language summaries of clinical studies
Balancing the risk of misinterpretation with the public’s ability to understand simplified plain-language summaries...
Can we talk about the ego-bias and chemicals influencing your target audience’s behaviour?
Over the Summer, the Page & Page team became fascinated by two books on this very subject. Two books from one author, Dean Burnett, an eminent neuroscientist, lecturing at Cardiff...
Paris
Making Europe a leader in bioscience: boosting trust and opening minds
A vision of Paris as Europe's leading hub for life sciences innovation...

Infographics