Failure is Pfizer's opportunity

The surprise failure in late-stage clinical trials of torcetrapib, Pfizer's experimental cardiovascular compound which was shown to prevent significantly fewer deaths than Lipitor, has compelled the company to accelerate its plans to transform itself into a more efficient, cheaper-running operation.

Pfizer's decision to cease all trials of torcetrapib was an unanticipated move that sent its share price downwards by around 12 per cent (approx ?12.1bn in market value) and led analysts to focus on the resulting `hole' left in the company's pipeline and potential future earnings. Torcetrapib was one of the firm's most promising and important products in development upon which it was relying to fill revenue gaps created by core products coming off patent, including Lipitor in 2010.

An analysis of the data from a 15,000-patient trial, ILLUMINATE, revealed that a greater number of deaths and cardiovascular events had occurred in the group receiving torcetrapib compared with those patients receiving Lipitor, the comparator compound in the study; 81 deaths versus 51. Pfizer was keen to point out that while torcetrapib, like Lipitor, affects the body's levels of cholesterol, the new findings do not throw up any fresh safety or efficacy issues related to Lipitor. The two drugs act differently.

However, the key impact for the company from the loss of torcetrapib is that it must act with intensified urgency to line up sufficient money-earning products that will bolster its near-term and mid-term futures. Healthy cash reserves and strong income from existing products for several more years makes an aggressive acquisitive and in-licensing period very likely.

ìPfizer's financial strength will enable it to continue to invest in a wide range of pipeline opportunities,î CEO Jeffrey Kindler said in a statement. ìIn addition, Pfizer will bring increased focus and emphasis to its business development and licensing efforts in order to identify new products and technologies that will supplement its pipeline.î

He added: ì[Pfizer] will bring forward major new product opportunities as aggressively as possible.î

Despite the downswing in stock value, and a consequent 15p upswing in the share price at AstraZeneca, the company has reassured investors that it will enhance total returns through ìdividends and share purchasesî. Pfizer's goal is to be able to bring up to six new products a year from 2010.