Pfizer Meets Analysts

AT A MEETING with analysts in New York City on March 5, Pfizer CEO Jeffrey B. Kindler defended his moves to "change the DNA" of the world's largest drug company in order for it to take advantage of growth opportunities.

Having downsized the company through a series of plant and research site closures and refocused R&D on "high value" disease areas, Kindler claimed Pfizer is moving forward with a more entrepreneurial management structure and leveraging outside expertise through R&D partnerships and small acquisitions.

Pfizer, however, will not get larger through a major acquisition any time soon, Kindler said. "I do not see anything that would meet the definition of a megadeal with a strategic value that would outweigh the potential concentration of risk," he told analysts.

Stock analysts have expressed dissatisfaction with Kindler in his first year at the helm, given that the company stands to lose more than $12 billion in sales when the patent on its lead drug, Lipitor, expires in 2010 and that no obvious successor awaits.

Morgan Stanley analyst Jami Rubin has told clients that the program detailed by Kindler would only bring Pfizer in line with other major drug companies. Given the patent liability ahead, she wrote, more radical change is needed. "Breaking up the company into separate companies specializing by therapeutic area with independent boards and management teams may be one way to achieve this," Rubin wrote.

At the meeting, Martin Mackay, Pfizer's new president of global R&D, described plans to strengthen the company's drug pipeline. Pfizer expects to begin 15 to 20 Phase III trials by the end of 2009 in therapeutic areas including oncology, pain, and diabetes. Pfizer expects a similar number of regulatory submissions between 2010 and 2012, Mackay added.

Admitting that Pfizer has not been "productive enough" in recent years, Mackay said he reviewed all projects in its pipeline late last year and stopped 24 of them in order to reinvest resources. Kindler said this move illustrates a corporate shift toward unilateral decision-making.

Corey Goodman, president of Pfizer's newly launched biotherapeutics and bioinnovation center, described how the center has built on several recent acquisitions, including Coley Pharmaceutical, Rinat Neuroscience, and CovX. Last week, Pfizer announced it will buy Serenex, a biotechnology firm developing a drug that treats tumors by inhibiting heat shock protein 90.