Impact of Pfizer’s Sales Force Reduction- Is there a hidden messagehere?

Impact of Pfizer’s Sales Force Reduction- Is there a hidden messagehere?

Yesterday Pfizer (NYSE:PFE) announced plans to reduce their U S sales force by approximately 20%, a move many see as a paradigm shifting event. While this may be true Diabetic Investor sees a hidden message behind Pfizer’s move that could have broad implications in the diabetes sector. With some of their biggest drugs facing generic competition and new drugs like Exubera failing badly, the company is in the uncomfortable position of finding replacements for their blockbuster drugs. Tomorrow the company will be hosting an analyst meeting which is supposed to provide a detailed look into the company’s pipeline.

While Diabetic Investor will be listening to tomorrow’s presentation with great interest based on past performance we believe the answer to Pfizer’s problem won’t be found in their pipeline. Pfizer didn’t become the largest pharmaceutical company through innovation but by acquisition. And Diabetic Investor believes Pfizer once again will be on the prowl for the next mega-blockbuster drug and there is no better place to look than the diabetes sector.

Diabetes is one of the few disease states that has all the elements Pfizer covets. As everyone knows diabetes is growing at epidemic rates and not just here in the US but globally. According to new report the type 2 diabetes drug market in China will reach $1.3 billion in 2010 as the country’s increasing economic strength allows more patients to afford Western branded drugs. According to Donny Wong, Ph.D., analyst at Decision Resources, “This shift towards increased use of more-expensive Western drugs, particularly successful newer agents such as the PPAR-gamma agonists and the insulin analogues, will contribute significantly to the expansion of the type 2 diabetes market in China.” Besides China, other nations such as India are facing the diabetes epidemic.

It is also well know that there is an increased interest in treating pre-diabetes, a condition which according to the Department of Health and Human Services affects nearly 51 million Americans. And let’s not forget the exploding population of obese patients, which has lead many to coin a new term “diabesity” as the link between obesity and diabetes has become obvious over the past several years.

So who will Pfizer make a run at? Diabetic Investor sees two possible targets in Amylin (NASDAQ:AMLN) and Novo Nordisk (NYSE:NVO). Neither company would come cheap but both would help Pfizer retain their title as the world’s premier pharmaceutical company. Of the two possible targets Novo has the stronger world presence as they have already established themselves as the premier global diabetes company. Based on pipelines Amylin appears to have the advantage and not just with the long acting version of Byetta, a product which Diabetic Investor sees changing the paradigm for treating type 2 diabetes. Amylin also has several drugs under development for the treatment of obesity which look promising. The only missing link with either company is a strong presence in the type 2 oral medication space.

Pfizer is surly aware that diabetes is one of the few disease states that meets its requirements for continued growth. Although Exubera has failed to live up to expectations their experience with Exubera has provided them with valuable knowledge of how the diabetes market works. Diabetic Investor will be looking for clues on Pfizer’s future direction as they will provide more color on their pipeline tomorrow. It’s difficult to imagine with all their major competitors turning their attention to the growing diabetes market that Pfizer can ignore this space. Stay tuned!!!!!

David Kliff
Diabetic Investor
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