Pfizer R&D Day
Today Pfizer (NYSE:PFE) is hosting an analyst meeting showcasing their existing pipeline and plans for the future. Amazing at it may seem the company still believes that Exubera, their inhaled insulin product has potential. While today’s presentation is not the forum to admit that you have made a mistake, it’s about time the company realized that Exubera is a failure and move on. Even with a smaller more portable delivery device, something the company says they are working on, won’t save what is clearly a poor performing product with little long term potential.
Diabetic Investor is continually stunned that so many on the Street see any inhaled insulin as a blockbuster product. The fact of the matter is, patients aren’t afraid of insulin injections they see moving to insulin as a personal failure and are afraid of insulin. For those who continue to believe that patients fear injections Diabetic Investor recommends taking a look at the continued success of Byetta.
Pfizer should also be concerned with the introduction of Januvia as it provides physicians and patients another alternative to insulin therapy. The reality of the situation is physicians and patients view insulin as the therapy of last resort, after ALL other therapy options have failed. This is particularly true of type 2 patients which are Exubera’s target market. Unlike type 1 patients who must use insulin, type 2 patients have a host of treatment options. Typically type 2 patients follow a therapy progression starting on an oral medication, followed by multiple oral medications, followed by Byetta and then if nothing else works insulin.
Pfizer is also in serious danger of alienating what’s left of their sales force. To say that selling Exubera is difficult would be vast understatement. No amount of training could have prepared these reps for the new world they were entering. A task made more difficult by Exubera’s poorly designed delivery device. One reason Byetta has been so successful is the simplicity of delivery. Patients on Byetta take two shots per day, that’s it. Byetta is not dose dependent so there is no need for the patient to check their glucose levels before they inject. The possibility of hypoglycemia, remote for patients on Byetta, can be a serious problem for insulin naïve patients. Add in the fact that patients on Byetta achieve solid control and experience progressive weight loss, and it’s easy to see why even though Byetta must be injected the drug continues to gain share.
Pfizer seriously misread the market believing that just because patients would not have to inject Exubera it would basically sell itself.
Interestingly just a day after Pfizer announced they would be cutting their sales force by approximately 20%, Novo Nordisk (NYSE:NVO) announced they would be expanding their sales force adding 700 sales staff in the first half of 2007. While some see this as mistake Diabetic Investor does not. Novo, the world’s largest insulin maker, understands correctly if they are to grow their sales in the face of new therapies like Januvia, physicians in particular primary care physicians need more education on the benefits of insulin therapy. The company also has a host of products under-development and understands the value of having an existing relationship with the primary care community. As Martin Soeters, head of Novo’s U S operations put it; “So many people with diabetes are still not in acceptable glycemic control. The expansion will prepare our organization for future launches of additional innovative diabetes products that we currently have in clinical development.” Translation, Novo isn’t just looking at the short-term situation rather they are looking long-term.
One has to wonder how Lilly (NYSE:LLY) will respond to Novo’s latest move. Once a dominate player in the insulin market, Lilly has fallen to third place behind Novo and Sanofi-Aventis (NYSE:SNY). With no major initiatives in the insulin area it appears Lilly is banking on the continued success of Byetta. A risky move should someone come along and buy Amylin (NASDAQ:AMLN). Diabetic Investor is surprised Lilly hasn’t taken advantage of Amylin’s recent share price decline and make a move for the company. As Diabetic Investor pointed out earlier this week shares of Amylin are down almost 14% since Januvia was approved. Diabetic Investor sees the pressure on Amylin shares as misguided as Januvia is more of a threat to Actos, made by Takeda and marketed by Lilly, than to Byetta. Finally Amylin has what Diabetic Investor considers the crown jewel of all the diabetes drugs under development with the long acting version of Byetta which should hit the market in late 2008 or early 2009.
With their history of buying companies with blockbuster drugs Pfizer might wake up and realize that rather than throwing good money after bad with Exubera, that buying Amylin is the best way to establish the company in the diabetes market. Such a move would have devastating consequences for Lilly and their continued presence in the market. The question is does Lilly have the vision to see the future or will this once proud leader in diabetes fall by the wayside while others see the light?