[Ip-health] NYT: In Wyeth, Pfizer Sees a [Biotech] Drug Pipeline

[Sarah Rimmington]

Note that Pfizer's purchase of Wyeth centered on acquiring a foothold
into the biologics market, which is widely seen as the future of the
pharmaceutical industry. This issue (and the article below) puts the
importance of the ongoing debates in the U.S. about the terms of
biogenerics or "follow-on" biologics legislation firmly into context.

This article and the Pfizer/Wyeth ("Wy-Phi) merger also points to the
fact that "little biotech" isn't really little biotech anymore, or won't
be for much longer. This is an important fact to highlight with many
Congressional offices which see biotech as much different from Big
Pharma, which helps them justify the idea of granting biotech drugs
unprecedented periods of data exclusivity (marketing monopolies) in the
legislation.

Of course, the myth of "little biotech" was never really true. Huge
financing deals with Big Pharma for Phase III clinical trials and
marketing rights have been one of the common features of the biotech
industry since the beginning due to the fact that many biotech companies
traditionally lacked the capital to pay for the important final stages
necessary to get products to market.


http://www.nytimes.com/2009/01/27/business/27wyeth.html?_r=3D1&ref=3Dbusine=
ss
The New York Times
January 27, 2009
In Wyeth, Pfizer Sees a Drug Pipeline
By NATASHA SINGER

Molecules.

That=92s the single word that might best sum up Pfizer=92s pursuit of Wyeth=
.

Most other traditional big drug companies that have been seen as
takeover candidates lately, like Bristol-Myers Squibb and
Schering-Plough, still concentrate heavily on so-called small-molecule
drugs =97 medicines made of small chemical molecules and typically
dispensed as pills.

But about seven years ago, Bernard J. Poussot, then the chief of Wyeth=92s
pharmaceuticals business who became chief executive of the whole
company, decided to reduce Wyeth=92s reliance on small-molecule drugs. He
steered Wyeth down a path more typically trod by pure-play biotechnology
companies, which develop biologics =97 drugs that are derived not from
small chemical molecules but from living cells and are often given by
injection or infusion.

The trouble with small-molecule pills =97 including Pfizer=92s own
blockbuster, Lipitor, the world=92s best-selling drug =97 is that when thei=
r
patents expire it is easy for generic companies to swoop in with
low-priced knock-offs based on the same chemical recipe. The looming
expiration of Lipitor=92s patent in 2012, in fact, is a big reason Pfizer
felt compelled to buy a company like Wyeth.

In contrast, biologics, whose molecules can be 100 to 1,000 times as
large as those of traditional drugs, are difficult and expensive to
replicate. And because there is no established regulatory pathway for
approval of generic versions of biologics, companies that make
large-molecule drugs have been able to charge monopoly prices.

Wyeth, for example, sells Enbrel, a biologic treatment for rheumatoid
arthritis and plaque psoriasis whose wholesale cost is $19,000 a year.
Enbrel has become Wyeth=92s second-best-selling drug, bringing the company
$3.8 billion in revenue last year. The company sells Enbrel jointly in
the United States with the biotechnology company Amgen while holding
sole rights overseas.

Pfizer=92s acquisition of Wyeth is a validation of Mr. Poussot=92s decision
to refocus Wyeth on biologics =97 and on vaccines, drugs that are also
derived from biological material. One of Wyeth=92s other cash cows is
Prevnar, a vaccine for children against life-threatening illnesses like
meningitis and pneumonia that are caused by pneumococcal bacteria.
Prevnar had worldwide revenue of about $2.7 billion last year.

=93We became very attractive to a company like Pfizer, because you cannot
be the No. 1 pharmaceutical company in the world and have not yet
started in biotech,=94 Mr. Poussot said in an interview on Monday.

Mr. Poussot=92s push into biologics was a survival strategy against the
eventual lapsed patents on Wyeth best sellers like Effexor, a
small-molecule antidepressant that had worldwide sales of $3.9 billion
last year. Its patent is due to expire in 2010.

After the Food and Drug Administration approved Enbrel, Mr. Poussot made
a big gamble by deciding in 2001 to build a $2 billion plant in South
Dublin, Ireland, to make the drug in high volume.

At the time, Wyeth was still working through legal settlements from the
debacle over the fen-phen diet drug combination, which was found to
damage heart valves. Then, in July 2002, a big National Institutes of
Health study found that Wyeth=92s best-selling small-molecule menopause
drug Prempro could raise the risk of breast cancer and heart disease. A
menopause products franchise that had sales of $2 billion in 2001 for
Wyeth would eventually drop to half that level.

But the Dublin plant, which opened in 2003, has helped offset the
Prempro damage. Mr. Poussot said it was the largest factory of its kind
in the world.

To a pharmaceutical giant like Pfizer, such big-molecule assets looked
particularly attractive, analysts say. William Tanner, a biotechnology
analyst and a managing director of Leerink Swann, a health care
investment bank, said it took five years and at least $1 billion to
build a biologics plant.

=93You either have to make or buy,=94 Mr. Tanner said. =93In Pfizer=92s cas=
e,
they decided to buy.=94

There has been a pattern in recent years of traditional pharmaceutical
giants buying smaller biologics companies. In 2007, Schering-Plough
bought Organon BioSciences for about $14.4 billion, and AstraZeneca
bought MedImmune for more than $15 billion. Last year, Eli Lilly bought
Imclone Systems for $6.5 billion.

But in acquiring Wyeth, Pfizer is buying another big pharmaceutical
company that has built up a sizable business in large molecules.

=93We want to become a leader in biotherapeutics and vaccines,=94 Jeffrey B=
.
Kindler, Pfizer=92s chief executive, said Monday at the Manhattan news
conference where the deal was announced.

David S. Moskowitz, a pharmaceuticals analyst with Caris & Company, an
investment bank, said that Wyeth=92s diverse portfolio made it more
interesting to Pfizer than a pure-play biologics manufacturer like Amgen
or other traditional drug makers like Bristol-Myers or Schering-Plough.

=93We think Wyeth is the much better play,=94 Mr. Moskowitz said.

While the deal has the potential to turn Pfizer into a vaccine and
biologics powerhouse, it also has potential pitfalls in the form of
bapineuzumab, a Wyeth biologic drug for Alzheimer=92s disease that is in
clinical studies. While current drugs for the disease treat symptoms,
Wyeth intends for bapineuzumab to try to attack the underlying causes of
Alzheimer=92s, a treatment that could be worth billions of dollars if it
proved effective.

But the results of a clinical trial made public last year raised
questions about the drug=92s safety and efficacy. The study showed, among
other shortcomings, that the drug did not benefit people who carry a
genetic variant that raises the risk of getting Alzheimer=92s.

Mr. Poussot said Wyeth had 10 different Alzheimer=92s treatments in
development, including small-molecule drugs and vaccines.

Wyeth=92s Prevnar childhood vaccine, meantime, is seen as successful and
destined to become even bigger. The company is working on expanding
federal approval for Prevnar to include infants and is studying the
drug=92s use in adults. It costs about $336 for a series of four injections=
.

=93Prevnar could do $5 to $6 billion by 2015,=94 said Dr. Tim Anderson, a
pharmaceuticals analyst with Sanford C. Bernstein & Company and a former
practitioner of emergency medicine. =93That=92s pretty good for a meningiti=
s
vaccine.=94

Analysts also said that companies with even a few biologics could be in
a better position to weather efforts in Washington to overhaul the
health care system because biologics are often aimed at rare, grave
diseases that have no other treatments. Even though biologics can be
much more expensive than small-molecule drugs, their total cost to the
health care system is markedly less than drugs that millions of people
take for widespread problems like high cholesterol.

Only about 300,000 people in this country take Enbrel, for example.

=93In the face of changes in health care reform,=94 said Mr. Tanner of
Leerink Swann, =93these drugs might do well.=94




--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/