Friday, January 21, 2005

Pharma Profits on Slippery Slope?


Some fourth quarter data are in from the pharmaceutical industry and, on the surface, it looks good for profits:
Pfizer said it earned $4.39 billion, or 58 cents a share, in the fourth quarter, excluding one-time charges, compared with $3.78 billion, or 50 cents a share, a year earlier. (WSJ, "Pfizer's Net Income Quadruples On Lipitor Sales, Fewer Charges," 1/20/2005). Sales of Pfizer's Lipitor, the world's best-selling drug, jumped 23% from last year. Celebrex sales rose 24% to $1 billion, while Bextra climbed 57% to $417 million in the quarter.

The company said net profit in the fourth quarter was $1.38 billion, up 1% from $1.36 billion in the year-earlier period. Novartis said it expects a slight slowdown of its sales growth in branded drugs this year as pricing pressure and tougher industry conditions take their toll. Novartis Posted Profit Gain of 1% For Fourth Period (WSJ, 1/21/2005)

Celebrex Slippery Slope a Cautionary Tale
However, behind these numbers lie problems. Take Pfizer, for example. As mentioned in previous posts, Celebrex may be a problem in 2005. Recall that I predict Celebrex will crash and burn this year just like Vioxx (see "COX-2's Die Hard: With a Vengeance"). Pfizer itself has warned investors in its latest financial statements:
"Within [the] accumulated body of data," the company wrote in its earnings release, "there were certain studies in which there was an increased percentage of specific cardiovascular events for patients taking Celebrex versus patients taking placebo or other drugs; in other studies, there was a decreased percentage of specific cardiovascular events. The investigators of those studies determined at the time that the differences were not meaningful and did not establish an increased or decrease cardiovascular risk for Celebrex." (Forbes, "Pfizer's Celebrex Risk Gets Worse", 1/19/2005).
Could the "accumulated body of data" include the following? (reported in FierceBiotech):
"One study concluded that heart bypass patients taking Pfizer's Bextra and an experimental Cox-2 inhibitor were three times more likely to have a heart attack or stroke than someone taking a placebo. The new study, which appeared in Circulation, used meta-analysis procedures to re-examine data for 2,000 patients in earlier trials. In another study, researchers concluded that mice prone to hardening of the arteries experienced a worsening of their symptoms after being treated with Cox-2 inhibitors and an aspirin substitute.

"Garret FitzGerald of the University of Pennsylvania concluded that the new research is substantial enough to warrant Pfizer to call off a planned study of Celebrex in patients with heart disease. "The clear emergence of a cardiovascular hazard from Cox-2 inhibitors in patients, the weak rationale for a study of their protective properties in the first instance, and now this evidence from mice would indicate to me that a trial in high-risk patients, such as that proposed for Celebrex is, at best, ill advised," FitzGerald told The Washington Post.

Other sources also warn of problems ahead for Pfizer:
The US Food and Drug Administration (FDA) warned Pfizer about failing to disclose appropriate risk information in its Celebrex and Bextra advertising campaigns. It also claimed that Pfizer made "unsubstantiated effectiveness claims" in its ads. (See "Drug advertising: FDA warning may return to haunt Pfizer") To view a copy of the FDA warning letter to Pfizer, go to http://www.fda.gov/cder/warn/2005/12560-letter.pdf

"Pfizer has withdrawn advertising of its COX-2 products in view of the FDA's concerns and the wider controversy surrounding the safety of COX-2s. Whether intentional or not, the 'misleading' advertisements will have benefited sales as the general public will mostly be unaware of the violations against the FDA's rulings. The immediate future does not look good for either the COX-2 class or Pfizer."
Given all this, its no wonder that the industry puts profits as a top concern for 2005 (see "Drug Prices, Declining Profits Top Issues for 2005," Pharma Marketing News).

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