Pfizer loses nearly a BILLION dollars on drug R&D

[6SpeedTA95]

This is a perfect example of just whats at stake and part of the reason drug prices are so high.

By Lewis Krauskopf and Ben Hirschler

NEW YORK/LONDON, Dec 4 (Reuters) - Shares of Pfizer Inc.(PFE.N: Quote, Profile , Research) fell almost 11 percent on Monday, wiping out $21.3 billion of market value, after the world's biggest drug maker unexpectedly halted development of its most important experimental medicine.

Pfizer stopped work on torcetrapib, designed to raise levels of "good" HDL cholesterol, because of increased deaths and heart problems among patients given the product in a late-stage trial.

Torcetrapib had been expected to fill a gap left when Pfizer's patent on Lipitor, the world's biggest-selling drug with annual sales of about $13 billion, expires in 2010 or 2011.

Drugs like Lipitor, which lower "bad" LDL cholesterol, cut the risk of heart attack by about 30 percent. Experts hope drugs that raise HDL -- which removes excess LDL from the bloodstream -- could greatly reduce risks of heart attack.

Pfizer shares fell as low as $23.52 but closed at $24.90 on the New York Stock Exchange. The 12-month low is $20.27.

Shares of rivals in the cholesterol market, including Schering-Plough Corp. (SGP.N: Quote, Profile , Research), Abbott Laboratories Inc. (ABT.N: Quote, Profile , Research) and AstraZeneca Plc (AZN.L: Quote, Profile , Research), rose on the news that a formidable competitor had been eliminated.

Analysts expect Pfizer to move to shore up investor confidence by raising its dividend and accelerating cost-cutting. New Chief Executive Jeffrey Kindler has already said he will announce long-term strategic plans in January.

Pfizer is also expected to fill a multibillion-dollar hole by buying other companies or rights to drugs.

"These guys were already on the acquisition trail for new products and new technologies, but the scale of what they would consider might now change," said Mike Ward, an analyst with Nomura Code Securities in London.

"Rather than the $1-billion-to-$4-billion range of acquisitions, which has been fairly consistent Pfizer policy for a while, there will now be speculation that it could be almost anything."

While it was unclear which companies Pfizer might target, the biotech sector enjoyed a modest rally, with the American Stock Exchange Biotech index <.BTK> rising 1.35 percent.

Ward said Pfizer might consider buying companies such as Wyeth (WYE.N: Quote, Profile , Research) or Amgen Inc. (AMGN.O: Quote, Profile , Research), which offer assets in vaccines and antibodies.

Deutsche Bank, Lehman Brothers, Morgan Stanley, Merrill Lynch and JP Morgan all cut recommendations on Pfizer shares. Moody's Investors Service placed Pfizer's Aaa long-term debt rating under review for a possible downgrade.

"SHOCKING REVELATION"

Saturday's decision to scrap torcetrapib took investors by surprise, although there had been concern that the drug caused higher blood pressure, itself a major risk of heart disease.

Just last week, at a meeting with industry analysts and money managers, Pfizer executives hailed the drug as potentially one of the most important medicines in a generation and said they hoped to seek U.S. approval for it next year.

But in the 15,000-patient clinical trial, 82 patients taking the combination of torcetrapib and Lipitor died, compared to 51 taking Lipitor alone.

Pfizer said it stopped the trial only because of the torcetrapib results and that the data had no impact on the safety or efficacy of Lipitor, which has been on the market since 1997 and widely studied.

Although this is its biggest setback, Pfizer has seen other promising experimental drugs disappear from its pipeline in recent months.

Product disappointments have led Pfizer to end a joint development program with Akzo Nobel (AKZO.AS: Quote, Profile , Research) for the schizophrenia drug asenapine and drop out of a deal to develop a sleep drug with Neurocrine Biosciences Inc. (NBIX.O: Quote, Profile , Research).

RIVALS GAIN

For some rivals, the problems facing Pfizer are good news.

Analysts at Morgan Stanley said the failure of torcetrapib was an "important positive" for AstraZeneca since the product had been the biggest potential competitor to AstraZeneca's cholesterol drug Crestor.

AstraZeneca shares, which have been punished recently following setbacks for its own drugs in development, rose 0.5 percent in London and 1.1 percent in New York.

Another potential winner from Pfizer's woes is expected to be Abbott Laboratories, which is acquiring Kos Pharmaceuticals Inc. (KOSP.O: Quote, Profile , Research). Kos markets Niaspan, part of an older class of niacin drugs that raise HDL. Abbott shares rose 3.3 percent.

Shares of Schering-Plough, which sells cholesterol fighters Zetia and Vytorin with Merck & Co. (MRK.N: Quote, Profile , Research), rose 3.7 percent.

Switzerland's Roche Holding AG (ROG.VX: Quote, Profile , Research) might also benefit among European pharmaceutical companies, since it is developing a rival to torcetrapib licensed from Japan Tobacco Inc. (2914.T: Quote, NEWS , Research). But some investors are wary that the problems with torcetrapib could turn out to be a class effect. Roche stock rose 0.8 percent.

R&D in this industry is ridiculously expensive as this goes to show. 15 years of R&D on this formula and 870 MILLION dollars gone. This is precisely why other countries need to pay fair market value for these drugs instead of forcing the US to shoulder the bill.

[ballz2wallz]

Yup. Other drugs they eventually get out will not only have to pay for their own R&D, but this R&D as well. It's a tough business, and people never fully appreciate it.

[RMNIXON]

Originally Posted by ballz2wallz

Yup. Other drugs they eventually get out will not only have to pay for their own R&D, but this R&D as well. It's a tough business, and people never fully appreciate it.

Canada appreciates!

They get the cheap knock-offs after we do all the work and take all the risks!

[6SpeedTA95]

Originally Posted by RMNIXON

Canada appreciates!

They get the cheap knock-offs after we do all the work and take all the risks!

No they typically get the real deal at a discounted rate by undercutting prices.

[Scrum]

Originally Posted by 6SpeedTA95

This is a perfect example of just whats at stake and part of the reason drug prices are so high.



R&D in this industry is ridiculously expensive as this goes to show. 15 years of R&D on this formula and 870 MILLION dollars gone. This is precisely why other countries need to pay fair market value for these drugs instead of forcing the US to shoulder the bill.

Ok bare with me here, but if these companies want to develop new drugs for future profits, shouldn't their shareholders pay the bill rather than the end consumers?

Should I have to pay a higher amount for my Claritin so these companies can R&D another drug that will make them more money? Why shouldn't their sharholders shoulder the bill since it will most likely just be putting more of my money in there pockets in the future?

[nbiggershaft]

Originally Posted by 6SpeedTA95

No they typically get the real deal at a discounted rate by undercutting prices.

I always wonderwhy this goes on, makes me much less sympathetic to drug companies.

[ballz2wallz]

Originally Posted by Scrumtralecent

Ok bare with me here, but if these companies want to develop new drugs for future profits, shouldn't their shareholders pay the bill rather than the end consumers?

Should I have to pay a higher amount for my Claritin so these companies can R&D another drug that will make them more money? Why shouldn't their sharholders shoulder the bill since it will most likely just be putting more of my money in there pockets in the future?

Capitalism should work with these companies just as it does any other company.

In any other company, the customer pays.

[kinggovernor]

Originally Posted by Scrumtralecent

Ok bare with me here, but if these companies want to develop new drugs for future profits, shouldn't their shareholders pay the bill rather than the end consumers?

Should I have to pay a higher amount for my Claritin so these companies can R&D another drug that will make them more money? Why shouldn't their sharholders shoulder the bill since it will most likely just be putting more of my money in there pockets in the future?

they did, their stock fell over 11%

[hsmith]

Originally Posted by Scrumtralecent

Ok bare with me here, but if these companies want to develop new drugs for future profits, shouldn't their shareholders pay the bill rather than the end consumers?

Should I have to pay a higher amount for my Claritin so these companies can R&D another drug that will make them more money? Why shouldn't their sharholders shoulder the bill since it will most likely just be putting more of my money in there pockets in the future?

Price has not one thing to do with costs and development. Not one.

[Scrum]

Originally Posted by hsmith

Price has not one thing to do with costs and development. Not one.

So when I purchase my perscription, not one cent of that goes to R&D?

[7960]

Originally Posted by Scrumtralecent

Ok bare with me here, but if these companies want to develop new drugs for future profits, shouldn't their shareholders pay the bill rather than the end consumers?

Should I have to pay a higher amount for my Claritin so these companies can R&D another drug that will make them more money? Why shouldn't their sharholders shoulder the bill since it will most likely just be putting more of my money in there pockets in the future?

That's like me telling the gas station owner "I don't want to pay for your lights and property taxes and equipment, I just want to pay for the gas and give you a percentage for profit. I shouldn't have to pay for the the rest of your business."

[7960]

Originally Posted by hsmith

Price has not one thing to do with costs and development. Not one.

... not one?

Where did you get this information?

[Scrum]

Originally Posted by 7960

That's like me telling the gas station owner "I don't want to pay for your lights and property taxes and equipment, I just want to pay for the gas and give you a percentage for profit. I shouldn't have to pay for the the rest of your business."

If he were charging you $50 a gallon and he was the only one allowed to sell you gas you would.

[ballz2wallz]

Originally Posted by Scrumtralecent

If he were charging you $50 a gallon and he was the only one allowed to sell you gas you would.

If he was drilling and refining that same oil himself, he'd have to charge a lot for it.

[7960]

Originally Posted by Scrumtralecent

If he were charging you $50 a gallon and he was the only one allowed to sell you gas you would.

So you're upset that, once they put in the effort and money to defelop a new drug they get exclusive rights to sell it?

[ballz2wallz]

Originally Posted by 7960

So you're upset that, once they put in the effort and money to defelop a new drug they get exclusive rights to sell it?

He's upset that they get to charge what they want for it. Perhaps he thinks they should spend billions upon billions to research a develop a drug to save his life, then give it away?

[7960]

Originally Posted by ballz2wallz

He's upset that they get to charge what they want for it. Perhaps he thinks they should spend billions upon billions to research a develop a drug to save his life, then give it away?

I can't tell Mr. Gas Stationman "I only want to pay for the gas, *not* the wells that were dug that didn't produce any oil."

But since there's a bigger market for gas the price is lower than for the epi-pen I bought for my son yesterday ($128.97 if I didn't have insurance...that's like $900/gallon!!).

[Scrum]

Originally Posted by 7960

So you're upset that, once they put in the effort and money to defelop a new drug they get exclusive rights to sell it?

No, it just makes me siick that they prey on the sickets people to pay these high prices.

Chemo patents take a drug called Zofran(sp?) to help ease nausea. The pill, when my Dad was taking it, cost over $30 a pill. $30 every few hours so you aren't trapped in the bathroom wishing you were dead.

I know these companies are in it to make money and i'm not saying they should give their product away, but they have no interest in helping people. Their only interest is the bottom line. Maybe they should cut back on the lobbyists and pass the savings on to use.

[ballz2wallz]

Originally Posted by Scrumtralecent

No, it just makes me siick that they prey on the sickets people to pay these high prices.

Chemo patents take a drug called Zofran(sp?) to help ease nausea. The pill, when my Dad was taking it, cost over $30 a pill. $30 every few hours so you aren't trapped in the bathroom wishing you were dead.

I know these companies are in it to make money and i'm not saying they should give their product away, but they have no interest in helping people. Their only interest is the bottom line. Maybe they should cut back on the lobbyists and pass the savings on to use.

'Prey' on sick people? I mean, I guess the alternative is that the drugs just aren't created, and the 'vicitims' that otherwise would have been 'preyed' on can be left to suffer in their own demise.

On the other hand, they aren't forced to purchase the drugs either