[SIZE="6"]Pfizer Taking Some Hits Over Billion-Dollar Bong
February 26, 2007
By Jim Edwards
NEW YORK -- Last year, Pfizer paid Sanofi-Aventis $1.4 billion for Exubera, a new inhaled insulin product for diabetics that Pfizer forecast would produce $2 billion in sales every year.
What Pfizer got for its cash was a device that looks a lot like a marijuana bong—and a brand that analysts, doctors, drug sales reps and some patients believe is a struggle to sell because it is so inconvenient to use.
And what was expected to be a dramatic blockbuster launch has turned into a bust, with repeated delays and negligible sales.
Now, few observers outside Pfizer believe that Exubera can reach $2 billion in sales, a forecast the company repeated to analysts in January.
“I think Pfizer is on drugs” if it believes it will get $2 billion a year from Exubera, said David Kliff, publisher of Diabetic Investor, a specialist investment data company. If Pfizer does reach its goal, “I’m going to run down Madison Avenue naked,” he says. Kliff believes Pfizer will be lucky if Exubera ultimately does half the business that Pfizer is predicting.
Exubera was approved by the Food and Drug Administration in February 2006. The product looks like a plastic tube into which patients slip prepared doses of powdered insulin, the drug diabetics need to control their blood sugar. The device bursts the packet and a transparent chamber in the tube fills with a cloud of insulin. The patient then inhales the powder from the top of the tube, in the same way a dope smoker takes a hit of cannabis smoke.
A launch was expected in fall of 2006. Pfizer said it expected to see revenues of $2 billion from the device by 2010.
But fall 2006 came and went. In November, Pfizer told investors, “An expanded roll-out of Exubera to primary care physicians in the U.S. previously targeted for November 2006 will begin in January 2007.”
Pfizer has declined to record total 2006 sales for Exubera—even though it does that for all its other drugs—probably because the sales have been so small. One analyst—Jami Rubin of Morgan Stanley—has twice complained that Pfizer has failed to record any sales for its billion-dollar bong.
In January, Pfizer’s head of worldwide pharmaceutical operations, Ian Read, could only tell analysts that the direct-to-consumer launch of Exubera would occur sometime in the “second half of 07” and that consumers would see a “full court press.”
Pfizer declined to talk about the campaign; a call to its agency, Grey Healthcare in New York, was not returned.
Pfizer’s own sales reps have berated Exubera on Café Pharma
, the industry’s Web-based gossip bulletin board. “I’ve only been able to sell one Exubera script that I know,” said one rep. “So much hype before the product was launched. This thing is a bust,” wrote another. “Dumb, dumb, dumb,” typed a third, “Look at the size of the bong who the [deleted] wants to carry something so damn big that it doesn’t even fit in a pocket[?]”
Their skepticism is borne out in the sales numbers: Analysts Friedman Billings Ramsey recorded only 881 Exubera prescriptions one week in January—a fraction behind the 15,000 level needed for blockbuster status. Merrill Lynch saw a similar picture in its most recent investor letter: 824 new prescriptions written, and only 1,111 total ongoing prescriptions. To put that in perspective, Pfizer has said it launched the brand with 2,300 reps touting the brand to 5,000 doctors specializing in diabetes, meaning that only one-fifth of those doctors have persuaded a single patient to stick with Exubera.
By contrast, Merck launched a competing product, Januvia, in October 2006, and scrips for that are running in the 17,000 to 27,000 region. The difference: While Exubera is a bulky device, Januvia is a pill and has a side effect that makes patients lose weight.
How did Pfizer get into this mess?
One source familiar with Pfizer’s thinking prior to the launch said the company was relying on consumer research data that has turned out to be faulty in the real world. The data, this source said, indicated that new diabetics would be more likely to get treatment if they could avoid using needles, and that if there was a no-needle-inhalable device option offered, a large majority of consumers would ask for that. (In fact, Pfizer’s Read repeated that belief in January.)
But, “they were overly optimistic,” this source said last week. Diabetics always want more options this source says, but their feeling about Exubera can be summed up as, “I wanted something new, but once I saw it I had second thoughts.”
Doctors who have expressed an interest in Exubera have had little traction. Dr. Richard Siegel of Tufts-New England Medical Center in Boston, who has “hundreds” of potential candidates for Exubera among his patients, said he has only one on Exubera. Insurance coverage is an issue—Exubera is more expensive than traditional injection-insulin—and “a couple of people who saw the inhaler were not interested,” he said. Siegel gets visits from Pfizer reps touting the bong once every two weeks, he said.
There is one possible silver lining for Exubera: Pfizer will gain experience in the burgeoning field of inhaled drug delivery systems, which some believe could be a goldmine in the future.
But in the absence of consumer advertising to drive interest in the Exubera, diabetics are talking about it themselves.
Amy Tenderich, who writes the Diabetes Mine blog, wrote recently that Exubera “is looking like a bomb.” The device’s “hospital-grade beige” color makes it “an aesthetic nightmare in an age of cool gadgetry,” she said.
And she’s noticed Pfizer instructional video on the Exubera Web site. It shows a man huffing on his Exubera tube at a restaurant table. The man “must live in a city as tolerant or as jaded as San Francisco or New York because not one patron even glanced over as he cocked and sucked on his medicinal bong,” she wrote. Exubera “really is as bad as it looks in the pictures.”