The past week was handful of events for the pharmaceutical
sector. The world's largest drug maker Pfizer (
PFE
) announced fresh rounds of job cuts for its sales representatives
as it grapples with a decline in sales amidst patent expirations.
But, recent impressive results in mid stage clinical trials for its
experimental breast cancer drug come as a boost to the company's
stock price. In addition, the company has completed sale of its
nutritional business to Nestle in a bid to focus on core
pharmaceutical business. Meanwhile, Merck (
MRK
) announced phase II clinical trials of new type of Alzheimer drug,
moving to front-line in quest for a complete cure for Azheimer's
disease.
Pfizer
Pfizer was in the news for a variety of reasons. Its
experimental drug, PD-0332991, for the treatment of most common
form of advanced breast cancer (60% of breast cancer cases),
exhibited strong efficacy and safety in a mid-stage trial. The drug
when taken with Letrozole (a conventional drug for the disease,
manufactured as Femara by Novartis) delayed the worsening of
symptoms in breast cancer patients by more than 18 months over
those with Letrozole alone. The 18 month is statistically
significant difference, boosting the drug's prospects as a
potential blockbuster. While there is still a long way to go for
regulatory approval as Pfizer is yet to begin late-stage trials,
the drug, if approved as a first-line treatment, could bring
multi-billion dollars in revenues for the struggling drug maker.
This could lead to an upside in our price estimate as we have not
considered the potential revenues from the drug in our model. The
expected approval could only come by 2017 or later.
In a separate event, Pfizer announced another round of lay-offs
in its sales representative staff, mostly related to primary care
even as the number of staff being let go, is not announced yet. The
move comes as the drug maker strives to manage its costs in a
flurry of patent expiries. Pfizer lost patent protection for its
largest selling drug Lipitor in Nov 2011, putting at risk about $10
billion even as it is slated to lose another $10 billion in next
2-3 years due to upcoming patent expiries. Due to these patent
expiries, the company took several other measures including
increase its focus on core pharma business and improve pipeline
along with reducing staff.
The sale of nutritional business and divestment in the animal
business are part of that strategy, and the company this week
completed sale of nutritional business for a $11.9 billion cash
deal. However, in countries where regulatory approvals have been
delayed (Kenya, South Africa and five Latin American countries),
Pfizer will continue to operate the business on an interim basis.
The company could spend this cash on its buy-back program and to
reduce debt.
See Full Analysis For Pfizer here
Merck
Merck started phase II trial to determine the efficacy and
safety of its MK-8931, a BACE inhibitor, in patients with mild to
moderate Alzheimer's disease. A BACE inhibitor is a new type of
treatment for Alzheimer as it blocks beta amyloid plaques in the
brain (high-level of it results into Alzheimer) to
treat Alzheimer. Any success in clinical trials could
significantly impact Merck's stock due to huge unmet demand in the
Alzheimer drug market.
Nearly 36 million people worldwide are estimated to be suffering
from Alzheimer's disease or other dementia, and without any
effective treatment, the number could surge to nearly 66 million
and 115 million by 2030 and 2050, respectively. In the U.S.
alone, approximately 5.4 million people suffer from Alzheimer's and
this is projected to increase to 15 million by 2050.
There is no complete cure available for Alzheimer's presently,
and the current treatment only improves a patient's condition by a
little. Further, no significant competition is present with the
exception of Roche Holdings (
RHHBY
) after competitors either failed late stage clinical trials
or saw inconclusive results (Read
Pfizer and Johnson & Johnson Dump Alzheimer Drug After Failed
Clinical Trials
).
Roche has emerged as the leader in the development of
Alzheimer drug . Roche has the strongest drug pipeline
for Alzheimer's with two of the
most promising pipeline drugs, Crenezumab
and Gantenerumab.
See Full Analysis For Merck here
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