Business

20 years after Viagra, Pfizer seeks another miracle drug

It has been 20 years since Viagra was introduced, and Pfizer is still searching for another drug with as much earning power as the revolutionary blue erection pill.

If anything, the chances for another miracle drug may be waning as the pharmaceutical giant constrains its research and development budget amid broader cost-cutting efforts.

Pfizer forecasts it will spend US$7.4 billion (S$9.7 billion) to US$7.9 billion this year on R&D, compared with US$7.7 billion last year, according to projections released in February.

That is below the R&D of rivals such as Merck and Johnson & Johnson, which plan more than US$10 billion in spending.

Pfizer's restraint means walking away from entire areas of medical research.

REINVEST

In January, the world's number two pharmaceutical company by sales ended its research programmes into treatments for Alzheimer's and Parkinson's, cutting 300 jobs and saying it would reinvest the funds in other domains.

Pfizer also signalled it could sell its consumer healthcare business, which includes popular over-the-counter products such as the anti-inflammatory drug Advil, multivitamin Centrum and the ubiquitous ChapStick lip balm.

Pharmaceutical R&D is a tricky business in the US, where there is extensive clinical testing and back-and-forth with the Food and Drug Administration before introducing a new drug.

Once launched, pharma companies also are under increased pressure to keep drug costs low following a number of controversies over runaway pill prices.

The cost of bringing a new drug to market requires an average of US$2.6 billion, according to the Tufts Center for the Study of Drug Development.

That is a heavy investment considering that in the last 20 years there have been just 19 treatments that have generated at least US$1 billion in annual revenue for their first five years, according to the QuintilesIMS Institute, a health care data and research company.

PARTNERSHIP

Pfizer has increasingly opted for a model where it shares the risks and benefits with other drug makers.

It has announced strategic partnerships with Merck and Bristol-Myers Squibb, while also collaborating with biotechs and university researchers in areas such as oncology and immunology.

Pfizer also finances some research through a venture capital-type unit, Pfizer Venture Investments.

Pfizer's other highly lucrative drugs include the anti-cholesterol drug Lipitor, the anti-depressant Zoloft and the anti-inflammatory drug Celebrex.

The company said it is confident of future success.

"Our current pipeline is poised with an opportunity to deliver up to an additional 15 potential blockbusters over the next five years," a Pfizer spokesman said.

The spokesman noted that the company's R&D budget has been "very consistent" at around US$7.65 billion the last three years.

But revenue dropped slightly last year to US$52.5 billion. While the group expects sales to rise this year, at most it would go up just 5 per cent, according to company projections.

Key challenges include the arrival of new generic products and the growth of the biosimilar market, which allows for substitutes to traditional drugs. - AFP

BUSINESS & FINANCE