In a move that could position Pfizer for more drastic measures down the road, the pharma giant has reorganized its development and commercial operations into several business units designed to foster autonomy and financial responsibility in the areas of specialty medicine, primary care and emerging markets.

The Pfizer restructuring news - which was more leaked by design than announced - followed by a week the revelation that the big pharma was exiting several areas of R&D: cardiovascular disease (including atherosclerosis, hyperlipidemia, and heart failure), obesity, anemia, bone health/frailty, gastrointestinal, liver fibrosis, muscle, disease-modifying osteoarthritis, and peripheral arterial disease (¹ [A#00700400013], p. 20).

The three new development/commercial units are patterned on - and ostensibly driven by the early success of - Pfizer's oncology and mature products business units, which were announced earlier this year. Global R&D and Pfizer's nascent Biotherapeutics and BioInnovation Center will run in parallel to the business units, which will typically take ownership of projects at clinical proof-of-concept. Pfizer maintains the restructuring and reduced R&D aperture won't result in significant layoffs.

The move ties Pfizer more explicitly to its declared "invest to win" therapeutic spaces - Alzheimer's, schizophrenia, pain/inflammation, diabetes (conspicuously lacking its former invest-to-win-partner obesity), and oncology. It also will maintain an R&D presence in allergy, respiratory and infectious disease. Martin Mackay, president of Pfizer global R&D, insists the company will make project-by-project decisions in other therapeutic spaces where licensing opportunities may arise and - if compelling science emerges - get back into those areas it is exiting today.

For example, "We got out of depression last year," Mackay said in an interview. "Not because there isn't medical need in depression, we just think that the mechanisms are not there to really satisfy that medical need." Rather than spend Pfizer's dime there, he says, the company is working more broadly in the CNS space with NIH, where some of the efforts include early work in depression.

"Things will change," Mackay noted, "and as breakthroughs occur we need to be flexible and nimble enough to move back into those areas."

Mackay downplayed the operational and cultural implications of Pfizer's decision to essentially exit cardiovascular R&D, an area that has been a cornerstone of the big pharma's growth. In particular, Lipitor (atorvastatin) and Norvasc (amlodipine) - both reaching the end of their patent protection - combined to drive $15.7 billion in revenue in 2007.

In cardiovascular, Pfizer is hanging onto a few compounds, including the Phase III clot-fighter apixaban, an oral Factor Xa inhibitor which it accessed in May 2007 via a $250 million upfront co-development co-promotion deal with Bristol-Myers Squibb (² Also see "Bristol’s Pfizer, AstraZeneca Deals Could Add Up To $2 Billion To R&D Budget" - Pink Sheet, 30 April, 2007., p. 4).

Perhaps the biggest culture shock for Pfizer came in November 2007, when the firm evaluated its development portfolio and decided to cull 25 programs. "To say 'we have a very good budget but we also need to make tradeoffs' to fund select late-stage assets - that was culturally difficult," Mackay said.

Those projects deemed to be extraneous to Pfizer's reduced focus will either be shelved, out-licensed or potentially used as the backbones for spin-outs, an effort that was primarily overseen by Ellen Strahlman, until her recent appointment as chief medical officer at GlaxoSmithKline (see "Can Out-partnering Help Vault Pfizer Over the Second Cliff?" IN VIVO, May 2008). David Rosen, head of development and commercial strategic alliances, now heads up the out-licensing effort.

"We'll be much more active in out-licensing assets," Mackay promised. "It will vary between single assets and small groups of assets, depending on what is the best deal for both parties." Pfizer, he says, is in active discussions with potential collaborators. "We'll be much more creative than we've been in the past in this particular arena."

In fact the company has already begun spinning out assets in the cardiovascular space - the second incarnation of Esperion Therapeutics emerged from Pfizer's now-dormant Ann Arbor facilities with a few preclinical assets in May 2008. RaQualia Pharma, a pain- and GI-focused biotech in Japan, spun out of Pfizer two months later with a handful of discovery candidates, development projects and even Japanese marketing rights to a few drugs already approved in the US, along with about 70 Pfizer employees from the company's Nagoya research site (see 'Pfizer/RaQualia: The Cost of Layoffs vs. Spin-Offs,' The IN VIVO Blog, July 3 ).

On a much larger scale, Pfizer's recent restructuring could eventually lead to the kind of spin-outs that change the face of the company entirely. Because the business unit structure "really empowers those business unit heads to run their own P&Ls so they will have tremendous responsibility" both to maximize existing product sales and invest in the unit's pipeline, as Mackay said, it isn't too much of a stretch to imagine an eventual stand-alone primary care group, for example.

For now the units' futures - and the purse strings - reside within Pfizer's top brass. "They'll be making tradeoffs" on what to invest resources in, while Mackay and the rest of the executive leadership will "be making tradeoffs across the business units" to set the overall company strategy, he said. "So we'll be spending some time making sure the allocations are appropriate for the revenues that will be generated from each of these business units."

Pfizer's global R&D network will hand projects off to the new primary care and specialist units (as well as the existing oncology business unit) as molecules reach proof-of-concept. Functions like pharmaceutical sciences and drug safety, which run in parallel to the development process and are already structured as pseudo-independent businesses, will remain the purview of the global R&D organization.

The moves so far have not impressed Pfizer's investors - who may have bigger fish to fry given the global financial calamity. And it will take time to determine whether the various elements of Pfizer's restructuring pay off in terms of better R&D productivity and commercial success. But Pfizer's willingness to leap, not step, into uncharted territory might at least begin to placate those stakeholders clamoring for evolution within big pharma business models.

- Christopher Morrison (c.morrison@elsevier.com)

Pfizer Restructures For A More Flexible Future

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