Pfizer has launched a generic injectables business in the U.S., as part of its ongoing efforts to diversify its revenue base through a multi-year process, which includes buying Wyeth, but also smaller, meaningful steps such as building a business in mature or off-patent products.

An example is Pfizer Injectables, which is opening its doors with 30 products - including 25 ready to market and five to be ready before year end - and plans to add another 13 products in 2010, eventually growing its portfolio to more than 100.

Although this is far from Pfizer's traditional roots in proprietary medicines, the move isn't a surprise. The business is part of Pfizer's Established Products Business Unit, one of the five commercially-oriented pharmaceutical business units created by Pfizer last year.

In this case, the EPB unit is charged with maximizing the commercial potential of Pfizer's and, eventually, others' marketed off-patent products. And the unit plans to expand into generics, reformulations, and niche businesses, where Pfizer's standards and access to complex technology may differentiate it from competitors. Jim Hageman, a former chief commercial officer of Mayne Pharmaceuticals, is the unit's general manager.

Pfizer believes better management of existing branded drugs that have lost, or are about to lose, their exclusivity will also help bolster sales (Also see "Pfizer On The Prowl For Generics" - Pink Sheet, 19 March, 2009.). The drug maker wants to "customize its portfolio to meet the needs of customers around the world, instead of selling whatever comes out of its labs," David Simmons, the EPBU president, said in an Oct. 2 interview.

Reputation With Hospitals Will Help Jumpstart the Business

By investing in sterile injectables, Pfizer is entering one of the more profitable, faster-growing subsets of generics. Injectables have far fewer competitors and higher barriers to entry than solid oral generics, largely because they are more complicated to make, distribute and sell. As a result, quality is more difficult to maintain and pricing holds up better than with the solid oral segment of generics.

The combined U.S. market for branded and generic hospital injectables - including intravenous, infusion and intramuscular products - is roughly $71 billion, of which 10 percent is generics, according to Simmons. Pfizer, which is currently ranked 13 in the market, would like to be among the top five players within five years. Simmons wouldn't specify his sales goals, but noted that the top three players in the U.S. each have sales in the $700 million to $800 million range.

But despite Pfizer's position as the world's largest pharmaceutical company, it faces an uphill battle. Established global health care companies are heavily vested in the field already, notably market leader Hospira, which is a spin off of Abbott Laboratories' medical supplies business.

Hospira bought the Australia-based specialty injectables company Mayne Pharmaceuticals in 2007 for $2.1 billion, and Fresenius, the German medical supplies and dialysis company. Fresenius helped Hospira's infusion-therapy subsidiary, Kabi, gain access to the U.S. market by buying APP Pharmaceuticals for $3.7 billion in July 2008.

In addition, Baxter and, more recently, Novartis, began selling generic injectables. In May, Novartis bought the Austrian oncology injectables company EBEWE for $1.2 billion in cash. And Boehringer Ingelheim's Bedford Laboratories is one of the top players in the U.S.

The Pfizer injectables business, however, is not part of Greenstone, the drug maker's U.S.-based solid-oral dosage generics subsidiary, which is also under the EPBU umbrella. Simmons and his team also are reviving Greenstone, which had been almost dormant. But Pfizer decided to keep the Pfizer Injectables separate because its main customers are hospitals, not chain pharmacies. Simmons says that hospitals have strong positive associations with the Pfizer brand-name and are less familiar with Greenstone.

Because hospitals generally conform to contracts negotiated by their group purchasing organizations, or GPOs, these are also important in influencing decisions. In some cases, however, hospitals contract independently of GPOs, or GPOs give their members several vendor options. For this reason, Pfizer not only has to negotiate GPO contracts, it also is assembling a small sales force - 20 to 25 reps - who visit hospital pharmacists and doctors to educate them about the new business.

Pfizer has several competitive advantages, which should enable it to jumpstart efforts to build hospital relationships. Simmons contends. This includes its Specialty Pharmaceuticals Business Unit, which already has strong relations with hospital purchasers and doctors, and can open doors for the injectables sales force.

The drug maker has a high-quality internal manufacturing capabilities in Perth, Australia, and Kalamazoo, MI, which are well suited to injectables, according to Simmons. And last, but not least, the drug maker has a long-standing presence in branded injectables - Pfizer originated some of the best-known injectables, now off-patent, including the oncology therapy Camptosar (irinotecan), which went generic in early 2008, and the older drugs Solu-Medrol (methylprednisone), Gelfoam , a treatment for vocal paralysis, and Unasyn , an anti-bacterial.

Pfizer will also be in-licensing products, and has already lined up Indian suppliers Aurobindo and Claris to provide anti-infectives. (Also see "Pfizer Bulks Up Its Generics Business" - Pink Sheet, 3 March, 2009.).

Next Up: Biosimilars

EPBU is the second largest of Pfizer's five relatively new pharmaceutical business units, and accounted for slightly more than 10 percent of the company's total 2008 sales of $48 billion. Because of the nature of the products it sells - off-patent drugs which face tremendous competition - its organic revenues continually decline.

Simmons, who became head of the business unit last year, estimated that the products that make up the unit's base business collectively had a 37 percent revenue decline in 2007, and is expected to experience an estimated 17 percent drop this year. Overall, EPBU saw revenues decline 20 percent year on year in the first half of 2009.

However, Simmons is responsible for stabilizing that base and positioning the unit to renew revenue growth beginning in 2011, mostly by adding new products and technologies. About 20 percent of that growth will come from reformulations, 40 percent from the solid oral generics, and 40 percent from sterile injectables sales, he says, underscoring how important the success of injectables will be critical to EPBU's fortunes.

Sterile injectables is the first of the niche businesses Pfizer hopes to enter. The drug maker is also eyeing biosimilars, transdermal patches and inhalable products. The commitment to biosimilars is new, at least publicly. Previously, Simmons had said the company was exploring the field's potential, but had yet to decide on how to approach it. And he still isn't ready to discuss Pfizer's biosimilars strategy - but insists the company has a game plan.

-Wendy Diller (w.diller@elsevier.com)

Pfizer Tries Injecting New Life Into Its Strategy With A Generic Injectables Unit

More from Archive

More from Pink Sheet