Pfizer’s Viagra reliance not enough to save it ? !

By Archon Saturday October 20th, 2007

Is Pfizer, the world’s biggest drug maker, in serious trouble: its star in decline? From the looks of things that may well be happening. The US company’s European headquarters at Sandwich in Kent is to close. In a little-noticed announcement, a spokesman for the company confirmed that all operations will cease there by the end of the first quarter of 2009, with the loss of 420 jobs. But – here’s the interesting bit – some of the activities at the British research and development plant will transfer to its operation in Cork.

But that’s not necessarily good news because the closure of the Sandwich research site is an acknowledgement of Pfizer’s failure to come up with a steady stream of new products. Indeed, the shock decision indicates that Pfizer doesn’t have enough new drugs in the pipeline to keep the troubled company firmly in the black – and that could have a knock-on effect on Cork.

The centre at Sandwich employs the world’s finest boffins to search for new breakthrough drugs and has security as tight as that at Guantanamo Bay.

With state-of-the-art scientific facilities, it uses techniques such as high-throughput screens where robots test the company’s vast library of three million compounds against targets thought to have a role in the spread of disease. Its research and development is central to Pfizer’s success worldwide.

For more than half a century Pfizer enjoyed a status as world leader in drug manufacturing but cracks began to appear six years ago. The company needed to find new money-spinning drugs and, although in recent years they pumped $35 billion into research at Sandwich, the company sent only 19 new medicines to regulators for approval – none of which hit the financial jackpot.

Earlier this year Pfizer finally admitted it was looking at a blank wall. It experienced a 16% decline in profits and, in response, appointed a new chief executive, Jeffrey Kindler, at an annual salary of $3 million. He initiated a sweeping restructuring of the company, cutting 10,000 jobs worldwide. Pfizer in Cork also suffered from his slash-and-burn policy – and the response to the lay-offs sent shivers through the Ringaskiddy area because of the fact that Pfizer is considered the backbone of the local pharmaceutical industry and the best employer in the city.

Pfizer’s failure to come up with new miracle drugs of the likes of Viagra or Lipitur is throttling the company. For a time it thought a drug called Maraviroc – a treatment that suppresses the onset of Aids symptoms – would do the trick. Anxious to assist the company, US and European regulators fast-tracked their reviews of the medicine. Maraviroc was expected to generate $500 million in annual sales but almost immediately very serious questions were asked about its efficacy. The American Food and Drug Administration declined to grant full marketing approval until it was provided with additional information on potential safety concerns and last July, at a major HIV conference in Sydney, no definitive consensus was reached as to the effectiveness of the drug.

The setback came in the wake of the abandonment of the company’s other high hope, the cholesterol drug Torceprapib which was in the final stages of development. But after sinking nearly $1 billion in the drug, it too went down the Swanee when it was found to be linked to high death rates in the US. It was written off as a total disaster, raising the spectre that Pfizer was unable to grow at the same pace as previously. Ominously for Pfizer and other American drug companies, the regulators may now look closer to see if they’ve been testing risky drugs in order to come up with the next best seller.

LIPITOR’S LAST CHANCE

Pfizer had also been counting on Torceprapib to replace the earnings from the cholesterol-lowering drug Lipitor which accounts for 50% of the company’s business. Lipitor has just four years left before it loses patent protection, after which rival companies will be able to make their own versions at a fraction of the price Pfizer is charging.

Pfizer still has Viagra which is manufactured at Ringaskiddy and which is responsible for the recent global success of the company, running up billions in sales. However, it hasn’t been enough, leading Kindler to sign the death warrant for Sandwich where chemists were expected to churn out money spinners on an annual basis. Unfortunately, they couldn’t. Ironically, the pressure to develop new drugs comes just at a time when countries are encouraging less dependence on drugs for medicinal use in an attempt to keep down health costs.

So how does Cork fit into an increasingly gloomy picture? According to Kindler, expertise will be ‘re-shuffled’ into centres of excellence. And that includes Cork. Sounds OK but firing key people at Sandwich will not boost confidence at a time when the company needs everybody to pull together. The plant at Ringaskiddy might well be a ‘centre of excellence’ and will enjoy a small boost in employment, but the question is: for how long?

VEROLME GHOST AGAIN

The former Verolme dockyard is about to jump back into the limelight. Once a major employer in Cork, the ship-building activities have long ceased but, thanks to the Doyle Group’s acquisition of the site some years ago, the place has enjoyed commercial success as an industrial park for 20 companies employing about 200 people.

Now, however, the Doyle Group, which is jointly run by cousins Frank and Conor Doyle, is involved in a bid to buy the Irish Continental Group (ICG), owners of Irish Ferries’ shipping line. The Doyles, who keep a low profile, are substantial players in both shipping and property and the Doyle family itself has had an interest in stevedoring and shipping going back to 1900.

Involved with them in the consortium seeking to buy ICG is One51 Capital, which is led by Innishannon native Philip Lynch. One51 has a 26% stake in NTR, the original toll road operator, and has substantial interests in waste management and ‘green energy’. Earlier this month the consortium bought more than §500,000 shares in Irish Continental Group but last week was rapped by the Irish Takeover Panel for breaking stock exchange rules.

At the old Verolme dockyard, now called Rushbrooke Industrial Park, fears are growing. The 38-acre land bank is worth §250 million and is expected to be sold to finance the ICG deal. Currently it’s zoned for commercial use but if rezoned for residential use and sold for housing, the sky’s the limit. Questions locals are asking is what will happen to their jobs and to the companies trading on the site if the Doyles and their butties succeed in their protracted takeover battle for Irish Continental. The curse of Verolme – closure – again seems to be threatening.