Pfizer: An Ideal Development Partner

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Video title: Pfizer: An Ideal Development Partner
Released on: November 30, 2009. © PharmaVentures Ltd
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In this episode of PharmaTelevision News Review, Paul Larsmon talks with Doug Giordano, Vice President, Business Development at Pfizer.

Filmed at BIO-Europe 2009, they discuss:

• the strategy behind Pfizer’s merger with Wyeth and how the 2 companies have integrated
• partnering with GlaxoSmithKline to focus on HIV/Aids
• the trend in Big Pharma partnering
• what Pfizer is looking for in a potential partner
• Pfizer’s emerging markets business unit
• “focus” in a difficult economic climate
• innovation and blockbuster drugs
• the future of the pharmaceutical industry in the next year
The strategy behind Pfizer's merger with Wyeth and how the 2 companies have integrated.
Paul Larsmon:
Hello and welcome to Bio Europe 2009 here in the Austrian capital of Vienna. With me is Doug Giordano Vice President Business Development from Pfizer. Doug Giordano first of all we can't ignore the merger with Wyeth merger [PharmaDeals ID = 32282]. Lots of column inches have been written about it but now I got you here in the chair what was the rationale behind this huge huge takeover?
Doug Giordano:
the rationale stems from our strategies so that the company had spent a lot of time thinking about the areas that we really wanted to strategically advantage in any type of business development transaction. We had step back with basically organize the company into business units trying to split our big company into smaller units that could take advantage of the specific dimensions and dynamics of those areas, we have a primary care business, a specialty business an oncology business and merging market business and established product business so those became kind of our strategic filter. We knew we needed to move forward in large molecules and biologics. We wanted to have a presence in vaccines. We wanted to diversify the company. We wanted to basically diversify not only in terms of the business units themselves but also in terms of the modality that the actual technical modalities of large molecule small molecule not be so dependent on the small molecule business that we had in historically, basically prior to the merger about 90% of our revenue was coming from the small molecule business and you know small molecule business is prone to you know periods of patent expirations where you see your sales basically going away. So we are trying to you know create a more stable revenue base trying to build equip you know build capabilities in areas that we were not and we looked at a variety of different ways to do that. we looked at trying to build this by streaming together a series of companies but quite frankly we couldn't find a series of assets that we could acquire at a price that we thought was appropriate and with kind of an execution risk profile that we saw was tolerable, when we compared that to doing a deal with Wyeth, Wyeth gave us a large presence in vaccines. Wyeth has given us large presence and great capability in biologics. It's also advantaged us in therapeutic areas that we have categorized as invest to win areas like inflammation areas like neuro science, Alzheimer, areas like infectious disease and oncology. Wyeth also gave us diversification so it took our revenue base which again had been by about 90 % in small molecules and in 2012 we estimated it will be about 55% in small molecules so you know platform diversification in that respect in terms of our revenue concentration again 90% in pharmaceuticals after the Wyeth merger will be much more diversified company about 75% in bio pharma 25% in other (indiscernable) that includes consumer and nutritional and animal health. So from our perspective we had a strategic vision for what we wanted the company to be and we thought that we can get there in a variety of different ways, we thought the best way to get there and the quickest way to get there to create a platform for growth in the future was to do a merger a with Wyeth.
Paul Larsmon:
mergers like this take a awful lot of corporate energy and is it a danger that you could sort of run of steam, you spend so much energy merging the two corporate cultures that you are actually stop producing new drugs?
Doug Giordano:
Yes I mean there is always that danger. We've in our history and I have been with Pfizer for 17 years so I have seen the company go through remarkable transformation. We have been through couple of large mergers before this. We have learnt from that and try to do things differently in the integration with Wyeth we tried to ring fence certain parts of the business to make sure that we keep people concentrated on the innovation business so we don't see a distraction. We also try to do it early on the integration. We tried to basically establish who the senior leaders of the organization would be and it was a mix of Pfizer people and Wyeth people and that helped to basically calm the organization in a large way and gave people on both sides Wyeth side and on the Pfizer side kind of bind into the vision. So that has helped, clearly there is there is the opportunity for distraction but one of the values of the adding structures in terms of the business units is we've tried to take a big business and split it up into smaller pieces, pieces that could be more focused on performance and we are hoping that that would pay dividends in terms of keeping people focused on what they need to do, people keep up focused on driving the near term business and also focused on innovation because after all is said and done the point of all of this is to create this diversified stable platform so that we can free people up to do what we are charged to do which is to innovate, to try to create you know solutions to unmet medical needs whether they be through innovation in the laboratory or innovation in a business model in the emerging markets.
Innovation and blockbuster drugs
Paul Larsmon:
obviously it's vital that you innovate you bring on new products did you think that the days of really big block buster drugs like Lipitor for example which comes off patent in few years I mean are they over?
Doug Giordano:
well it's always hard to project you know are they over, you know certainly you know you can't plan a business model and you can't organize a business to basically accomplish things that have never have only been accomplished a handful times so then you know in the history of industry there has been a handful of products that have achieved the kind of success that the Lipitor or Norvascor even a Zoloft, Prozac from Eli Lilly those were the kinds of products they don't come along often and if you are organizing your company to continue to innovate and then produce those types of successes you organize it for failure and I think you know probably some of the issues that larger companies including you know companies like Pfizer may have had in the past was that you know based on the successes that where of the 90's and the early 2000's they felt the companies like ours felt that you can continue to sustain that type of innovation and then you would see those kinds of successes but you can't, you really have to organize your business around the you know therapeutic areas trying to approach and meet unmet medical needs and whether they be in small niche markets or whether they be in large markets really you have the science drive the business but you can't you can't plan to produce block buster's that's not ever going to be you know that formulated.
Partnering with GlaxoSmithKline to focus on HIV/Aids.
Paul Larsmon:
moving on to some of the other strategies you are doing at the moment you just the announced the tie up with GlaxoSmithKline to help develop new HIV-AIDS medicine why did you do that?
Doug Giordano:
so and as I said what we have done is we have taken step back few years back and looked at strategically what are the areas that we wanted to advantage and we've come to the conclusion that while you know companies like Pfizer need to continue to do in research and innovation in the area of HIV and AIDS it wasn't going to be an area where we had a particular expertise or we had a particular mass that we thought we can drive you know ultimate success so with that kind of as a strategic patch up we were looking at different ways that we could continue to stay active in that space, take advantage of what we have already created in the laboratory and had been begun to commercialize and also take advantage of what we thought was a very a good early stage portfolio and we had talked to a variety of different partners at the same time Glaxo was looking at what they wanted to be in HIV. They had a very strong revenue portfolio, they had a pipeline that they were looking to continue to advantage and they saw a good complimentary between you know what Pfizer had in its portfolio both from a revenue and a pipeline perspective and what they had and we thought together the two companies could actually partner and create a an even more dynamic company that could innovate and look to create more value in that space. So again it was it had to do with the complimentarity of what they had and the near term on the revenue side of what we had on the pipeline bringing them together and creating a focus similar to what we've tried to do kind of in our company with the business units we created that in this joint venture with Glaxo [PharmaDeals ID = 33119] so this is a company that's gonna be focused on this (indiscernable) that is facing society. We've got a strong leadership team, strong scientific base and we expect you know great things out of that fashion.
The trend in Big Pharma partnering
Paul Larsmon:
so it was a very specific deal to meet a very specific need what about the tie ups with other big pharma going forward?
Doug Giordano:
yeah I think you are gonna start to see more and more of a trend in this area especially you know as companies you know like Glaxo and like Pfizer begin to look at their portfolios and recognize that we can't be you know great in everything and that we really do have to focus and really do have to focus our efforts so that we can continue to achieve so you know you achieve what you focus on and if you don't focus you can't achieve anything. So companies begin to go through that and more and more companies we've seen Glaxo has done that, we've seen Merck talk about that and you know as part of basis for what they have done with Schering, Eli Lilly announced a few months back their areas of concentrations. As companies to think through where they want to concentrate and where they really want to excel there is still going to be lot of opportunity there for those areas that you know wouldn't necessarily be there highest priorities to partner and to try to create an opportunity where the two companies, multiple companies can get together basically making share infrastructure to (indiscernable) the expenses and continue to innovate in a specific area. So I think you know we will see more and more of these types of combinations especially you know as the cost of drug research, drug development continue to escalate and companies are seeing a potential issues with their current revenues, patent excessivity, loses etc they are gonna continue to look for ways of getting more out of their expense base and that's gonna continue to drive creative couplings of companies whether they be large companies with smaller companies or large companies getting together again to share kind of their development expense to share that burden but more importantly to actually combine those resources so that they can accomplish what's needed in those therapeutic areas.
what Pfizer is looking for in a potential partner
Paul Larsmon:
this conference is all about partnering lot of that going on actually just downstairs, there are lot of small and medium sized biotech's that just simply love to have a relationship with Pfizer, what are you looking for from them going forward?
Doug Giordano:
well what we are looking for is innovation. We really you know we are focused I mean my view or the company's view is that you know now more than ever with access challenges in all the major markets with healthcare reform in our biggest market in US market payers are demanding differentiation in innovation and while that has always been a theme I think it's more pronounced now than ever before so that the partners that we are interacting with and the ones that are gonna get us the most excited are the companies that are working on things that are new that are different that can basically look to go after areas of unmet medical needs and allows us the ability to differentiate ourselves out in the market place and so we are gonna want to work with folks that are gonna want to innovate and separately similarly what we don't want is this companies to see us as a cheque book or as bank. That doesn't really create a good foundation for a partnership and I think more often than not companies view large company like ours as a cheque book, source of financing but what we really hope is that folks see us a development partner as a company that has a unique perspective on the market place, has unique perspective on what is driving medicine and what's driving innovation in specific therapeutic area and we want to tap into that unique perspective and at the same time we will be able to leverage the greatness that they are trying to create in their laboratories.
“Focus” in a difficult economic climate
Paul Larsmon:
what you say is the accusations by here some of the biotech's that big pharma isn't doing enough that the small biotech's brought you profits when times were good but now you are all backing off and not helping them.
Doug Giordano:
so you know I think historically in our industry there has been a symbiotic relationship between you know what's happening in academia, what's happening in smaller biotech's and then what happens later on in development and in commercialization so I kind of reject the notion that things have changed I think there has been partnerships that have you know in part of this business for last 40 years and they continue to be part of this business and I think this value has been created as a partnership for that period of time and will continue to be a partnership. I think would ask that the smaller companies do understand that there are specific realities of a large pharmaceutical company that it's not a an open cheque book and there is not an endless supply of money, we have businesses there is financial discipline we have stake holder share holders that we are accountable to and so we need to be focused we need to prioritize and we need to be selective about the kinds of partnerships that we enter into and the kinds of products that we are going to pursue. We can't just draw and spend money like a drunken seller I mean it's that not a recipe for success and this is a period of time in the industry that probably is unprecedented you know for a long period of time so through the nineties and through the early part of this decade we have seen companies continuing to increase their R&D spend and spending more and more to drive products through the pipeline basically using the proceeds of very good crop of block buster products and very innovative products. We have seen a dry spell, there isn't as much right now. Companies are seeing some of those good products coming off patent over the next three to four years and with that we have an obligation to our shareholders to be much more selective in how we spend that money. So you are definitely seeing a situation where probably was an over buy up of programs and you are seeing some of that now fall out and I think there probably where too many companies too many smaller companies that where started and opened up prior and it wasn't driven by best science and we are starting to see some of that fall out so I think kind of in a natural selection process you are seeing some of the products some of the companies that perhaps weren't founded on the highest of science beginning to struggle. Those companies that have a strong scientific mission that are focused on areas of unmet medical need that are focused on innovation to continue to thrive and companies like ours will continue to work very cooperatively and hopefully creating a lot of value both for the patients who are at need as well as the stake holders in each business.
Pfizer's emerging markets business unit
Paul Larsmon:
there are often reports and rumors about Pfizer looking to do deals in the emerging market so what's the truth of all this at the moment?
Doug Giordano:
well you know as I had said early on we have reorganized our business into nine business units. Four of them are clustered and what we call our diversified businesses and that's the nutritional, consumer, animal health and our capsugel of business and the other five businesses are in the bio pharma space. So that includes our primary care business our specialty business our established business are oncology business and then the fifth business area is the emerging markets business unit and we are clearly very focused on delivering the innovation that we have created to all corners of the globe. We have a large global infrastructure we are eager to continue to use that infrastructure to bring solutions to patients in the across the world and we are working very thoughtfully in those markets to create access for different socio economic levels within that some of the products themselves which are now primarily available to focus kind of at the upper economic scale we are looking to deliver products at different points within that social structure and economic structure. So it makes good business sense it's important in order to deliver solutions and to basically deliver on our desire to help address the healthcare needs of the world and we are gonna continue to be very active. I think there is other companies that expressed similar strategies we have seen quite a bit of activity from companies like Glaxo, from companies like Sanofi, Novartis has done a lot in the emerging markets. Pfizeris also looking to advantage and continue to move forward in those market place.
Paul Larsmon:
what does it mean in practical terms are you specifically looking to buy a big for example Indian pharmaceutical company?
Doug Giordano:
you know it's not just about buying, it is we have done is we have actually forged some interesting partnerships we have a partnership [PharmaDeals ID = 32691] with Aurobindo and we are taking their products their dossiers and using that not only in the emerging markets but also in the major markets. We are working cooperatively with a host of different companies in India, variety of companies in south America and we are continuing there to look to partner with companies that can provide products that we could sell through our infrastructure that are going to meet the needs of a specific market of a specific geography and will some of that manifest itself as acquisition perhaps but you don't ever really enter into a strategic process thinking that the answer is going to be that we are going to merge or we are gonna acquire. We actually try to understand what are the capabilities what are the types of products what are the kinds of things that we are trying to do within a specific geography and then from that look what are the solutions there what are the different ways that we can do that where what's the what's that specific the new answers of that specific country of that specific geography does it make sense to partner does it make sense to acquire? Are there ways that we can just simply in license dossiers in the specific market place and is that the best way to accomplish what we are trying to accomplish in the specific market in the specific geography and so we don't try to one size fits all or we are just gonna buy and then from my perspective may be that would be a good thing ahead of M&A but we really look to figure out what makes the most sense to advantage our business to advance our business and then we execute.
The future of the pharmaceutical industry in the next year.
Paul Larsmon:
because it finally we are seeing some green sheets there has been a lot of hard times lot of suffering going on in this sector as well as any other, Bio Europe 2010 in one year's time how do you think the landscape is going to look?
Doug Giordano:
well I would expect that what we will hopefully see is a continuation of those companies that have innovative products in their pipeline some creative partnership deals and continue to see good programs get the kind of funding they need to continue to advance you know the way I look at it as I said this industry is founded on a symbiotic partnership relationship between the biotech community whether that's in Europe or in the united states or in Asia and the larger pharmaceutical infrastructure companies and from our perspective of Pfizer as a larger player with a large sales and marketing infrastructure it's going to continue to achieve what it needs to achieve not only in the short term but in the longer term. We are gonna need a very healthy and viable biotech community and we are gonna need to see that those companies are well financed and at the programs that they are bringing through into the clinic today are going to be available in 2015 and 2016 and so that we have a robust pipeline of good products that will be advanced at a time when the medical community needs those products companies like ours might need those products to continue to achieve on our business model and so I would hope that when looking back a year from now we are seeing that through the courses of share we have seen a number of innovative deals that has allowed companies to get the capital that they need to advance those programs.
Paul Larsmon:
Doug Giordano, Thank you very much for joining us.
Doug Giordano
Vice President, Business Development
Current VP, Business Development at Pfizer Inc, Past Consultant at Booz allen & Hamilton, Education Cornell University - S.C. Johnson Graduate School of Management Duke University
Pfizer is the world%27s largest research based biomedical and pharmaceutical company; in 2007 the company earned $448.4 billion in revenues and invested $8.1 billion in research and development. Its headquarters are located in New York with research and development faculties based in the US and in the UK. Pfizer produces the number-one selling drug Lipitor; the neuropathic pain/fibromyalgia drug Lyrica; the oral antifungal medication Diflucan, the long-acting antibiotic Zithromax, the well-known erectile dysfunction drug Viagra, and the anti-inflammatoryCelebrex. Recent innovations include Sutenta novel cancer medicine that both cuts off the blood supply that feeds tumors and destroys cellular reproduction, and Chantixa new prescription medicine and accompanying support plan designed specifically to help smokers quit.