By Shannon Pettypiece Dec. 9 (Bloomberg) — Pfizer Inc ., which became the biggest drugmaker selling widely prescribed pills such as the Lipitor heart medicine, is preparing to enter the business of making cheaper copies of pricey, injectable drugs from biotechnology. The company may sell its first copies of medicines like Amgen Inc. ’s anemia therapy Epogen or Sanofi-Aventis SA’s blood thinner Lovenox in four to five years, and eventually market 10 to 15 such drugs, said David Simmons , head of Pfizer’s Established Products Business Unit. Pfizer also may ally with or buy companies that possess the technology as part of a strategy that’s still being completed, Simmons said. Pfizer’s $68 billion Wyeth acquisition , completed in October, expanded its ability to make biologic drugs, injectable treatments made in living cells. Health-overhaul legislation, now being debated in Congress, would create the first U.S. regulatory process to copy biotech drugs, opening a market worth $10 billion in the next decade, according to Ronny Gal , a Sanford C. Bernstein analyst in New York. “While the market is young and nascent in its development, it’s going to be big,” Simmons said in a telephone interview. Pfizer still needs to complete its plans and appropriate internal funding to take advantage, he said. Pfizer, based in New York, fell 30 cents, or 1.7 percent, to $17.76 in New York Stock exchange composite trading yesterday. The drugmaker has rebounded 52 percent since reaching a 13-year low on March 2 this year, in line with a 52 percent gain in the Dow Jones Industrial Average. Lipitor Losses Pfizer Chief Executive Officer Jeffrey Kindler said during an Oct. 20 conference call with investors that he wants to increase Pfizer’s generic offerings as a new stream of revenue beyond blockbuster drugs, such as the cholesterol pill Lipitor. The company is preparing to lose most of Lipitor’s $12 billion in annual sales starting in 2011 when cheaper generic copies enter the market. Both the House and Senate health-care bills include language that would allow U.S. regulators to set up a method for approving copies of biotechnology drugs. Under the proposals, biologics would get 12 years of market exclusivity before copies could enter the market. Both chambers must agree on final language in their overhaul measures. Congress is under pressure to pass legislation creating biogenerics as a way to reduce health costs for Americans. The Congressional Budget Office estimated that introducing copies, also called biosimilars, may save $6.6 billion over 10 years with most of that amount coming after 2013. “We believe it is appropriate to provide a regulatory pathway for follow-on biologics,” Kindler said during a Dec. 1 interview in Boston. $120 Billion in Sales The Senate proposal “strikes the right balance for providing the appropriate incentives for innovators to invest in the research necessary to discover and develop innovative biologics while at the same time allowing a pathway for follow on biologics to be available to patients,” he said. Biotechnology therapies generated $120 billion in sales last year, according to data from IMS Health Inc. , a Norwalk, Connecticut-based market research firm. Individually, they are among the most expensive drugs in use today. Genzyme Corp. , for instance, charges about $200,000 a year for Cerezyme, a treatment for Gaucher disease, a hereditary disorder affecting about 10,000 people. Roche Holding AG’s Avastin can cost as much as $100,000 and treats tumors of the colon, lung, brain and breast. Pfizer Generics Pfizer has a generics business called Greenstone LLC , which it added through its April 2003 acquisition of Pharmacia Corp. That operation began to increase the number of drugs it sold last year, when Kindler formed a business unit headed by Simmons with its own budget and management focused on products that have lost patent protection. In the past year, Pfizer has bought rights to sell more than 150 generic products in more than 70 countries from two Indian drugmakers, Aurobindo Pharma Ltd. and Claris Lifesciences Ltd. The company is in talks with Aurobindo about expanding the partnership, Simmons said. The market for generics may climb to $525 billion in 2012, or twice the 2006 level, as more medicines lose patent protection, Kindler said at a conference last year. “I think it is a good strategy for a large company like Pfizer that wants to be a player in generics,” Bernstein’s Gal said. “I would be surprised if they weren’t considering” biogenerics. The market for biologic copies will grow during the next five years as patents expire on medicines whose annual sales total $15.3 billion, including Roche’s cancer drug MabThera, sold as Rituxan in the U.S. with Biogen Idec Inc., and Eli Lilly & Co.’s diabetes treatment Humalog, according to IMS. Market Rivals That market is already drawing rival pharmaceutical companies. Merck & Co., based in Whitehouse Station, New Jersey, announced plans last year to start a unit to copy biotech medicines and said it would sell at least six biogeneric drugs by 2017. Biosimilars are attractive to drugmakers because they are priced higher than traditional generic pills. Making a copy of a biologic medicine costs less than inventing one because there is less testing and development involved. Copies of biotech drugs have been sold in Europe since 2006, and companies in that market are investing in technology to bolster their capabilities in anticipation of new U.S. rules. Teva Pharmaceutical Industries Ltd., of Petah Tikva, Israel, Novartis AG’s Sandoz division, of Basel, Switzerland, and Hospira Inc., of Lake Forest, Illinois, have won approval in Europe for biosimilars. These products aren’t considered interchangeable with brand-name medicines in Europe unlike with generic pharmaceuticals. Biosimilar Investment Novartis , which sells versions of Epogen and Pfizer’s growth hormone Genotropin through its Sandoz unit, committed as much as $263 million to Momenta Pharmaceuticals Inc., of Cambridge, Massachusetts, to copy Lovenox. Teva, which sells in Europe a copy of Amgen’s Neupogen, used to treat infections in patients undergoing chemotherapy, is seeking approval of the drug in the U.S. as a new medicine because there isn’t a procedure yet to approve biosimilars. Teva is the world’s biggest maker of generic drugs. Through the Wyeth purchase in October, Pfizer gained a larger biologic business than its own. Before that, Pfizer had been buying smaller biotech companies, such as CovX Research LLC for its antibody technology and Rinat Neuroscience Corp. for its experimental Alzheimer’s drug. Simmons said he is on the hunt for deals and partnerships with companies that have biologic technology. ‘External Opportunity’ “If I see an opportunity in the near term with an external partner, I would be pursuing it pretty rapidly using my business unit’s own resources,” Simmons said. Pfizer has its own biologics, such as the arthritis treatment Enbrel, which it got from its acquisition of Wyeth, and the human growth hormone Genotropin, that may face competition once legislation is enacted. “Eventually you are going to see a lot more companies looking into biosimilars,” said James Greenwood , CEO of the Washington-based Biotechnology Industry Organization in a Dec. 3 interview. “It will be the biggest generic companies, it will be big pharma and big biotech.” To contact the reporters on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net ;
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Pfizer Faces Life After Lipitor by Embracing Bio-Generics to Spur Growth
