Wednesday, February 06, 2013

Even Viagra may not work!

Losses of patent rights in the pharmaceutical industry prove how the biggest of dreams can turn into the worst of nightmares. And there are no exceptions. by steven philip warner

It wasn’t just another day for Jeffrey Kindler at office. Kindler, for the past four years, had been serving as the General Counsel at Pfizer. It was precisely two days ago, when he had been hastily appointed as Pfizer’s CEO. He switched on his office desktop for the first time and typed-in an email to Pfizer employees, which read thus: “July 31, 2006: To meet our challenges in a rapidly changing industry, we will need your continued help. I would like to discuss our challenges openly...” The note was headlined: “We move forward from a position of strength.” This was to some surprise, as his firm had been clearly suffering a stagnated top-line and a falling stock (which, under his predecessor Henry McKinnell, had fallen by 43%). Today, a Ronald McDonald shoe and a rubber chicken (that he was gifted by his bosses at McDonald’s on his exit) are placed neatly in a shelf in his New York office, and it serves as a reminder of his being the first big pharma CEO who had had no previous pharma experience (before becoming the General Counsel). Under Kindler’s watch, in May 2008, Pfizer’s stock price nosedived to the sub-$18/share level only for the second time in over 12 long years. As of March 2010, the stock is gasping at $17.75. Pfizer’s revenues have continued being indifferent to Kindler’s presence (they’ve hovered between $47 to $49 billion!). But the biggest worries of Kindler go far beyond just the humdrum tales of a battered stock price & a browbeaten bottomline (its net profit for FY2009 represents just 43% of what it earned four years back!).

It’s amusing how one man’s meat can become another man’s poison, even in the world of pharma. For his predecessor Henry, the acquisitions of Warner-Lambert (in 2000 for $90 billion) and Pharmacia (in 2002 for $60 billion) proved to be glorious moments (as the first deal gave Pfizer a control over the world’s no.1 selling $11.4 billion-a-year drug Lipitor, while the latter helped it pocket its now third-bestseller Celebrex, which earns $2.5 billion-a-year); for Kindler, the very same deals are now giving nightmares of a dry drug pipeline! Today, Kindler is grudgingly shouldering the burden of launching blockbusters to make up for the loss of its patents over the next few years.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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