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Read takes over a Pfizer facing many difficulties
Question of the Day
NEW YORK (AP) - Pfizer Inc. may be the world's biggest drugmaker, but new CEO Ian Read is taking charge at a trying time for the company, and he will have to deal with a declining share price, repeated failures of potential new products and expirations of patents on key drugs.
Pfizer said Sunday that Read is replacing Jeffrey Kindler, who was Pfizer's CEO for four-and-a-half years. Read, 57, has worked at Pfizer for more than 30 years in a variety of positions and countries, making him a potential contrast to Kindler, who was an executive for McDonald's Corp. and a director of the New York branch of the Federal Reserve before he joined Pfizer.
While Kindler's exit came as a surprise, analysts said the choice of Read indicates big changes are not immediately in store for the company.
Still, control of Pfizer could be shifting. Read is likely to have less say in Pfizer's direction than Kindler did because, unlike Kindler, he won't be the chairman of Pfizer's board. However Read is getting the newly created role of company president.
Pfizer shares gained 9 cents to $16.81. The stock is down 9.6 percent over the last year.
Jefferies & Co. analyst Jeffrey Holford said Read is "a safe pair of hands," who is familiar with Pfizer.
"We are confident that the transition will be smooth and likely beneficial to the company as it becomes increasingly diversified, given Mr. Read's extensive experience with the company's key operations," he said in a note to clients.
But are larger changes needed? In late 2011, the patent on Pfizer's best-selling drug, the cholesterol medication Lipitor, will expire. Lipitor brings Pfizer almost $13 billion in annual sales, and after the patent expires, generic competition will reach the market and sales of its drug will plunge. This year the patents on Pfizer's antidepressant Effexor XR and Alzheimer's drug Aricept expired. More will follow, including billion-dollar sellers impotence drug Viagra, in 2012, and pain reliever Celebrex, in 2014. The company has had trouble developing drugs to replace those products.
The company has seen at least half a dozen drugs fail in the last stage of clinical testing in the last year and a half, including its Alzheimer's disease treatment Dimebon, osteoarthritis treatment tanezumab, and cancer drug figitumumab. Multiple trials that were designed to expand the marketing approval of its cancer drug Sutent also failed. Failure of the trials was due to ineffectiveness or safety problems.
Professor Erik Gordon of the University of Michigan's Ross School of Business said Read would be "safe" and "no-nonsense," but that those traits alone were not enough to turn Pfizer's fortunes around. In an e-mail, Gordon said Pfizer needs to figure out how to avoid costly failures in late-stage clinical testing.
"What Pfizer needs is leadership to rebuild a broken research and development organization," he said.
The company's pipeline difficulties continued Monday when the company said its drug candidate bosutinib was not significantly better than another cancer drug at treating chronic myeloid leukemia. It said bosutinib did not outperform Novartis AG's drug Gleevec in a late-stage trial.
The company has reported successes with studies of its lung cancer drug crizotinib and heart drug Inspra. Some studies of its blood thinner apixaban have been successful, but last month Pfizer stopped a trial because the drug was linked to an increased risk of bleeding. Pfizer is developing apixaban with Bristol-Myers Squibb Co.
Kindler sought to offset the pipeline expirations in part by wheeling and dealing. A little more than a year ago, Pfizer bought rival Wyeth for $68 billion, and it is in the process of buying King Pharmaceuticals Inc. for $3.6 billion. But analyst Les Funtledeyer of Miller Tabak & Co. said the Wyeth deal has not lived up to its billing so far.
"I don't think the Wyeth acquisition met the expectations that a lot of people had for how much it would improve Pfizer's standing, in contrast to Merck-Schering-Plough," he said in a telephone interview, contrasting it with Merck's $46 billion purchase, which closed about a month after Pfizer bought Wyeth.
Read came to Pfizer in 1978. He was the chief financial officer of the company's Mexican operations, country manager of Pfizer Brazil, and later ran its businesses in Europe, Canada, Latin America, and Africa and the Middle East before he was placed in charge of its worldwide pharmaceutical operations in 2006.
"One of the knocks on Jeff Kindler was that he really didn't have a lot of pharma experience before coming to Pfizer," said Funtledeyer. "That won't be a criticism here."
Funtledeyer said Kindler was responsible for some of Pfizer's problems, but not all. He cited the failure of Pfizer's cholesterol treatment torcetrapib, the sale of the company's health care division before Kindler became CEO, the health care reform law and unease in the stock markets at issues beyond Kindler's control.
"I think what people were complaining about was that things that were in his control did not turn out as well as he expected or the street expected," Funtledeyer said.
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