Healthy Skepticism Library item: 11348

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Publication type: news

Johnson S.
Did Pfizer's marketing fizzle with Exubera?
San Jose Mercury News 2007 Aug 31
http://www.mercurynews.com/business/ci_6767521?nclick_check=1

Full text:

The government’s approval in January 2006 of Exubera, the inhaled insulin product developed by Nektar Therapeutics of San Carlos, was widely hailed as a revolutionary way to reduce the number of injections diabetics must give themselves.

Some analysts giddily predicted it would reach blockbuster status with sales topping $2 billion a year by 2009.

But despite a newly launched TV and magazine ad blitz, it’s hard to find a biotech product that has hit the market with a bigger thud.

Pfizer, the New York drug giant that licensed Exubera from Nektar and is responsible for its marketing, hasn’t disclosed the product’s annual sales. It did say that the treatment’s revenue in the second quarter of this year was a measly $4 million, prompting a Morgan Stanley analysis to declare Exubera “dead in the water.”

Some people blame the product for its dismal debut in the marketplace, saying it is more expensive and complicated to use than injectable insulin, even though it is the first-ever inhaled insulin system for adults.

But others fault Pfizer for not manufacturing it quickly enough, trying to market it initially with an ill-prepared sales team and delaying its ad campaign until this summer.

“Exubera was not our finest day,” acknowledged Pfizer’s vice chairman, David Shedlarz, during a recent conference call with analysts. “We made a lot of mistakes with what is a profoundly important therapeutic.”

An even blunter assessment was offered by Howard Robin, chief executive of Nektar, which gets royalty and other payments from Pfizer totaling up to 18 percent of the product’s net sales, according to some analyst estimates.

During his own call with analysts in May, Robin called Exubera one of the “worst performing products for a new launch that I can ever recall,” adding that Pfizer executives “have really done a poor job” selling it.

Exubera certainly seemed a can’t-miss idea.

Nearly 21 million Americans – most of them adults – are estimated to have diabetes, which prevents the body from producing or properly using insulin, which converts sugar, starches and other food into energy. Because the condition can lead to heart disease, kidney failure, blindness and nerve damage, more than a quarter of diagnosed diabetics take insulin several times a day, typically by injecting it.

Yet many people dislike needles. So Nektar was founded in 1990 largely with the goal of developing an inhaled alternative. Exubera’s ability to reduce – although not eliminate – injections created expectations it would reap fortunes for Nektar and Pfizer.

It still could. Citing their own surveys that show many diabetics like the idea of inhaling insulin, some analysts have said Exubera could prove a huge financial success eventually. Moreover, executives at both firms voice confidence in the product.

“We are continuing to work with Pfizer,” said Nektar spokesman Tim Warner, noting, “we are exceptionally proud of the role we have played in pioneering the introduction of inhaled insulin.”

Pfizer spokeswoman Jennifer Brendel added, “We are committed to continuing to educate patients and physicians about Exubera’s role in the treatment and management of diabetes.”

Still, Exubera has gotten off to such a slow start some analysts have predicted Pfizer may soon halt its involvement with the product. And while executives at the two companies declined to discuss in detail why Exubera sales have been disappointing, doctors and analysts cited a number of reasons. Much of the problem, they said, stemmed from Pfizer’s marketing campaign.

“It went way wrong,” said Ian Sanderson, an analyst with investment bank Cowen and Co., who owns no shares of Pfizer or Nektar.

He said Pfizer executives weren’t prepared to begin manufacturing Exubera after the U.S. Food and Drug Administration approved it because they assumed the agency would take longer to review it. Pfizer also initially assigned the product to a sales team that had scant experience with diabetes or medical devices such as the Exubera inhaler, so they had a hard time explaining its usefulness to doctors, Sanderson said.

Other critics fault Pfizer for waiting until June to begin advertising the product.

But Pfizer hasn’t been the only problem. Exubera can’t be taken without a prescription. And some doctors see no compelling reason to have their patients switch to it from the injectable insulin.

For one thing, they complain that a daily dose of Exubera costs at least twice that of the injectable variety and that some insurance companies won’t pay for it. Moreover, figuring out the proper dose of Exubera is somewhat different than with injectable insulin. And because Exubera can hinder lung function in some cases, anyone using it is supposed to get a lung test first.

Because of that, “it’s a harder new medication to get doctors comfortable with,” said Dr. Todd Kaye of Mountain View, who has some patients using Exubera.

Just the fact that Exubera is different also puts off some physicians, said Dr. Darrell Wilson, chief of the division of pediatric endocrinology and diabetes at Stanford’s Lucille Packard Children’s Hospital.

“Doctors tend to be conservative, and to use something new is, I think, challenging” for some of them, he said.

Despite Exubera’s sluggish sales, many analysts are upbeat about Nektar’s future.

The company’s technology, which offers new ways to get drugs into patients and to help the medicines be more effective, is used in several other products. And it is developing treatments for such ailments as cystic fibrosis, cancer and the constipating side effects of pain killers. On Aug. 6, German drug giant Bayer agreed to pay Nektar $50 million for shared rights to an inhaled antibiotic Nektar is working on, plus up to $125 million more if Nektar meets certain goals developing it.

Nektar also hopes to come out with an improved Exubera in a few years. But by then, other companies are expected to introduce their own insulin inhalers. And when Nektar’s CEO Robin conferred with analysts on Aug. 8, his long-term revenue projections pointedly did not include any sales from Exubera, once widely hailed as a sure-fire blockbuster.

That product, he concluded, “is not strategically relevant to the future success of Nektar.”