No one would be surprised if, in a quiet moment, Ian Read confided that he doesn’t know what hit him.
Reid became CEO of Pfizer a few weeks back, following Jeffrey Kindler’s unexpected retirement. He took the lofty position knowing that his biggest task in the short-term would be to replace nearly 20% of the company’s annual revenues, more than $11 billion, beginning later this year when Lipitor loses patent protection. He knew as well that Pfizer could make a good start in this regard if it could rapidly expand sales in emerging markets like China.
But he probably didn’t know that 2 people who were set to lead Pfizer’s international expansion would bolt the company soon after Kindler departed, or that a monumental regulatory shift in China was about to be announced, a move that could potentially cripple the company’s expansion plans in that country. And he almost certainly didn’t know his company would be ensnared by the WikiLeaks data dump as well.
Here’s a quick brief on the unexpected developments facing Read and Pfizer:
China-Last week, China’s National Development and Reform Commission cut prices on a host of drugs by an average of nearly 20%. Drugs on the list included Pfizer’s oral diabetes agent, glipizide (Glucotrol), and azithromycin (Zithromycin), an antibiotic.
“All the excitement about emerging markets is fine and good, but these countries are learning very fast how to contain the cost of medicines,” William Looney, the editor of Pharmaceutical Executive and a former Pfizer staffer in emerging markets told the Wall Street Journal. That may “tamp down the growth.”
Pfizer’s emerging market sales account for roughly 18% of the company’s top line, and these revenues have grown by 40% this year. Read has gone on the record stressing the need to leverage this opportunity.
Exodus-The 2 executives that followed Kindler out the door were Steve Yang and Jean-Michel Halfon. Yang had spearheaded Pfizer’s program to develop drugs in Asia. He was apparently poached by AstraZeneca. Yang is reportedly well-connected with physicians and scientists in China and knows the ropes when it comes to clinical research and trial implementation in that country. Halfon was the head of the company’s emerging markets division since its inception 2 years ago.
WikiLeaks-A leaked diplomatic cable from the US Embassy in Nigeria suggests that Pfizer hired investigators to “uncover corruption links” and other scandalous information about the country’s attorney general in an effort to persuade the Nigerian government to drop lawsuits it had filed concerning a Pfizer-funded clinical study.
The trial in question took place in 1996, and involved Pfizer’s antibiotic, Trovan. During that trial, 11 children died in a local outbreak of bacterial meningitis.
The cable was sent during settlement talks between the drug giant and Nigerian federal and state governments. The latter had claimed that Pfizer tested the antibiotic without obtaining consent from parents of children involved in the study. Pfizer responded that the deaths were caused by the infection, not the drug, and that it had obtained proper consent.
Pfizer reached a $75 million settlement with a state government in Nigeria soon after the cable was sent, and shortly after that, it settled with the Nigerian federal government. Pfizer has ridiculed the claims made in the cable as being “simply preposterous.”
A company the size of Pfizer can move-on rather easily from a fiasco like WikiLeaks-Nigeria, but as for the other matters mentioned above, let’s just say that Ian Read knows quite well the exact date his company’s Lipitor patent expires, and that the clock is ticking.