Pharma Woes Linger On
First Vioxx. Now Celebrex.On Friday, Pfizer (PFE)said it found an increased risk of heart attacks and strokes for patients taking high dosages of its top-selling arthritis painkiller Celebrex, adding to a turbulent second 1/2 of the year for the pharmaceutical sector. The drug industry has already been under fire for numerous high profile cataclysms: Alongside Merck & Co.'s withdrawal of Vioxx, the failure of Chiron Corp. to deliver our flu vaccines have left onlookers and investors in the weeds.
PFE has no plans to remove Celebrex from the market, but the news precipitated a mass selling--Pfizer's shares tumbled because of fears that it could impair sales of what had been the #1 prescribed drug for treating arthritis. The world's largest pharmaceutical maker fell 11 % to $25.75 wiping out almost $25 billion of Pfizer's market value. PFE execs insisted that sales of Celebrex will continue because "it has not shown in totality that it increases the risk of heart attacks."
Deutsche Bank announced that its expects Celebrex's sales to fall by 50 percent next year. Ouch! "In this environment people are hysterical...all the headlines would scare people even though the drug's problem manifested itself at high doses," commented one top analyst.
Like most drug companies, Pfizer is facing high exposure to patent expirations, with close to 35 percent of its revenues coming off Patent through 2007. A blind monkey could've forseen Merck's problems a year ago. I had my doubts back then, even while their joint venture with Schering Ploughn (SGP) looked promising. The truth is, many of these large drug companies are banking thier fortunes on one or two key drugs--but no miracle drug can withstand the onslaught of generic rivals. Sorry. This hysteria should continue to whack the numbers of major co.s while smaller biotechs like OSI pharmaceuticals post jaw-dropping gains. OSIP rocketed 20 points Friday after AstraZeneca's rival lung cancer drug Iressa failed to deliver the promised goods. Hey, I guess the little guy laughs last.
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