No Vaccine for Financial Flu Plaguing the Pharma-Biotech Industry

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas). Ouch! No matter that you’re the biggest drug maker in the world – it still hurts when you take a serious financial stumble, maybe even more so because there is a lot more money in play. Industry giant Pfizer (NYSE:PFE) (New York, New York) is reeling from a third-quarter profit plunge of 77% because of a $2.8 billion pre-tax charge to end investment in inhaled insulin drug Exubera. It has been a tough few years for the company as it has laid-off scores of employees and closed plants across the world. Pfizer is far from alone, as other companies big and small scramble to weather the current maelstrom of unfortunate events plaguing the industry. The flashpoint for the troubles seems to be rooted in the constant industry thorn of products, either in failure to perform or general lack thereof.

Unfortunate Nektar Therapeutics (NASDAQ:NKTR) (San Carlos, California) was hit hard when Pfizer kicked them to the curb along with their Exubera deal. As a result of Pfizer dropping ties to Exubera, Nektar, which had received a 15% royalty from the company for the drug (approved in January 2006), watched its shares take a 17% dive to $6.69 this week. As sales of the inhaled insulin never really took off, the end results were not a complete surprise to either company, although Nektar has started making noise regarding a definite lack on the part of Pfizer in regards to marketing the product.

Swiss drug giant Novartis International AG (NYSE:NVS) (Basel, Switzerland) found itself in a financial paradox for as profits for the last 9 months hit an impressive record of $6.8 billion, its drug sales were sputtering. The spike in earnings came as a result of an ambitious divestment plan for operational restructuring. The hitch is the company had planned on seeing glowing sales figures accompanying the influx of divestment cash. Instead, the deadly duo of generic competition for several top selling drugs and product failures took a serious chomp at the company’s earnings. As a result, numerous Novartis employees worldwide are facing the ax, with nearly 1,300 positions in the pharma sales and marketing team on the chopping block and 240 jobs being lost at the US headquarters. Another 500 will lose their jobs, including third party sales teams. The company hopes to save almost $250 million in 2008 as the result of the job cuts.

Even seemingly bulletproof biotech Amgen (NASDAQ:AMGN) (South San Francisco, California) is in the midst of a financial reorganization. Capital plans across the world were put on hold at the same time the company announced a staff reduction of 12-14 percent, which would result in the loss of nearly 3,000 jobs (see: No More Rumors: Amgen Slashing $2 Billion Capital Investments and 2,500 Employees). Spurring the changes were poor sales and health alarms surrounding its anemia drugs, Aranesp and EPOGEN.

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