Pfizer's Torcetrapib Failure: The Risks of New Drug Development
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Case Details:
Case Code : MKTG172
Case Length : 26 Pages
Period : 2000-2007
Pub Date : 2007
Teaching Note :Not Available Organization : Pfizer, Inc.
Industry : Pharmaceutical Countries : USA, Europe
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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A Loss for Pfizer and Heart Disease Patients Contd..
Following the announcement, the share price of Pfizer fell by more than 11
percent, wiping out some US$ 21 billion in market value on December 4, 2006.13
The panic among investors was understandable as Pfizer's future growth prospects
depended on the successful launch of Torcetrapib. Pfizer's dependence on the
sales of Lipitor had increased over the years and as of end-2006, analysts felt
that there were no drugs in its product pipeline that could compensate for the
sales of Lipitor post-2010. To complicate matters further for Pfizer, for the
five years from 2002 to 2006, Pfizer had been the worst performer of the major
research-based pharmaceutical companies on the stock market.
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Some of its blockbuster drugs including Zoloft and Norvasc were approaching
patent expiry by 2006 and 2007 respectively.
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Analysts felt that the Torcetrapib failure would be a
big jolt for a large pharmaceutical giant like Pfizer (Refer to Exhibit
I for a brief note on Pfizer). They expected the company to try and turn
around its fortunes by taking aggressive cost-cutting measures, and by
strategic acquisitions of smaller firms.
Analysts were also of the view that Pfizer's loss would translate into
gain for its competitors. It could allow companies such as Merck & Co.14
(Merck) the opportunity to snatch back the market leadership of the
lucrative cholesterol drugs market from Pfizer... |
The outlook for companies such as AstraZeneca Plc.15
(AstraZeneca), Roche Holding AG16 (Roche), Abbott
Laboratories17 (Abbott) and biotechnology firm, Isis
Pharmaceuticals, Inc.18 (Isis), all improved at the
news of the termination of Torcetrapib's development...
Excerpts >>
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