The Ripple Effect

Pfizer's aggressive reorganization plan shifted to crisis control last week as its senior leaders halted trials on the company's most promising drug compound. Torcetrapib was slated to help Pfizer overcome billions of dollars in patent expirations and sluggish top-line growth, and breathe life into a therapeutic category that's been virtually void of innovation since the late-1980s advent of statins.

Now, it appears Pfizer's decision to reduce the size of its sales force by 20 percent may be just the tip of the iceberg as the drug giant struggles to get back on its feet. Pfizer has one of the most anemic pipelines among the 12 largest drug companies, according to an analysis from research firm EvaluatePharma, which compared compounds in development to 2005 sales.

Pfizer halted clinical trials on torcetrapib, designed to increase levels of "good cholesterol," due to an increase in mortality among study participants--nearly 50 percent more deaths in the torcetrapib group than the one that took Lipitor (atorvastatin) alone. Investigators are still trying to make sense of what caused the increase in deaths, leaving not just Pfizer, but also Merck, Roche, Abbott and other companies with HDL-raising drugs in their pipelines wondering how to proceed.

Pfizer executives appeared to be blindsided by the trial results, which were delivered from independent monitors observing the trials. The company's senior leaders had come out swinging for the drug at an R&D briefing a mere two days before the devastating news.

The loss of torcetrapib will accelerate Pfizer's cost-cutting efforts. Still, it remains to be seen how competitors will react--follow suit or try to capitalize on Pfizer's setback.

Pfizer has been trimming its sales and marketing operations since late last year, when observers first suggested that the rest of the industry would begin similar cutbacks. Although many of its competitors--like Johnson & Johnson, Novartis, Wyeth, and Bristol-Myers Squibb--did reduce the size of their sales teams, others, like Boehringer-Ingelheim, Takeda, and Reliant, added significant manpower, according to Verispan.

Despite the cuts, the overall size of the industry's sales forces remained flat last year, topping off at just over 101,000 reps nationwide.

Other companies closely watch Pfizer because of its reputation as one of the savviest marketers in the industry. Yet few drug makers can afford to staff their sales forces the way Pfizer does. While some analysts have predicted widespread layoffs in light of Pfizer's recent trimming, "that might not be the case," said John Kain, vice president of marketing at ImpactRx. "It's going to take a lot of time to shake out."

Sales force staffing depends on a multitude of factors, most importantly, where a company's lead products are in their life cycles. Pfizer lost patent protection on Zithromax (azithromycin) and Zoloft (sertraline) this year, and is facing patent expirations on Norvasc (amlodipine) and Zyrtec (cetirizine) in 2007.

"This is something that you could see coming," Kain said. "They're recognizing that they're not getting the same ROI in their sales force."

Pfizer has about 10 percent more sales reps than its closest competitor, GlaxoSmithKline, according to Verispan, and the company remains a formidable marketing force.

Still, what might go by the wayside is the tactic of using multiple sales reps to call on the same physician. "Pfizer pioneered the 'multiplex' sales call," said Mark Bard, president of Manhattan Research. "Part of the problem is an access issue."

Physicians have less time to spend with sales representatives, and are finding that they can find the same information from other sources. Electronic programs, like Pfizer's MedNet Web site, can provide many of the services that reps previously offered, such as facilitating sample orders.

At Pfizer headquarters, officials are trying to soften the blow, pledging to bring six new products to market each year starting in 2010. They will also in-license compounds to help account for gaps in the company's pipeline.

Nevertheless, cost-containment measures are also on the agenda, and will be "accelerated" in light of this weekend's torcetrapib news, according to a company statement. "Pfizer will focus on its core research and development, manufacturing and commercial operations, as well as procurement and other areas, to improve efficiency and lower its costs as expeditiously as possible," the statement said, leaving industry watchers wondering if others will do the same.