Pfizer generics chief eyes licensing, injectables

NEW YORK (Reuters) - Pfizer Inc (PFE.N) is seeking licensing deals to help turn its burgeoning business focused on generic drugs into a growth engine for the world's largest drug maker over the next several years.

Pfizer, whose own products have been eroded by competition from low-cost generic versions, plans to make a big advance into off-patent medicines both in developed and emerging markets, said company executive David Simmons, who is overseeing the push.

Pfizer's current roster of its own medicines that have lost patent protection already amounts to $10 billion in annual sales, and it plans to boost its portfolio by marketing generic versions of other drugmakers' medicines, Simmons said. It has already started selling versions of antibiotics that were not originally made by Pfizer.

The drugmaker is seeking to expand its portfolio of generic versions of hospital-based injectable drugs, a market which has fewer rivals and in which Pfizer already has a competitive cost structure, Simmons said, as well as significantly broadening its array of generic pills and tablets.

Simmons said Pfizer decided to create a unit focused on off-patent medicines after determining, when CEO Jeff Kindler took over in 2006, that global growth of such drugs would outstrip that of on-patent medicines through 2012, especially as developing markets demand low-priced medicines.

"When we looked at this off-patent market, especially in the developing world but also in the U.S., we saw it very poorly served, especially from a quality standpoint," said Simmons, general manager of Pfizer's established product business unit.

"We're not saying all generics are poor quality. There are some very high-quality generic companies. However, there's a lot of noise -- how do you know?"

"You start to put those pieces together and we say there's a societal need for this and there's a huge market opportunity that flows from that," said Simmons, a steel industry veteran who has been with Pfizer for 12 years.

Pfizer, which struck a $68 billion deal in January for rival Wyeth WYE.N to shore up profits, plans to turn the off-patent unit from a deteriorating business to a "growth story" over the next four years, Simmons said.

Pfizer's new focus on off-patent medicines already has reversed revenue slides for some products, Simmons said.

Simmons said the company is hiring regulatory executives to steer the business, but plans to strike licensing deals for access to supplies of generic medicines. An acquisition is unlikely in the near term, he said.

He plans to prioritize deals for injectable products, and hopes to increase Pfizer's U.S. portfolio from about 18 products now to 100 perhaps in five years. Pfizer is already efficient at producing the injectable products, Simmons said.

"Compared to what a top-notch generic company would make it for, there's not much cost differential," he said. "Generally, the belief is their cost structure is much lower than ours."

Plus, he said, fewer competitors are in the injectable space: "You can literally go through these on about one hand. Where if you get into how many people are selling (Pfizer's off-patent blood-pressure pill) amlodipine in this country you have to go to all your fingers all your toes and then your neighbors' fingers and toes."

Simmons also hopes to boost Pfizer's U.S. portfolio of generic pills to 200 from 60-80 currently. It has previously sold versions of Pfizer drugs out of its Greenstone unit.

Beyond injectables and pills, Simmons hopes to spur growth through reformulations of existing medicines. For example, the company is developing a citrus-flavored version of the anxiety pill Xanax that dissolves under the tongue. In addition to dissolving versions, future reformulations may be designed to cut the number of pills a patient must take.

He is also seeking how Pfizer can retain more revenue once patents lapse on its products. His first such task is mammoth: mitigating the decline for Lipitor, the $12 billion-a-year cholesterol fighter that loses U.S. patent protection in 2011.

Simmons is optimistic Pfizer can stem the decline of Lipitor sales somewhat more than with past Pfizer products, but cautions the boost will not be huge.

"I'm confident we'll create value outside of the predicted erosion curve," Simmons said. "It's not billions, though."

Simmons said the company was evaluating whether to get involved with generic versions of biotechnology medicines, in which some pharmaceutical companies already are investing, but it currently is "not in the game."

The company's desire to separate itself as a quality manufacturer in the generics arena could be timely amid concerns over contaminated medicines made in China and U.S. generic manufacturers disrupting supplies over regulatory problems.

Indeed, Simmons eschews the term "generic" because he says it has a connotation of questionable quality.

"I want them to see Pfizer as the resolution to their dilemma," he said. "I want them to see that they get an affordable medicine and not sacrifice quality."

(Editing by Tim Dobbyn)