Pfizer generics chief eyes licensing, injectables

By Lewis Krauskopf

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 It has already started selling versions of antibiotics that were not originally made by Pfizer.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.