CORRECTED - UPDATE 1-Pfizer to end heart, obesity drug development

(Corrects sourcing in paragraph 11 to the Wall Street Journal) (Recasts, adds details)

NEW YORK, Sept 29 (Reuters) - Pfizer Inc PFE.N will drop efforts to develop medicines for heart disease, obesity and bone health as part of its plan to focus research on cancer and five other therapeutic areas, a company memo showed.

The New York-based firm, set to provide a product development update on Tuesday, will end drug development in an area known for its flagship $12 billion per year cholesterol-lowering drug Lipitor, as well as some of it’s biggest disappointments.

Alzheimer’s disease, diabetes, inflammation/immunology, oncology, pain and psychoses (schizophrenia) were “higher priority areas” for Pfizer going forward, its Therapeutic Advisory Group wrote in an internal memo dated Sept. 25 provided to Reuters from the company.

“These large markets, with rapidly advancing science, are the areas where Pfizer can take a leading position,” the group wrote in the memo. The company is still considering whether to pursue ophthalmology.

“It’s a continuous process to constantly evaluate our pipeline and make decisions based on high priority, unmet medical needs with market growth potential,” Pfizer spokesman Ray Kerins said.

Sales of Lipitor, the world's top selling drug, are slowing as patients have opted instead for cheap generic forms of Merck & Co's MRK.N Zocor. The sales are set to fall off a cliff in 2011 when generic versions are slated to hit the market.

Pfizer has been unable to come up with enough new blockbuster medicines to replace those that have lost, or will lose, patent protection, such as hypertension drug Norvasc.

In December 2006, the company scrapped cholesterol-lowering drug Torcetrapib after it was linked to deaths in a large trial, losing some $800 million in development costs.

It was a major setback for the company and investors, who had high hopes for the product, and the share price has languished ever since.

The recent shift in R&D focus was led by President Martin Mackay, a long-time Pfizer research executive who took over the division in October of last year.

The plan is expected to include job cuts and a reduction in spending, according to a report in the Wall Street Journal. The moves will not affect products in late stage development or set to be launched in the next three years, according to Kerins.

That includes its co-development collaboration with Bristol-Myers Squibb Co BMY.N on the experimental blood clot preventer Apixaban from a highly anticipated new class of medicines that has been targeted by several drugmakers. (Additional reporting by Phil Wahba) (Reporting by Edward Tobin; Editing by Clarence Fernandez)