NEW YORK (Reuters) - Pfizer Inc (PFE.N) still has enough resources to innovate and support its experimental medicines despite the drugmaker’s recent decision to cut its massive research budget, Pfizer’s research chief said on Thursday.
Mikael Dolsten, Pfizer’s president of worldwide research and development, said making choices about research priorities was a “sign of a healthy company culture.”
“Our action was more a thoughtful deliberation after looking at how the industry has performed as a whole,” Dolsten said in an interview on the sidelines of the Bio-Windhover Pharmaceutical Strategic Outlook conference in New York.
“We feel that the amount of investment in R&D that we are committing to is really the right number to drive the priorities we have put in place.”
Dolsten’s comments came after he spoke on a panel of company executives addressing the structure and productivity of industry research.
Despite hefty research budgets, drugmakers have struggled to develop sufficient new medicines to offset older drugs whose sales are set to decline as their patents expire, leading to questions by Wall Street about whether they should be directing those dollars elsewhere.
Pfizer, the world’s largest drugmaker, last month lowered its target for 2012 research and development spending to a range of $6.5 billion to $7 billion, from $8 billion to $8.5 billion previously, a reduction of as much as 24 percent.
The move, which drove up Pfizer’s shares, contrasted with rival Merck & Co (MRK.N), which a few days later said it would refuse to slash its research budget and simultaneously withdrew its long-term profit forecast.
Dolsten noted in the interview on Thursday that Pfizer still maintained a “large R&D budget ... and that will allow us to drive innovation in a number of areas.”
“I’m not convinced that more is necessarily better,” Dolsten said. “If you take the perspective of science, business and finance together, where you want to deliver a good return of investment to shareholders and future investors as well as providing important products to patients, and we have tried really to have a comprehensive approach.
“We will be able to drive many exciting products through the pipeline,” he said. “We have just made a priority in which areas we think the likelihood of success is going to be high for the future.”
Dolsten pointed to several promising medicines in late-stage development: rheumatoid arthritis treatment tofacitinib, lung cancer drug crizotinib, and a version of its Prevnar 13 vaccine for adults.
Analysts are particularly excited about the sales potential of tofacitinib, which comes in pill form and could be more appealing than a widely used group of injectable medicines.
“I think there is a great need and demand for a drug like that and we will continue to move it forward,” Dolsten said.
During the panel, the executives agreed that spending needs to be more efficient, but also cited the rising costs of clinical trials, as regulators require larger studies before approving medicines, for pushing spending higher.
“Late-phase clinical development has just doubled, tripled, quadrupled in costs for individual projects,” Andreas Busch, a top pharmaceutical research executive at Germany’s Bayer (BAYGn.DE), told the audience.
Busch said that while concerns over toxicity used to lead companies to end development of experimental drugs in earlier stages, costs are now more of a factor.
“Now you run more and more into a situation that you kill them for strategic considerations,” Busch said.
Reporting by Lewis Krauskopf; Editing by Richard Chang