Value Will Pave The Way For Innovative Brands, Pfizer’s Germano Says

Global Innovative Pharma Business President Geno Germano sat down with “The Pink Sheet” to discuss growth strategy, M&A and Pfizer’s increasing focus on value in a changing health care world.

It’s no coincidence that Pfizer Inc.’s Global Innovative Pharma (GIP) Business President Geno Germano also has been tapped to manage the company’s global health and value group, a team focused on pharmacoeconomic research. In today’s increasingly cost-conscious and outcomes-centric health care market, demonstrating value for brands is the only way for new entries to establish a solid foothold in crowded therapeutic categories, Germano maintained in a recent interview.

“In the past, I would have thought we want physicians to use our medicines as often as possible for the appropriate patients, and that was kind of the end of our thinking,” Germano said. “Today and in the future what we have to think about is that we want physicians to use our medicines for the right patients so they get the right outcomes, so that the patient does well, the physician does well and our product does well in the long run.”

Germano sat down with “The Pink Sheet” for an interview at the company’s global headquarters in New York City Aug. 28, about eight months into his role as head of Pfizer’s newly formed GIP business. He is charged with overseeing most of the pharma giant’s innovative brands, representing about $14.5 billion in annual sales.

Germano, who joined Pfizer with the acquisition of Wyeth, has led Pfizer’s GIP group since the start of the year, when the company put in place a new corporate structure that includes three core business units. One aim of the new structure is to better position the company for an eventual break up (Also see "Pfizer Reorganizes Internally As It Moves Closer To Decision On Splitting Business" - Pink Sheet, 30 Jul, 2013.). The company established the new health and value group, led by Germano, at the same time.

The global health and value group brings together different groups within Pfizer focused on understanding value. For example, the team includes outcomes research experts from R&D, pharmacoeconomic analysts, market access leaders who work in the field and real-world data analytics experts.

“They are kind of scattered and fragmented in the way they support the business,” Germano said. “We brought them together in an integrated way so that they can work together and build stronger and stronger capabilities to help in the whole value chain.”

The effort has already yielded results, according to Germano. While Pfizer was preparing to move a monoclonal antibody candidate into Phase II development for lupus, the health and value group took a step back and conducted some deep-dive research and analysis into the cost of the disease.

“We wanted to understand not only what are the symptoms and what are the consequences of lupus disease, but what are the cost drivers, what ends up costing the most,” Germano explained. “We went out and did a real-world study, did the analytics and developed a better understanding of which outcomes were associated with highest cost. We incorporated that information into the protocols we are going forward with for Phase II and Phase III.”

“We will still measure the clinical outcomes and endpoints that we ordinarily would, but now we have better insights through this type of approach so that we will be in a better position to demonstrate the value drivers at the time we launch the program,” he added.

Pfizer’s emphasis on real-world data and pharmacoeconomic analysis comes as industry has more access to big data than ever before and as payers around the globe are cracking down on drug costs and looking for new ways to reduce health care spending. In the U.S., some pharmacy benefit managers have begun excluding certain drugs from being covered altogether (Also see "CVS Caremark’s 2015 Formulary Excludes 95 Products From Coverage" - Pink Sheet, 5 Aug, 2014.).

“The more you are able to demonstrate the value in both clinical and economic terms, the stronger position you are going to be in to avoid exclusionary positions on those formularies,” Germano added of that new trend.

GIP Growth Depends On Innovative New Drugs

Pfizer has first-hand experience with the challenge of launching new brands in today’s market. New launches like Xeljanz (tofacitinib) for rheumatoid arthritis and the blood thinner Eliquis (apixaban), partnered with Bristol-Myers Squibb Co., are key to Pfizer’s growth strategy but have gotten off to a slower than expected start.

Pfizer is counting on those drugs and others in the pipeline to help it return to growth after losing Lipitor (atorvastatin) and other blockbusters. This year, the company is reeling from the loss of its co-marketing collaboration with Amgen Inc. for Enbrel (etanercept) in the U.S. and Canada, a partnership that ended in October 2013.

The company’s need for near-term growth drivers has grown rather urgent, contributing to the company’s surprising bid to buy AstraZeneca PLC earlier this year. Pfizer’s final $117 billion offer ultimately was rejected by AstraZeneca in May and the deal fell through, but investors expect Pfizer either to return to the negotiating table later this year when the U.K.’s takeover laws allow it or to pursue another takeover target altogether (Also see "AstraZeneca Gets A Reprieve But Will Have To Earn Its Independence" - Pink Sheet, 26 May, 2014.).

Indeed, Germano admitted M&A is part of his strategy to drive growth within GIP, though he declined to comment on AstraZeneca specifically (Also see "Pfizer’s Geno Germano Talks M&A Strategy" - Pink Sheet, 1 Sep, 2014.).

GIP, which includes innovative brand drugs excluding oncology and vaccines, accounts for about 27% of Pfizer’s consolidated revenues. The other two business segments are Global Established Pharmaceuticals (GEP), made up of drugs that have lost exclusivity or will soon, and Global Vaccines, Oncology and Consumer Healthcare (VOC). GEP is the biggest business segment, accounting for about 50% of Pfizer’s sales.

Sales of GIP were down 6% to $6.62 billion in the first half of the year, but the core business, excluding the impact of Enbrel, is growing, according to Germano. Sales of the core portfolio are up about 9%, driven by the acceleration of Eliquis and Xeljanz, and continued growth of mature products like Lyrica and Pfizer’s hemophilia franchise, which includes BeneFix.

Xeljanz generated $68 million in the second quarter, up from $22 million in the year-ago quarter. Sales of Eliquis, which Pfizer shares with Bristol, were $171 million, up from $12 million in the second quarter of 2013. The company expects indication expansion will help drive growth of both brands in the near-term. Eliquis gained an indication earlier this year for use to prevent deep-vein thrombosis following hip or knee replacement surgery (Also see "Can Eliquis Play Catch Up? New Indication Should Help" - Pink Sheet, 14 Mar, 2014.).

And Pfizer is preparing to file Xeljanz for use in patients with psoriasis in early 2015. The company reported positive Phase III data on Xeljanz in patients with psoriasis last year (Also see "Pfizer’s Xeljanz In Psoriasis Does Best At Dose That Worried FDA" - Pink Sheet, 9 Oct, 2013.). But it’s not clear how comfortable generally cautious dermatologists will be about prescribing the drug, a first-in-class janus kinase inhibitor approved for RA in 2012, because of its serious side effects.

Nonetheless, Xeljanz is administered orally, which Germano expects will be a substantial benefit to some patients who have been hesitant to take injectable tumor necrosis factor blockers.

“Dermatologists haven’t embraced the injectable biologics the way [physicians] have for RA,” Germano said. “If the data are viewed as having an obvious benefit-risk balance, then we think the dermatologists will gravitate toward it.”

PCSK9 Fight Will Come Down To Outcomes, Germano Says

Pfizer needs new drugs to drive growth. The company completed a rolling submission for the high-profile breast cancer treatment palbociclib in August, based on Phase II data (Also see "Pfizer Gets Palbociclib To NDA Finish Line On Phase II Data" - Pink Sheet, 18 Aug, 2014.). But of drugs that would fall under the GIP umbrella, one of the most highly anticipated is bococizumab, a PCSK9 inhibitor for high cholesterol.

The class of drugs is highly anticipated because they have been shown to lower LDL cholesterol well below treatment with statins, but Pfizer is well behind rivals in the category, and it’s not yet clear how FDA will react to data based on surrogate markers like LDL cholesterol versus long-term cardiovascular outcomes data.

Amgen filed a BLA for its PCSK9 candidate evolocumab on Aug. 28, the first PCSK9 inhibitor to reach FDA for review (Also see "Amgen’s Evolocumab At FDA: Dawn Of PCSK9 Era Still Cloudy" - Pink Sheet, 28 Aug, 2014.). Sanofi and partner Regeneron Pharmaceuticals Inc. are close on Amgen’s heels and are expected to be the second to file.

Pfizer, meanwhile, is still conducting Phase III trials testing bococizumab, but it expects to deliver cardiovascular outcomes data around the same time as Amgen and Sanofi/Regeneron, likely in 2017.

“We believe the most important value driver for that class of drugs is going to be the outcomes data,” Germano said. Pfizer has not made a decision as to whether it will wait for the outcomes data or file earlier based on the LDL cholesterol data, he added. “It would certainly be an option,” he said.

There are other drugs in the pipeline Germano is enthusiastic about. Rivipansel moving into Phase III for sickle cell disease and the nerve growth factor inhibitor tanezumab for pain in Phase III (though on a clinical hold by FDA) are two he highlighted.

Clearly, the expectation on the part of investors now is that Pfizer will complete yet another big deal to bolster its portfolio and improve the company’s top- and bottom-line growth prospects. Germano said he is evaluating a full spectrum of opportunities, everything from single-asset companies to large-scale M&A.

“I’m looking for assets that align well with our business, with the therapeutic areas that we are in, that are complimentary to the businesses that we have, where we have the ability to satisfy unmet needs and we have the ability to demonstrate value,” he said.

Diminishing Blockbusters: Pfizer’s Marketed GIP Brands
Product	Indication	Revenue (First Six Months)
Lyrica	Seizure, fibromyalgia, neuropathic pain	$2.47 billion
Enbrel (ex-U.S. and Canada)	RA, psoriasis, and multiple inflammatory conditions	$1.89 billion
BeneFix	Hemophilia B	$428 million
Genotropin	Growth deficiency	$360 million
Chantix	Smoking cessation	$317 million
Refacto AF/Xyntha	Hemophilia A	$316 million
Eliquis	Blood clot prevention	$277 million (split with Bristol)
Rapamune	Organ rejection after kidney transplant	$175 million
Toviaz	Overactive bladder	$142 million
Xeljanz	RA	$120 million
Somavert	acromegaly	$109 million
BMP2	Bone development	$90 million