Wyeth Kicks Off “Project Impact” As Protonix Generics Threaten Bottom Line
This article was originally published in The Pink Sheet Daily
Executive Summary
Drug revenues jump 10 percent for the fourth quarter and full year, and dual-fronted patent fight goes on.
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Wyeth is hoping a company-wide restructuring program can salvage revenue lost to generic versions of the proton pump inhibitor Protonix in the short term and change how the firm does business in the long term, the company told investors in a Jan. 31 sales and earnings call. Called "Project Impact," the push entails headcount reductions of 4 percent to 6 percent by the end of this year's first half, and layoffs could reach as high as 10 percent over three years, mostly in the marketing and sales of Protonix (pantoprazole). The cost cuts follow the at-risk pantoprazole launch by Teva in December and another by Sun Pharmaceuticals on Jan 30. Wyeth's 2008 guidance calls for pro forma diluted earnings per share in about the 3.30-cent to 3.50-range range, a drop of 1 percent to 5 percent from last year. Wyeth CEO Bernard Poussot said the firm "will not be able to fully address the impact of the resulting loss of profits from the Protonix franchise" but is trying to plug the leak by adjusting 2008's cost structure in every area except research and development. Otherwise, he said, "nothing is off limits," though he declined to be more specific. Protonix revenue reached $1.9 billion for 2007 and $461 million for the quarter. Poussot said Wyeth and partner Nycomed will "vigorously prosecute the patent litigation against Teva and other generic manufacturers," seeking lost profits and damages. A New Jersey court denied the brand firm's motion for a preliminary injunction last fall (1 (Also see "Protonix Generics Could Be Imminent After Denial Of Wyeth’s Preliminary Injunction Request" - Pink Sheet, 7 Sep, 2007.)). Wyeth aims to maintain a portion of the pantaprozole market with continued sales of the branded product, and with the launch of its own first authorized generic, to be distributed by Prasco. Wyeth divested its ESI Lederle generic division to Baxter Healthcare in 2002. Hopes lie with new and upcoming products, including Pristiq (desvenlafaxine) for depression, due for FDA action at the end of February, and methylnaltrexone, a peripherally acting mu-opioid receptor antagonist (2 (Also see "FDA Extends Wyeth, Progenics NDA Review For Methylnaltrexone Until April" - Pink Sheet, 10 Jan, 2008.)). Wyeth's antibiotic Tygasil (tigecycline), launched at the start of 2005, showed a near doubling in revenue for the year, and the mTOR inhibitor Torisel (temsirolimus), which reached the market in the first half of 2007, achieved revenue of $27 million. Worldwide net revenue increased 10 percent to $5.8 billion for the quarter and 10 percent to $22.4 billion for the year. Worldwide pharmaceuticals net revenue increased also 10 percent for the fourth quarter and full year. The psoriasis drug Enbrel (etanercept) and pneumococcal vaccine Prevnar drove earnings growth. Enbrel, which Wyeth markets ex-U.S., exceeded $2 billion in annual sales internationally for the first time. Prevnar revenue for 2007 hit $2.4 billion, with fourth quarter revenue up 11 percent on a year-over-year basis. - Jamie Hammon ([email protected]) |