No. 9: Exubera Market Withdrawal—Your Imperfect Disaster/Hastiness/Rudeness Analogy Here
On October 18, Pfizer publicly announced its decision to stop selling Exubera, the first inhalable human insulin approved by the FDA, because of poor market performance. The decision to terminate sales, 21 months after the drug’s approval, was a reported surprise to Exubera codeveloper Nektar Therapeutics, which learned of its breakup with Pfizer in Matt Damon-esque* fashion through Pfizer’s release of its 3rd-quarter results.
Sales of Exubera, which had been predicted to exceed the blockbuster threshhold of $1 billion per year, totaled just $12 million during the first 9 months of 2007 and consumed less than 1% of the insulin market, according to a New York Times report. To add insult to Nektar’s injury, the share price of Nektar stock fell more than 20% during the week after the announcement, while Pfizer stock dropped less than 5% during the same time period.
The seemingly abrupt decision to pull the Exubera plug by Pfizer’s CEO Jeffrey Kindler, a lawyer whose corporate experience included high-level positions at McDonald’s, was criticized for being misplaced in the steep-investment, slow-development world of the pharmaceutical industry. A prescription pharmaceutical’s not a McDLT (which may have actually been on the nationwide market longer than Exubera). But analysts were quoted as generally supporting the decision to pull the drug.
There were also blogging wags who couldn’t help but liken the crash-and-burn market performance of the highly anticipated Exubera to the Titanic and the Hindenberg; however, these analogies—more than most—miss their mark. Exubera was not withdrawn for safety reasons but for suboptimal market performance. It’s as if the White Star Line built its ship, but only a handful of people bought tickets.
Similarities can also be drawn between Kindler’s judgment and that of a hasty television executive, who prematurely cancels what is actually a reasonably good show because of poor Nielson ratings. There were diabetics who liked the versatility of insulin adminstration that Exubera provided, despite the tennis-ball-can size of the inhalation device, according to a Dallas News story.
Nektar specifically faulted Pfizer—the sales powerhouse of the pharmacetical industry—for its poor promotion of Exubera, and it is clear that certain marketing obstacles should have been anticipated and addressed by Pfizer from the get-go: physician and patient ignorance of the inhaler device, the required performance of baseline and periodic pulmonary function testing, and expense. The daily cost of Exubera is approximately $5 a day, about twice that of injectable insulin. Consequently, insurance coverage may have been limited, both for the drug and for pulmonary function testing, and a September report on behalf of the National Institute for Health and Clinical Excellence (NICE) indicated that, although the product is safe and effective, it is not cost-effective. But cost obstacles are nothing new to the
Nektar executives were reportedly stunned at Pfizer’s feeble launch campaign for Exubera and the company’s inability to establish any marketing momentum with doctors or consumers. This frustration was apparently shared by at least one Pfizer insider, who posted at the free-wheeling cafépharma.com, “[T]he launch was an absolute joke,” and described Jeffrey Kindler as “the Jimmy Carter of corporate
Withdrawal Aftermath
On November 13, the burned Nektar and the possibly chagrined Pfizer announced the resolution of “all outstanding contractual issues in connection with Exubera,” which consisted of the transfer of all drug rights and, most importantly, a lump-sum payment of $135 million from Pfizer to Nektar. The joint comment from the respective CEOs is a head-spinning clinic in PR doublespeak, which describes the separation as an “agreement” that “strengthens our relationship.”†
A tidy sum of money notwithstanding, Nektar reportedly has millions of doses of Exubera, without any imminent, practical way to unload them, and related fallout includes dramatic restructuring and job cutbacks at Exubera manufacturing partners Consort Medical and West Pharmaceuticals.
*With appropriate apologies to Mr. Damon, who famously announced his break up with Minnie Driver (allegedly unbeknowst to Ms. Driver) on The Oprah Winfrey Show. Mr. Damon has repeatedly denied that the actress did not know of the break up before he divulged the news on TV.
†I’ll say. As the quipsters at the Health Blog of the Wall Street Journal wrote, “Nothing says you’re sorry quite like $135 million.”
