Pfizer Inc.'s CEO said Tuesday that he favors small deals and research partnerships over another "mega-acquisition" as he restructures the drugmaker's research and finances.
Ian Read told analysts that's because, after Pfizer's $68 billion purchase of fellow drugmaker Wyeth two years ago, the company now has all the technology, geographic reach and expertise needed to be a leader in vaccines and biologic drugs as well as pills made from chemicals.
Read took the helm of the world's largest pharmaceutical company in December 2010. He's since been revamping internal research, cutting spending, appointing some new key executives and determining how best to use Pfizer's cash.
Speaking at the 30th Annual J.P. Morgan Global Healthcare Conference in San Francisco, Read said Pfizer's reduced research budget is now at the appropriate level, is sustainable and will produce growth. Meanwhile, Pfizer has been forging more partnerships with academic researchers in deals that give it rights to develop any promising compounds they discover.
"I'm very disinclined to be looking at the possibility of another mega-acquisition," Read told the analysts.
"We're only going to do bolt-on acquisitions or licensing deals that make sense financially," he added, referring to small- to mid-size purchases of companies that fit well with Pfizer's current businesses, and agreements to gain rights to market experimental medicines.
Read also said he's still considering whether to sell or spin off the animal and consumer health businesses acquired with Wyeth.
He said the New York-based company has five key drugs that will drive growth in the near term. Those include blockbuster pneumococcal vaccine Prevnar 13, which just got approval for use in adults age 50 and older, and Xalkori, the first new medicine approved in more than six years for deadly lung cancer.
The other three other drugs are awaiting approval: axitinib for advanced kidney cancer, tofacitinib for rheumatoid arthritis, and anti-clotting drug Eliquis, which Pfizer is jointly developing with Bristol-Myers Squibb Co.
Eliquis, or apixaban, was approved in Europe in May for preventing clots in patients getting hip or knee replacement surgery. The companies now hope to get it approved in the U.S. for stroke prevention _ which would include millions more patients _ after the Food and Drug Administration announced a priority review with a March 28 target date for a decision.
The amount of revenue those and other products in development generate is crucial for Pfizer. Its cholesterol-fighting blockbuster Lipitor, the top-selling drug in history, lost U.S. patent protection on Nov. 30, and revenue began plunging almost overnight.
Read's no-megadeal strategy is a big change for Pfizer. The company became, and has remained, the world's biggest drugmaker by revenue through a series of giant acquisitions. Since 2000 it has bought Warner-Lambert Co., Pharmacia Corp. and then Wyeth.
Each deal brought Pfizer important assets, from gaining ownership of Warner-Lambert's Lipitor to getting promising experimental drugs, biologic drug and vaccine businesses, and consumer and animal health products all with the Wyeth deal.
However, some analysts have said Pfizer's strategy just enabled it to boost profit temporarily through massive job and cost cuts after the deals, while its internal research operation has repeatedly had high-profile failures and produced few important drugs in recent years.
That problem and Pfizer's languishing stock price led to the ouster of Read's predecessor. Read has since been doing a top-to-bottom review of the business and reduced Pfizer's research budget by about $1 billion a year, to around $8.3 billion, partly by eliminating compounds and projects not expected to generate market-leading drugs.