Pfizer has launched a huge marketing campaign for slow-selling Exubera. Can it inject life into its needle-free insulin drug?
When Pfizer (PFE) introduced Exubera, the first ever inhalable insulin product for people with diabetes, the New York-based drug giant estimated it would be a $2 billion-a-year blockbuster. On July 18, a full year after launching Exubera, Pfizer disclosed the product's quarterly sales for the first time: An anemic $4 million. Now the company has debuted a massive ad campaign that some on Wall Street are calling a Hail Mary pass to jump-start Exubera sales.
It's a long shot, at best. Exubera was initially conceived as an alternative for people who need insulin to control their blood sugar, but are afraid of jabbing themselves with needles. Yet patients and doctors have greeted the product with disinterest, and in some cases, outright disdain (see BusinessWeek.com, 7/16/06, "From Pfizer, Irrational Exubera?"). That's because the inhaler is unwieldy and not very discreet.
What's worse, it can cause lung problems, so patients have to get their lungs tested before they start Exubera, and periodically while they're on it. Some insurance companies are refusing to pay for the tests, reports Dr. Joel Zonszein, director of the clinical diabetes center at Montefiore Medical Center in New York. "Once patients start learning about these issues, they get disenchanted," Zonszein says.
It won't be the first time Pfizer has used mass advertising to try to build a whole new market. Its cheeky TV ads for Viagra turned the diagnosis "erectile dysfunction" into acceptable cocktail-party conversation, and transformed the drug into a $1.7 billion-a-year best seller. Pfizer's hit incontinence drug, Detrol, advertised with the jingle, "gotta go, gotta go, gotta go right now," encouraged a crowd of pharmaceutical companies to follow with similar ads about urinary conditions that were once deemed too icky to sing about on TV (see BusinessWeek.com, 3/12/07, "When the Going Gets Tough…").
Exubera creates a new set of challenges for Pfizer, though. The television ad doesn't show anyone actually using the product, so it may be difficult for patients to grasp the intricacies of inhaling insulin vs. injecting it. And the warnings about lung side effects may sound daunting. Furthermore, diabetes has become a crowded category for direct-to-consumer advertising. Exubera will be competing for attention with such heavily advertised products as Sanofi-Aventis' (SNY) Lantus, a popular injectable insulin, and GlaxoSmithKline's (GSK) non-insulin treatment Avandia. Overall, the market for diabetes treatments is worth more than $15 billion annually.
Sanofi-Aventis and GlaxoSmithKline spent $13 million and $25 million, respectively, advertising their diabetes products last year, according to TNS Media Intelligence. Pfizer has not disclosed how much it's spending on the Exubera campaign, but it's likely in the tens of millions of dollars as well; the ads are already ubiquitous on TV, in magazines, and on Web sites such as dLife.com, which is associated with a CNBC television show for people with diabetes.
Early buzz on the Exubera ad is less than glowing. One online blogger observes that the ad doesn't adequately depict how large the device looks when a patient is actually using it. Folded out, it's about the size of a can of tennis balls (the blogger disparagingly refers to it as a bong), so some people might be embarrassed to use it in public. And the ad doesn't play up what was supposed to be Exubera's biggest selling point—its needle-free delivery. The ad, says a Pfizer spokesperson in an e-mail, is designed to explain "the progressive nature of diabetes and how Exubera can help control blood sugar levels." Although sales of the product have been "disappointing, we have received very positive feedback from physicians and patients who are using Exubera and we believe the new campaign will help to increase awareness."
While it will take a couple of quarters to gauge how the diabetes population is responding to the Exubera ads, it's clear the product won't become the multibillion-dollar hit it was once projected to be. In fact, it may be difficult for Pfizer to recoup its investment in Exubera. Last year, Pfizer paid Sanofi-Aventis $1.3 billion to acquire the worldwide marketing rights to the product, which was being co-developed by biotech company Nektar Therapeutics (NKTR).
Jim Reddoch, an analyst for Friedman, Billings, Ramsey Group (FBR), estimates Pfizer will pay Nektar $122 million this year to manufacture the inhaler, and that the product will bring in worldwide sales of just $20 million. He estimates Exubera sales will peak at $326 million a year. Upon hearing the news that Exubera sales were just $4 million in the most recent quarter, Reddoch tempered his estimates, griping in a note to clients, "We thought the number was missing a zero at first."