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Pfizer’s Lipitor Plan Might Not Be ‘Worth It,’ Watson CEO Says

Pfizer Inc. (PFE)’s strategy to keep its market share of cholesterol pill Lipitor may boost revenue without aiding profit, said the chief executive officer of Watson Pharmaceuticals Inc. (WPI), the drugmaker’s partner on the medicine’s generic version.

Pfizer’s plan to hold off generic competition may be failing, said Paul Bisaro, Watson’s CEO. Pfizer, the world’s largest drugmaker, gave Parsippany, New Jersey-based Watson the right to sell an “authorized” copy of Lipitor for a share of the revenue generated by the generic drug.

“They’re starting to lose market share,” Bisaro said today at a company meeting with analysts. “It appeared they were trying to protect revenue and not profit,” he said.

Lipitor (PHAM1150), with $10.7 billion in sales in 2010, began facing generic versions made by Watson and Punjab, India-based Ranbaxy Laboratories Ltd. (RBXY) last month in the U.S. after the medicine’s patent protection expired. New York-based Pfizer reached agreements with insurers such as UnitedHealth Group Inc. and Coventry Health Care Inc. to block sales of the copycat pills in return for rebates or price cuts on Lipitor.

“We couldn’t ever make it work that the discounts they were doing to get market share were better than what they’d get if they just allowed their authorized partner sell the product,” Bisaro said. “People have to decide, on a brand perspective, whether it was actually worth it.”

Market Numbers

Pfizer’s market share has dropped to 32 percent in the seventh week of competition from 41 percent in the second week, according to data from IMS Health analyzed by Jami Rubin, an analyst with Goldman Sachs in New York. “PFE’s share may be starting to slip,” Rubin said in a note.

Watson fell 2.3 percent to $55.89 at 4 p.m. New York time. Pfizer declined less than 1 percent to $21.66.

Pfizer’s strategy “is designed to increase patient choice and improve patient adherence by offering Lipitor patients more support than they would receive from a company selling generic atorvastatin,” said Mackay Jimeson, a spokesman for Pfizer, in an e-mail.

Watson plans to spend on acquisitions to diversify into brand-name drugs, rather than share buybacks or a dividend, Bisaro said today.

“Over time our investor base will appreciate the assets we have in our portfolio,” Bisaro said.

On Jan. 20, Watson failed to win the support of a panel advising the U.S. Food and Drug Administration on the company’s pre-term birth gel. The FDA is scheduled to decide whether to approve the drug by Feb. 26.

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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