Bad Day for Drug Companies and Patients
Friday December 17, 12:08 pm ET
By Ben Hirschler, European Pharmaceuticals Correspondent
LONDON (Reuters) - Investors in pharmaceuticals were dealt a triple whammy on Friday as Pfizer Inc, AstraZeneca Plc and Eli Lilly and Co all shocked the market with bad news about key products.
Pfizer, the world's largest drugmaker, saw its stock fall as much as 17 percent after trial data for its popular arthritis drug Celebrex showed an increased risk of heart attack.
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The medicine is of the same type as Merck & Co Inc's (NYSE:MRK - News) Vioxx, which was pulled from the market in September after tests showed it too posed a cardiovascular threat to patients.
Pfizer said it had no plans to recall Celebrex but investors feared there was mounting evidence that the danger seen with Vioxx may be common to all drugs in the so-called COX-2 class.
"This does not bode well for COX-2s in general," said Ira Loss, an analyst at Washington Analysis.
Reflecting the concerns, shares in GlaxoSmithKline Plc and Novartis AG, which are developing newer COX-2 medicines, also fell.
Pfizer's bombshell came just hours after AstraZeneca reported that its lung cancer drug Iressa -- already launched in the United States, Japan and other non-European markets -- had failed to help patients live longer in a major clinical study.
The news was the third setback for the Anglo-Swedish company in two months and sent its shares skidding more than 9 percent lower to a fresh 21-month low.
Meanwhile, Eli Lilly announced it was adding a warning to the label of its attention deficit/hyperactivity disorder medicine Strattera, advising patients with jaundice or a liver injury to stop taking the treatment. Its shares lost 6 percent.
"The pharmaceutical industry has been taking one hit after another," said Jason Leander, senior market strategist at Lind-Waldock, a division of Refco LLC.
The American Stock Exchange's pharmaceutical index was down 4.1 percent in its biggest one-day drop since May 19, 2003.
RISK VS REWARD
Industry analysts said the slew of bad news reflected the difficulties of bringing effective new medicines to market and the increasingly tough regulatory environment in terms of proving safety and efficacy.
The final quarter of this year has been overshadowed by fallout from the withdrawal of Vioxx, which analysts believe will make it harder for drug companies to win approval for products aimed at big patient populations.
That is likely to force a re-examination of the relationship between risk and reward in the drug development process.
AstraZeneca Chief Executive Tom McKillop -- who has also suffered rejection of anticoagulant Exanta and safety allegations over cholesterol fighter Crestor -- said there was now a danger that companies would eschew risk.
"If pharmaceutical companies feel that they get punished for taking risks in the breakthrough area and a disappointing result is over-interpreted, I think there is a danger that pharmaceutical companies will become more conservative as a result," he told reporters in a conference call.
"That would be a pity from the point of view of patients and physicians."
The Vioxx affair followed a summer of intense scrutiny from regulators and politicians on the safety of modern antidepressants and was succeeded shortly after by the news that half the United States' flu vaccine supply had been contaminated at a British manufacturing facility.
(Additional reporting by Ransdell Pierson, Kim Dixon, Doris Frankel and Daniel Burns)
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