Kindler Reveals Some do's and don't's for Pfizer
From Day, The (New London, CT) (January 10, 2010)
Jan. 9--Pfizer Inc. chief executive Jeffrey B. Kindler told a group of health care analysts in New York City this week that he found "fundamental flaws" in his company's operations after taking over the pharmaceutical giant four years ago.
The flaws came to the fore about a year after Kindler took over. In October 2007, Pfizer decided to take a nearly $3 billion hit by forgoing Exubera, an inhaled insulin discovered by Nektar Therapeutics but which Pfizer had agreed to market.
Pfizer's sales of the Exubera -- never embraced by doctors or patients -- had been lackluster.
"In many ways the defining experience of our tenure was Exubera," Kindler said, speaking for his management team in the unscripted forum with analysts. "And so much of what we're doing today is a reflection of making sure nothing like that happens again."
Kindler said he has spent much of his time reorganizing Pfizer's research organization to ensure it is more accountable for expenditures than in the past. One of Pfizer's main research sites is in Groton, where about 3,500 people work; another 1,400 are housed in New London, a site to be closed by next year.
"The research organization made the decision to fund the (Exubera) project over time without a lot of accountability for capital," Kindler said. "Nobody was really responsible for making the decision of whether we were going to continue to pour money into this."
Kindler said he has been reducing the layers of management and empowering individual business units to make decisions about promising therapies to streamline the organization.
"When I find a committee, I blow it up," he told analysts at the event, called Goldman Sachs Healthcare CEOs Unscripted: A View from the Top.
Kindler said the R&D operation used to have 56 committees; now it encompasses 11, perhaps more since he hasn't gone on a "search and destroy" mission recently. Similarly, the company used to have 15 layers between bench scientists and him, but the bureaucracy has been cut in half, Kindler said.
"It's probably still too high," he added.
Kindler said Pfizer also used to have four or five layers that had to O.K. the pursuit of new drug targets.
"We blew that up and said ... the head of the therapeutic area ... gets to make that decision without any further review," he said.
While results have not been instantaneous -- Pfizer's stock has continued a long decline through much of Kindler's tenure -- the company has shown some life in the past few months. The stock rebounded from a low of $11.66 last March to close the week at $18.68, up15 cents.
Kindler said his goal has been to seek "predictable, steady growth" as opposed to swinging for the fences with blockbuster drug candidates like Lipitor, the cholesterol fighter that accounted for about a quarter of Pfizer's sales before the company's acquisition of Wyeth. Kindler said he doesn't want any one Pfizer drug to account for more than 10 percent of the company's sales.
"Part of the whole approach we're taking here is not to be a company that is reliant ... on one or two drugs," he said.
That's a change from early in Kindler's tenure, when torcetrapib -- heralded as the potential successor to Lipitor and a blockbuster candidate -- crashed and burned during drug trials because of safety concerns.
"One of my goals in life is not to leave my successor with a Lipitor problem," Kindler said. "Because my little saying around the company is that for every Lipitor problem there's a torcetrapib solution."
Posted: January 2010