Pfizer Inc. ended its bid to return to the multibillion-dollar cholesterol market that long fueled the company, halting development of a once-promising drug candidate amid safety concerns and mounting pricing pressures confronting the industry.
The New York-based pharmaceutical company on Tuesday said it would take a charge of 4 cents a share in the fourth quarter as a result of its decision to end development of the cholesterol compound, called bococizumab.
Bococizumab, which was in phase 3 testing, belonged to a class of new cholesterol-lowering injections blocking a protein known as PCSK9 that Wall Street had initially thought could be as much as a $20 billion market.
But drugs already being sold—Repatha from Amgen Inc., and Praluent by Sanofi SA and partner Regeneron Pharmaceuticals Inc.—have struggled to meet original sales expectations, partly due to their list prices above $14,000 a year.
Health insurers and drug-benefit managers have steered patients to using low-priced, generic versions of statins like Lipitor, which was once the top-selling drug in the world and a longtime driver of Pfizer’s growth until losing patent protection in 2011.
Repatha and Praluent are selling at an annual rate of $312 million, RBC Capital Markets says, less than what analysts originally expected.
Pfizer CEO Ian Read said during a conference call the company decided to scrap bococizumab’s development partly because testing of the drug showed its efficacy declined over time and it had some safety issues.
Another factor was the restrictions that health insurers and drug-benefit managers have placed on use of the PCSK9 drugs on sale, “which have meaningfully dampened our initial expectations for the market potential,” he said.
Pricing pressures on the drug industry have hurt stocks recently as investors fear companies won’t be able to command the prices they had, especially given the criticism politicians have leveled during this campaign season.
Mr. Read said he expects the political rhetoric to subside after the elections end, and “good public policy will prevail,” reflecting the value of the medicines sold by Pfizer and other drug companies.
He said patients have been hurt by the decisions that health insurers have made to raise out-of-pocket costs, and said patients may be better served by finding other ways to lower drug prices than the rebates that companies currently offer.
Although certain companies have raised drug list prices substantially, Mr. Read said Pfizer has acted responsibly. “I don’t believe there is any reason for Pfizer to change its approach to pricing as we sit here today,” he said.
The bococizumab charge contributed to Pfizer’s reduced guidance for the rest of the year, along with sales lost due to generic competition for drugs losing their patent protection and the impact of a stronger dollar, especially in Venezuela.
For the full year, Pfizer said it now expects adjusted earnings of $2.38 to $2.43 a share, reducing the high end of the range by 5 cents. It also now expects revenue of between $52 billion to $53 billion, increasing the low end of the revenue forecast by $1 billion.
For the third quarter, Pfizer reported a profit of $1.32 billion, or 21 cents a share, down from $2.13 billion, or 34 cents a share a year prior. Excluding certain items, adjusted earnings were 61 cents a share, up from 60 cents.
Revenue rose 7.9% to $13.05 billion.