In­no­va­tion’s Ac­coun­tant

The price of Viagra—and other older drugs—is go­ing up. Pfzer’s Ian Read in­sists the prob­lem is health in­sur­ance, not pharma.

Forbes - - Strategies - By Matthew her­per

When Ian Read, an ac­coun­tant and com­pany lifer, took over as Pfzer’s chief ex­ec­u­tive in De­cem­ber 2010, the drug frm—the world’s largest—was fac­ing the im­pend­ing patent ex­pi­ra­tion of Lip­i­tor, the best­selling drug ever made, and the ut­ter fail­ure of one of the most lav­ishly funded re­search lab­o­ra­to­ries on the planet to de­velop much of any­thing. The stock was sufer­ing, and Read’s pre­de­ces­sor— Je­frey Kindler, a bear­like lawyer hired from Mcdon­ald’s—had just spent $68 bil­lion to buy ri­val drug­maker Wyeth in a Hail Mary strat­egy shift. Now Read had to make it work.

“I’m not go­ing to talk about mis­sion or vi­sion,” Read re­calls telling em­ploy­ees back then. “This is crit­i­cal. We’ve got to talk about im­per­a­tives.” Namely, cut­ting costs, pleas­ing share­hold­ers and fx­ing the com­pany’s R&D op­er­a­tion (it had spent $40 bil­lion over fve years to pro­duce just four drugs, which to­day have com­bined an­nual sales of about $2 bil­lion). Read cut head count from 130,000 to a low of 80,000 at the be­gin­ning of this year, raised $32 bil­lion by sell­ing of ex­tra­ne­ous di­vi­sions and got seven drugs ap­proved. He made Wall Street sali­vate over the idea of break­ing Pfzer into two com­pa­nies, a slower-grow­ing busi­ness that sells older medicines and a hot one that fo­cuses on break­throughs. Though the par­ing down cut sales 27% to $50 bil­lion, an­nual net in­come has in­creased 10% to $9 bil­lion. The mar­ket has ap­plauded: Pfzer shares are up 94% over Read’s ten­ure, 23% more than the Arca phar­ma­ceu­ti­cal in­dex and more than dou­ble the gains of heavy­weight ri­vals like Merck and As­trazeneca.

Restor­ing the pub­lic’s shaken trust in pharma

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