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Pfizer Seeks Pricing Perfection

"It's not just about needles," said Dr. Julio Rosenstock in a speech at the recent ADA meeting. "It's about improving compliance." Rosenstock, a clinical professor of medicine at the University of Texas Southwestern Medical Center, has received research support from many drug companies, including Pfizer. He was lead investigator of a recent Pfizer study showing that Exubera was as effective as injectable insulin but caused less weight gain.

In the pharmaceutical business, convenience means compliance. Assuming there's no difference in efficacy or side effects, patients are more likely to take their medicine faithfully if it's a once-a-day pill vs. a three-times-a-day pill, or if it's a pill instead of an injection.

Exubera stretches the concept of compliance, offering a new way of taking a drug that has been injected ever since 14-year old Leonard Thompson became the first human to receive insulin extracts in 1922. A year earlier, insulin was discovered by scientists at the University of Toronto.

Injectable and inhalable insulin replaces or supplements the body's natural insulin, a hormone produced in the pancreas to help turn sugar into fuel for the body's cells. Type 2 diabetes, the vast majority of all cases, occurs when the pancreas can't produce enough insulin or when the body isn't able to adequately process the natural hormone. Type 1 diabetics can't produce insulin.

Pfizer says Type 1 diabetics must take long-acting, injectable insulin as well as fast-acting Exubera. For some Type 2 diabetics, Pfizer says Exubera can be used by itself. For others, the drug can be used with blood-sugar control pills or long-acting injected insulin.

"At this juncture, we believe there are valid arguments both in favor and against a successful Exubera launch," says Corey Kasimov, of Oppenheimer, in a June 27 report to clients about Nektar. He doesn't own shares, and his firm doesn't have an investment-banking relationship.

Kasimov initiated coverage with a buy rating, saying his exuberance is based on recent clinical data, Pfizer's pricing strategy and the belief that the inhaler "could boost patient satisfaction, quality of life and compliance."

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