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Pfizer Gambles on Building an Alzheimer's Empire

Updated from 2:39 p.m. EST

With Monday's $68 billion bid to acquire Wyeth (WYE), pharmaceutical giant Pfizer (PFE - Get Report) is setting itself up to potentially dominate the Alzheimer's disease treatment market for years to come. But in making such a big bet on one of society's most pressing unmet medical needs, the pharmaceutical giant may also face increased government scrutiny and possibly some resistance from its key partners.

Pfizer and the Japanese drug maker Eisai, currently co-market Aricept, the leading Alzheimer's drug today with worldwide sales of more than $2 billion.

But Aricept loses patent protection at the end of next year, which is one reason why Pfizer has decided to invest heavily in new Alzheimer's drug research.

Analysis
Discussion
Stock Rating
Thomas P. Au:
The deal makes sense.

Last September, Pfizer acquired worldwide commercial rights to Dimebon, an experimental Alzheimer's drug currently in phase III studies. Pfizer paid Medivation (MDVN - Get Report), Dimebon's owner, $225 million upfront for the rights, making it one of the largest drug partnership deals of 2008.

Pfizer also has four Alzheimer's drugs in its own pipeline, most of which are in the early stages of clinical trials. This includes an experimental Alzheimer's drug acquired in 2006 when Pfizer bought privately held Rinat Neuroscience.

Wyeth has 10 Alzheimer's drugs in clinical trials, both internally and through partnerships, the most important of which is with Irish drug maker Elan (ELN). The two companies share development efforts and marketing rights to bapineuzumab, which is being studied in four phase III clinical trials.

If the acquisition of Wyeth announced Monday closes as is, Pfizer would boost its Alzheimer's drug pipeline from five drugs in clinical trials to 15, including two of the four drugs currently in pivotal phase III studies. ( Eli Lilly (LLY - Get Report) and Baxter (BAX - Get Report) own the other two phase III Alzheimer's drugs.)
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PFE $32.66 0.00%

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