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Fate of Pharmacia s Diagnostics Division May Affect Future of Pharmacogenomics at Pfizer

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The extent of Pfizer’s pharmacogenomics effort may be decided in the coming weeks as the drug giant moves closer to acquiring Pharmacia.

In fact, the growth of pharmacogenomics research at Pfizer may hinge on its interest in Pharmacia’s modest diagnostics business. People close to Pharmacia say the smaller company “wants to build a bridge” with Pfizer to preserve some of the diagnostics unit, “and perhaps the bridge will be built through pharmacogenomics.”

But the way things look now, Pfizer may want to break up the business. “Pfizer really doesn’t know what to do with it. It’s a very tiny piece,” said Jorge Leon, president of Leomics Consulting, which has been helping Pharmacia devise a strategy to convince its suitor to keep the unit.

From Pharmacia’s perspective, its diagnostics unit is an important asset not only because it can help in the preclinical selection of patients, but because diagnostic discovery can also uncover functional therapeutic leads. “But Pfizer probably will want to divest it as soon as possible,” Leon said.

Neither Pfizer nor Pharmacia would comment on current or future pharmacogenomics plans.

Truth is, the issue of pharmacogenomics got lost in all the noise that accompanied Pfizer’s acquisition news last July. Genomics tool vendors of every persuasion began rubbing their palms just thinking about the potential buying power of an even stronger Pfizer: The deal, worth an estimated $60 billion in stock, will give Pfizer the keys to a $7 billion R&D war chest and nearly $50 billion in annual revenues.

Pharmacogenomics-tool providers in particular had every right to feel optimistic: Pfizer co-founded the SNP Consortium and is the second-largest pharmacogenomics player in the US behind GlaxoSmithKline. In a recent two-day pharmacogenomics conference in Philadelphia, Pfizer was one of only three drug companies to present. (The other two were Pharmacia and Bayer.)

Already the biggest drug maker in the US, Pfizer will have 120 new chemical entities in development after the Pharmacia deal closes over the next two months, and said it plans to file 20 NDAs over the next five years.

So from a strictly economic perspective, Pharmacia’s diagnostics business can be considered expendable. The unit, which focuses on ho-hum allergy testing, contributes around $300 million in revenues each year and is “very, very profitable, very healthy, and growing very nicely” at about 10 percent per year, said Leon. “To Pfizer that amount is a drop in the ocean,” he said. “Pfizer’s like, ‘Who cares?’”

Around 30 years ago many pharma firms opened diagnostics businesses “because that was seen as a nice way to get into chemistry and patient testing and clinical trials,” according to Leon. But when high-throughput chemical screening came around and revolutionized the pharma landscape many players turned their backs on diagnostics. It suddenly became small game.

But today, diagnostics is experiencing a rebirth. “I think now pharmaceutical companies are taking a closer look at diagnostics, and it is acquiring tremendous relevance as an asset not just through preclinical selection of patients but also for the diagnostic discovery that will drive the discovery of functional therapeutic leads,” Leon explained. And later, in the marketing phase, diagnostics will perform the pharmacogenomics tests “that will become critical to prescribe drugs and help drive market share.”

In fact, a recent report from consulting firm Front Line said the worldwide pharmacogenomics market will swell 20 percent to more than $1.6 billion by 2007, and that diagnostics will account for 29 percent of that growth.

“I would predict [Pfizer] will seriously, seriously consider enhancing [its] pharmacogenomics efforts though the acquisition because of the link to diagnostics,” Leon speculated. “I would suspect that somebody there would see this opportunity.

“They’re really doing a tremendous amount of work in pharmacogenomics, and here suddenly they have a diagnostics company in their facilities,” he said. “The connection is there to be made.”

— KL

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