Insulin flop costs Pfizer $2.8 Billion

Pfizer Inc.'s decision to shelve a novel insulin inhaler and take a $2.8 billion pretax hit on the product - one of the drug industry's costliest failures ever - rids the company of an albatross. But it suggests the risks Chief Executive Jeffrey Kindler and other industry executives face as they steer makers of traditional pills more deeply into biotechnology drugs.

The world's largest drug maker by sales said it is pulling Exubera, a biotech medication that offers diabetes patients an alternative to injected insulin, after the product recorded a disappointing $12 million in sales this year, in part due to concerns among doctors about its long-term safety. Earlier the company predicted the drug would be a $2 billion-a-year product.

Drug companies often cancel drugs during human trials, and occasionally after they go on the market if there are any red flags about safety. But to pull a new drug from the market because it didn't sell - in the absence of a red flag - is almost unprecedented.


"This is one of the most stunning failures in the history of the pharmaceutical industry," said Mike Krensavage, an analyst at Raymond James & Associates. "I hope it would give Pfizer pause about buying any more assets."

During a conference call with analysts, Mr. Kindler said Thursday that he would take a hard look at how his company could have made such a mistake, which contributed to a sharp decline in the company's third-quarter earnings. "We will, of course, evaluate closely what happened here," Mr. Kindler said. He added, "When I started this job it was clear that this business needed to be fixed in a lot of ways."

Mr. Kindler added that Pfizer is canceling plans to develop a next-generation inhaler. Pfizer declined to make executives available for an interview.

The company's stock slipped a penny Thursday to $24.54 in 4 p.m. composite trading on the New York Stock Exchange.