Nov. 26, 2007 (Investor's Business Daily delivered by Newstex) --
Pop quiz: Name the top three biotech companies by sales.
A no-brainer, right? Amgen (NASDAQ:AMGN)
And next up is ... Wyeth (NYSE:WYE PR) (NYSE:WYE)
Though best known as one of a handful of U.S.-based big pharma companies, Wyeth actually generates about $7 billion in annual sales from biotech products, says Cavan Redmond, executive vice president and general manager of Wyeth's biopharma business unit.
That's more than twice the sales of the next big biotech, Genzyme (NASDAQ:GENZ)
Wyeth's biologics-based products account for 35% of total sales. Its biggest seller is Enbrel, which it markets with Amgen, for various forms of arthritis, ankylosing spondilitis and psoriasis.
Biologic drugs use proteins rather than chemicals to fight disease.
Wyeth began transforming itself more than a decade ago, when it was known as American Home Products. Redmond's goal is to push biotech sales to half of the total.
He spoke with IBD.
IBD: How did Wyeth start meshing conventional pharmaceuticals and biotech?
Redmond: We acquired a company called Genetics Institute in 1996. From a business standpoint 20hat gave us an in-house biotech.
We already had partial ownership of Immunex, which was purchased by Amgen in 2002.
We currently have a relationship with Amgen for Enbrel (to treat rheumatoid arthritis). We have rights outside North America.
Our biotech revenues come from Enbrel and two hemophilia products. And we have the world's largest biotech vaccine, Prevnar, for pneumococcal (bacterial) diseases.
IBD: What about creating new biotech science?
Redmond: In the mid-'90s, many small-molecule (chemically based) drugs, including our own, were growing rapidly and doing well.
Our company was looking at new ways to attack different diseases. We had a huge investment in arthritis pain medication.
Originally biotech was just seen as a tool -- another way to go after diseases. You can keep going after the pain for arthritis, but could you affect the underlying disease? Proteins go after that underlying disease.
We had a group in research and development and the executive wing who looked at that as a good area to invest in. It was new and exciting. They were able to place multiple bets.
IBD: What kind of bets?
Redmond: In the last seven years we spent over $3 billion on manufacturing capabilities, in and outside of the U.S.
Historically when you build biotechnology plants, you need to build early in the product development life cycle.
That's very expensive. If the drug fails, you end up with an empty, expensive facility.
But if you don't build enough capacity, patient demand outstrips your ability to manufacture, and you can't provide the market with enough product.
We took a different approach. Our goal is to have multiple products in the same development area simultaneously and manufacture them in a pilot facility.
When a product gets through the regulatory process, we apply that product into our current infrastructure. We don't have to keep building every time we have a new product.
We created a development facility in Andover, Mass. It does all of our work for products in the R&D stage. It's a standard platform that can be applied to any of our manufacturing plants. If it were a computer, this would be the operating system.
If I get one or 10 proteins, we have a way to manufacture them and get them in the clinic for trials, without constantly expanding and contracting my manufacturing. As a result, a third of our R&D pipeline is in biotechnology.
IBD: What is your plan for product development?
Redmond: I'd like to see us take individual diseases and apply all three of our technologies to them simultaneously.
In the war on Alzheimer's we have 11 different projects in R&D. Some are small molecules, some proteins and some vaccines.
The amount of technology transfer from my biotechnology unit to the small-molecule group, and vice-versa, is what's allowing us to push the science and manage our risk differently from other companies.
It takes years. It takes a major cultural shift. Pharma companies that are now going into biotechnology will take years to integrate it into their core businesses.
IBD: What's next out of your integrated pipeline?
Redmond: Prevnar 13 (to prevent pneumococcus). We believe it's a significant improvement over our current Prevnar because it will go after more strains of pneumococcal disease. It has the potential to deal with pneumococcal disease in children as well as adults. Phase three trials are underway for both.
We've been working on it for a number of years. The product is slotted for 2010. Prevnar will soon be the first vaccine with $2 billion in annual sales. We anticipate Prevnar 13 to have comparable success.
Newstex ID: IBD-0001-21196933
Originally published in the November 26, 2007 version of Investor's Business Daily.
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