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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 737  
Subject: Legend of Pfizer Date: 8/14/2011 7:30 PM
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“The Legend of Pfizer,” by Jeffrey L. Rodengren, Write Stuff Syndicate Inc., 1999. This 160 p hardback tells the story of Pfizer Corporation from its beginnings as a fine chemical manufacturer in 1849, in the Williamsburg section of Brooklyn, NY. Its first product was candied santonin, a treatment for intestinal worms. Borax, camphor, iodine, tartaric acid and citric acid were early products. The company prospered as a reliable supplier of medicines–including morphine, chloroform, and mercurials-- in the Civil War. Pfizer pioneered a fermentation process for citric acid (rather than processing citrus concentrates) in 1919. That fermentation experience provided an entre to penicillin manufacture during World War II. Pfizer became the leading supplier of penicillin.

In 1906, Pfizer formed Chlorine Products Co to manufacture chloroform by chlorination of acetone in Niagara Falls, NY. Dow Chemical developed a more economical process causing Pfizer to discontinue manufacture and buy from Dow.

Citric acid by fermentation came out of World War I shortages caused by embargo with Europe. James Curie of the US Dept of Agriculture brought the company the idea of citric acid by fermentation of sugar (and later molasses) when he joined in 1917. Years of research were needed to develop a practical deep tank fermentation. Commercial production began in 1923, and was expanded in 1928. Pfizer pioneered deep tank fermentation (sterile air bubbled through the tank agitator) as part of its citric acid expansion program.

In 1935, Pfizer began production of vitamin C (ascorbic acid) by fermentation of sorbose using a process licensed from Abbott and the University of Basel. Riboflavin (vitamin B-2) followed in 1938; then B-12, and vitamin A. Pfizer became the leader in the manufacture of vitamins.

Pfizer faced the worst of the Great Depression in 1932. The company was able to avoid layoffs thanks to Emile Pfizer who contributed $250K to keep employees working at least 3 days per week. Pfizer also instituted a 10% salary reduction in June of that year.

In 1946, Pfizer built the world's largest citric acid plant at a surplus submarine shipyard acquired from the US govt in Groton, CT. A research lab followed on the site in 1960. Pfizer went public in 1942.

The story of penicillin is well told. In 1928, Alexander Fleming first noticed that penicillium mold inhibited the growth of bacteria, but penicillin was unstable and difficult to isolate. Ernest
Chain and Howard Florey at Oxford found that penicillin killed numerous bacteria in test animals. Their work, published in Lancet in August, 1940, created a sensation. Dr. Martin Dawson at Columbia University established that the agent reduced infectious organisms in humans. His work was presented at the American Society of Clinical Investigation at Atlantic City in May, 1941. Pfizer as well as Merck and Squibb soon began research, but Pfizer focused on producing penicillin by fermentation while Merck and Squibb hoped that a synthesis of the small molecule would be practical once its structure was known.

Yields were low and processing difficult in surface fermentation, and improvements were difficult, but finally Pfizer management took a chance and built a deep-tank fermentation plant, which proved remarkably successful. The govt authorized 19 other companies to use the Pfizer deep tank process. Pfizer produced 90% of the penicillin available on D-Day. After the war, competition increased and pricing fell.

Pfizer began manufacture of its second antibiotic, streptomycin, in 1945. Initially developed to fight diseases resistant to penicillin, such as typhoid fever, treatment of urinary tract infections drove demand. Again competitors had participated in govt research, and prices fell sharply. In December, 1947, a former US Army Corps of Engineers site in Vigo Co., IN, near Terre Haute, was acquired and converted to produce streptomycin. In 1952, an agricultural research division was established on the Vigo site. The company also undertook an extensive soil sampling program–testing 135,000 samples–to find new antibiotics. Over 200 antibiotic containing molds were found. In 1950, the company introduced terramycin, a broad spectrum antibiotic, the first pharmaceutical product sold in the US under the Pfizer name.

The decision to become a pharmaceutical company and sell directly to pharmacies was a major one. Previously the company had been a fine chemical company who sold wholesale to pharmaceutical companies. Pfizer expertise in research and fermentation had produced the products, but others downstream netted most of the profits. Terramycin proved very successful and drove the transition. International sales soon followed.

The agricultural research program looked at vitamins and antibiotics in agriculture. The first product, introduced in 1950, was Bi-Con, a feed additive which combined vitamin B-12 and streptomycin fermentation residue. Terramycin products soon followed.

In the 1950s, the Federal Trade Commission accused six companies including Pfizer of price fixing in antibiotics. The case required years to resolve. The suit especially focused on Pfizer and American Cyanamid who together had 38% market share. Cyanamid's Lederle had a related tetracycline antibiotic, aureomycin, and had fought each other in patent interferences cases on some derivatives resulting in a cross licensing agreement.. Senate hearings followed in which Sen. Kefauver threatened price controls on drugs due to excessive margins. That effort fizzled.

Pfizer continued research efforts but after terramycin, came a bit of a dry spell. Vibramycin introduced in 1967 was the next big product. In 1958, Pfizer undertook bulk production of the Salk polio vaccine and later of the Sabin vaccine. In 1976, Minipress, in1982, Feldene antiinflammatory; in 1980, Procardia, 1992, Norvasc, 1992, Zoloft, 1992, Zithromax, and in 1998, Viagra.

In 1965, management guru Peter Drucker was brought in to advise. He concluded the company tended to see itself as a manufacturer, but in reality its product was technology. Drug discovery became the focus. Zithromax, Feldene, Norvasc, and Zoloft resulted from the new focus.

Acquisitions played a role too. One was Howmedica, maker of hip replacements in 1972. Another was Shiley, in 1979, a maker of heart valves.

The book ends before the most recent round of mergers and acquisitions, but several “co-promotions” are mentioned including Celebrex (GD Searle Div of Monsanto), Lipitor (Warner Lambert), Aricept (Eisai), and inhalable insulin (Hoechst Marion Roussel/Inhale Therapeutic Systems, Inc.). Acquisitions included Warner Lambert in 2000, Pharmacia (including GD Searle and Celebrex) in 2003, and Wyeth in 2009. The merger era resulted in a few behemoths. One of those is Pfizer.

This book is a nicely done overview of Pfizer to 1999. It contains numerous photographs, and tells the story in a non-technical way. It mentions the pipeline problem faced by the drug industry–limited product lifetime caused by the expiration of patents and the entry of generics. Hence, success in drug discovery is necessary to survive. There is no mention of opportunities posed by the human genome or combinatorial chemistry. The book also does not describe trends toward allowing small start-up companies to do basic drug discovery and then investing once the certain milestones have been achieved.

Employees, shareholders, and others interested in Pfizer will find this an informative introduction, a bit out of date, but loaded with the earlier history. Index.
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