Insulin drug climbdown costs Pfizer $2.8bn

Pfizer, the world's largest drug maker, completed an embarrassing climbdown yesterday by ending its investment in the inhaled insulin drug, Exubera, taking a $2.8bn (£1.4bn) charge on its third-quarter profits as a result.

The news was also bad for the UK drug delivery group Consort Medical, formerly known as Bespak, as it was one of two manufacturers contracted to produce the inhalers. Consort made 160 people redundant from its Milton Keynes plant in June on the back of drastically reduced sales forecasts for the drug.

Consort was expected to generate only 10 per cent of group profits from Exubera in 2009, and the news sent its shares 55p lower by the close, a fall of 7.8 per cent. The company told investors that it expected the decision from Pfizer to result in a £2m reduction in next year's pre-tax profits, with no impact on current year forecasts, adding that it remains confident of achieving its long-term goals.

Despite paying the French group Sanofi Aventis $1.4bn to license Exubera, Pfizer managed just $4m in sales in the second quarter. At one point, Pfizer had great hopes for the drug, forecasting sales of up to $2bn per year for Exubera as recently as January.

But the drug has failed to convince doctors and pat-ients, many of whom were concerned about inhaling a powder. Exubera was rejected for use in the National Health Service because government advisers believed the drug offered little improvement on injected insulin treatments already available to diabetics and that its cost, £1,100 per patient per year, was prohibitive.

The $2.8bn hit on Pfizer's third-quarter results sent its net income down to $761m, more than 77 per cent lower than the $3.36bn it made in the same period of 2006.