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Pfizer’s success only partially due to Viagra

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With longtime pharmaceutical industry leader Merck & Co. slipping a bit due to expiring patents on some popular drugs, Pfizer is easing into the position of premier U.S. drug company.

Pfizer has little exposure to drugs losing patent protection and an unsurpassed drug pipeline that's growing faster than that of rivals, causing Wall Street analysts to predict it will outpace Merck's earnings the next five years.And then, of course, there's Viagra. The dramatic introduction of this pill to treat male impotence has boosted Pfizer's name recognition among the public in unaided tests from a lowly 8 percent to nearly 34 percent. From the cover of Time magazine to an endorsement from former presidential candidate Bob Dole, Viagra is what's happening these days.

William Steere Jr., Pfizer's trim and dapper 61-year-old chairman and chief executive officer, hasn't seen anything like it in his time at the company since joining it as a medical service representative in 1959. Steere says he hears Jay Leno's Viagra jokes on "The Tonight Show" before he goes to bed.

Regarding the six deaths of Viagra users, the company is emphasizing to emergency rooms and physicians the fact that Viagra's label warns against combining the drug with commonly used heart-disease medicines containing nitrate-type chemicals, such as nitroglycerin. Both the Food and Drug Administration and Pfizer maintain the drug is safe.

"Our worst fear, which is the fear of anyone introducing a new drug, is that there will be some rare but serious side effect," said Steere. "We haven't seen that, the only concern being the low chance of having a heart attack during sex."

Steere pointed to a report by Merrill Lynch analyst Steven Tighe that points out that six deaths from a drug prescribed to a million men thus far in the United States, as is the case with Viagra, would extrapolate to 72 deaths annually. That's not alarming, it concludes, given that the annual male death rate from cardiovascular disease is as high as 3,300 per million, as estimated by the American Heart Association.

Merrill Lynch, who rates Pfizer stock a short- and long-term buy, surveyed 50 urologists who predicted a 95 percent compounded annual growth rate in the number of patients treated with Viagra over the next three years.

In an interview for my upcoming book "Global Investing 1999: The 50 Best Companies in the World to Invest In," to be released in January by Warner Books, Steere criticized the overwhelming global move to merge businesses, talked about worldwide marketing and expressed his displeasure over drug piracy around the world.

"Our company is becoming dominant because we didn't get sidetracked by mergers, which helped us to stay focused, and because other people had bad luck because of expiring patents," related Steere, whose office facing out over New York's East River has a large wall sculpture depicting all the world's continents.

"We're known for our marketing and our ability to `tease out' the differences in our products, which adds up to a big difference in everyone's perception of them." As a lucrative world business, pharmaceuticals are now experiencing pervasive thefts of patents, Steere noted. Companies in India have been sending out bulk supplies of a Viagra-type drug, Argentina has a reputation as a big pirate due to its lack of patent laws. Egypt is also involved in unauthorized manufacture and sales, he said.

"In the 1990s, a company must have focus, because there's never been a time when the competition has been more fierce," declared Steere, who is looking to sell the company's medical devices business because it's not a perfect fit with its pharmaceuticals, consumer products and veterinary medicine medicines. "You need a critical mass in this business, but after that, size isn't that important."

He noted that despite the fact that his company's acquisition of Smithkline Beecham's animal business was a success, the first year it took a lot of time to draw together two very different corporate cultures. In most really big mergers, he believes, too much time is wasted with everyone worrying about their jobs, their offices and their futures. That keeps everyone from getting their more important duties done.

"If we had a failed pipeline and low growth, we'd look for a partner, but now is certainly not the time for us to do so," Steere concluded with a hand flourish and a shrug, dismissing the thought that his company is anywhere but in the catbird's seat.