Pfizer Inc. and Bristol-Myers Squibb Co., facing cheaper generic competition to their bestselling drugs within four years, will team to develop medicines for diabetes and obesity.
The collaboration focuses on a family of compounds known as DGAT-1 inhibitors, which block creation and storage of fat, the New York-based companies said Monday.
Bristol will pay Pfizer $50 million to handle research until the last stage of testing, then Pfizer will pay 60% of costs and get 60% of profit from the venture.
Pfizer's cholesterol pill Lipitor, with $12.9 billion in 2006 revenue, and Bristol-Myers' blood thinner Plavix, which generated $6.3 billion, face generic competition in 2010 and 2011. Although the partnership won't result in a marketed product within that time period, it may help the companies lower research costs in a key drug development area.
"These are two companies that are losing their big drugs and need to mitigate the risk of developing new ones," said Les Funtleyder, an analyst with Miller Tabak & Co.
Pfizer bought the DGAT-1 compounds from Germany-based Bayer in 2006. The enzyme blocked by the compounds is crucial to the last step in the production of triglycerides, the chemical form of body fat.
The worldwide diabetes market is about $15 billion. At least 400 million adults were obese worldwide in 2005, according to the Geneva-based World Health Organization.
Bristol-Myers shares fell 15 cents, or less than 1%, to $29.40. Pfizer shares rose 2 cents to $24.76 and have lost 4.4% this year.