The Pennsylvania-based manufacturer of components for injectable drug delivery systems announced during the release of its second quarter results last week that it would scale back production of the Exubera devices in the third quarter of this year. Production is expected to be reduced to one shift per day.
West manufactures about 60 per cent of the powdered insulin inhaler device used in Pfizer's Exubera, which was seen as a hot contender for the treatment of diabetes, but since the drug's approval early last year, Exubera has not cracked the market as it had been anticipated to do.
West's Tech Group business segment recorded a second quarter revenue of $10.2m for the product, which was compared to the $8.7m in the prior year period.
Despite the increase in the period, the growth rate of the product continues to be slow; Pfizer noted in its second quarter results that sales were "disappointing" with just $4m of worldwide revenues recorded for the second quarter.
The slow growth led to the call from Nektar, the developer of Exubera's powdered insulin formulation, to scale back production.
The move is a reflection of the job losses announced in June by Bespak, a contract manufacturer of Exubera, following posted revenues of the product falling short of expectations.
Despite the scale back, West claimed the company would not be drastically affected by the move because of the terms of the contract with Nektar. The "cost-plus" production agreement for the product would see the costs associated with the reduction in the labor force borne by Nektar.
In the 10-Q filing West noted: "Our Tech Group segment continues to support the U.S. launch of Pfizer's Exubera Inhalation Powder . . . The initial acceptance of Exubera by health care providers and insurers has been slower than Pfizer anticipated, and as a result their inventories have increased.
"While we are committed to fulfilling current orders, we expect Pfizer's high inventory levels and slower-than-expected demand will affect our fourth quarter 2007 and full-year 2008 sales levels. We had anticipated the reduction in Exubera activity and included the estimated impact in our 2007 earnings projections. In coordination with our customer, Nektar, we have reduced production to one shift per day at our dedicated facility beginning in the third quarter of 2007. The costs for any associated severances will be reimbursed to us by Nektar."
West is now forecasting 2007 revenues for Exubera to be approximately $33m, down from the previously forecast $36m. This is despite Pfizer expecting to up its sales force later this year.
In other second quarter results, West announced the company had posted consolidated sales in the second quarter of $263.7m, a 9.8 per cent increase over the second quarter of 2006.
Second quarter sales for the Pharmaceutical System business segment were $189.3m, 13.8 per cent higher than the prior year period, with an operating profit of $39.8m in the quarter compared to $38m in the second quarter of 2006.
Second quarter sales for the Tech Group business segment were $77.7m in the quarter, slightly higher than the $76.5m reported for the same time the previous year, with an operating profit of $3.5m, compared to $4.7m in the 2006 quarter.