Last week, the pharmaceutical giant Pfizer broke ground on a $50-million expansion to its pilot plant facility for biologics. Though that's small change in Pfizer's multibillion world, it reflects a big change at the company.

The 50,000-square foot expansion will roughly double the size of Pfizer's Chesterfield, Missouri-based biologics pilot plant by 2009, a reflection of the growing need the traditional pharmaceutical company will have to produce the protein-based therapies for clinical trials as it progresses them toward the market. Pfizer originally acquired the Chesterfield site in 2003 from Pharmacia, which provided it with both expertise and capacity in biologics, which are large and complex molecules derived from living organisms.

Pfizer does not currently have any significant biotechnology products on the market. It does sell recombinant forms of human growth hormone it acquired when it purchased Pharmacia. It also markets Exubra, an inhaled version of insulin it launched on the market last year through its partnership with Nektar. The company's pipeline, though, now includes 14 biologics including vaccines and antibodies designed to treat cancer, rheumatoid arthritis, influenza, and other serious medical conditions. It said it is making "significant internal and external investments to further expand its presence in biologics," and expects these products to eventually make up 20 percent of its portfolio.

"Pfizer used to be known as a small molecule company and we're now saying openly that we're not just a small molecule company," said Stephen Lederer, a spokesman for Pfizer. "We're pursuing targets in both areas."

Embracing Biologics
The ground breaking in Missouri follows Pfizer's 2006 acquisitions of the biotechnology company Rinat Neuroscience and the DNA-based vaccine company PowderMed in 2006. It came a week before Xoma announced that Pfizer paid it $30 million in up-front payments to license technology to discover and produce monoclonal antibodies. Pfizer's comes as the world's largest pharmaceutical company is facing the loss of billions of dollar in revenue from drugs that will lose their patent protection by 2012, including its best selling cholesterol-fighting statin Lipitor. The $12.1-billion drug comes off patent in 2011.

Analyst say Pfizer's push reflects a greater move on the part of big pharma to embrace biologics as these companies recognize the ability of these products to command higher prices, face fewer reimbursement pressures, and demonstrate the ability to act on interesting targets for disease where small molecule drugs cannot.

"Clearly Pfizer, like everyone else, is making a concerted effort to advance its capabilities in the area," said Joseph Tooley, an analyst at A.G. Edwards & Sons. "The collective pipeline of the industry is not as productive as it once was and the next horizon and new frontier in life sciences research is in biologic therapies."

Bye Bye Blockbusters
Tooley said it also reflects a move on the part of big pharma away from its traditional hunt for blockbusters toward more "specialized, personalized and tailored" treatments for patients.

Others, though, say Pfizer's increasingly aggressiveness in the area of biologics is a reflection that there are opportunities it has missed. So-called targeted therapeutics, once thought to serve only niche markets, have demonstrated the ability to become blockbusters as drugs such as Genentech's Rituxan, originally developed to treat cancer, finds multiple markets as a treatment for autoimmune diseases.

"I don't think any big pharma is ever going to turn down a blockbuster, but it is an acknowledgement that others have succeeded where they haven't had a presence," said Les Funtleyder, a healthcare strategist with the institutional trading firm Miller Taback. I don't know that it's a change in business model so much as an expansion of the areas that they would target."

John McCamant, editor of the Medical Technology Stock Letter said big pharma's efforts to move into biologics is mirrored by large biotechnology companies such as Genentech expanding their capabilities to discover, develop and manufacture small molecule drugs. He said small molecule drugs remain attractive because of their relative ease of producing and using, but are not always able to interact with a desired target.

"These companies are too big to avoid any potential way to get onto the drug market at this point," he said. "Whether you are a Pfizer or Genentech, you've got to use every trick that you've got."