TRENTON, N.J. (AP) – Pfizer Inc. is shifting its research focus to diseases that have high potential for big profits and for treatment improvements, such as cancer and Alzheimer’s disease.

The world’s biggest drugmaker also is ending new research on conditions from obesity to heart disease, but research on drugs already in late-stage human testing will continue, spokeswoman Liz Power said Tuesday.

Experts said such tweaking of research strategy is standard in the pharmaceutical industry – and needed periodically as new competition and other factors affect revenue.

Pfizer expects to spend up to $7.5 billion on research and development this year, a huge budget for the industry.

“Even though it is very large, it is finite,” Power said.

Like most of its competitors, Pfizer has been reorganizing and cutting costs to deal with looming generic competition and a lack of blockbusters in its pipeline.

Power said Pfizer needs to focus research, particularly costly late-stage human testing, on areas where patient needs aren’t met by existing treatments, where there’s a sizable commercial market and where the company has expertise and a good chance for scientific success.

The New York-based company has identified six high-priority areas for future research: cancer, pain, inflammation, diabetes, Alzheimer’s disease and schizophrenia.

“They’re basically looking at the largest-margin, largest-market indications,” said analyst Steve Brozak of WBB Securities.

Pfizer has increasingly been investing in cancer research and probably now will move into treatments for pain and inflammation that work through different mechanisms than its blockbuster Celebrex, he said. The focus on diabetes likely will be on the type linked to the Western obesity epidemic, and Alzheimer’s also will be a huge market, given the aging population. And there are “no satisfactory cures whatsoever” for schizophrenia, Brozak added.

Areas where the company is ending research, much of it still in early stages, include anemia, bone health, gastrointestinal disorders, muscle diseases, obesity and some approaches to osteoarthritis. The company also is dropping early research in four areas of cardiac disease: hardening of the arteries, high cholesterol, heart failure and peripheral arterial disease.

Deutsche Bank pharmaceuticals analyst Barbara Ryan noted Pfizer has been among the top few drug companies that develop heart drugsa huge market given the aging population in developed countries.

Pfizer markets the world’s top-selling drug, cholesterol fighter Lipitor, which generates about $12 billion a year in revenue. However, it will lose its U.S. patent late in 2011, and there’s already a generic version of a cholesterol drug from the same class, Zocor.

Many heart drugs in other categories also have significant generic competition that is eroding sales of brand-name medicines.

“We have a large number of highly effective (cardiovascular) drugs, and it’s very difficult to demonstrate a big improvement above and beyond what exists, and that’s really what the FDA and payers demand,” said Ryan.

Meanwhile, Pfizer on Tuesday gave its semiannual update for investors on its research pipeline. It now has 114 human studies of drugs in process and said that since its last update in February, the number in final human testing has grown from 16 to 25 – 19 of them in its high-priority areas. Testing of 13 drugs, including four for rheumatoid arthritis, has been stopped since February.

Biotechnology drugs, which generally are extremely profitable and so far have been insulated from generic competition by their complexity, will be a big part of that pipeline, particularly in cancer research.

In afternoon trading, Pfizer shares were up 41 cents, or 2.3 percent, to $18.06, near their 52-week low and at about the same level where they traded in the summer of 1997. The broader market, though, was up about 4 percent, recovering from Monday’s massive selloff.

AP-ES-09-30-08 1516EDT

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