Last week Pfizer (PFE), without any warning to its partner Nektar (NKTR), announced it would no longer manufacture or market Exubera -- a form of inhalable insulin -- and my subscribers took a hit.

Analysts applauded and an incredibly smug newsletter editor, David Kliff, even signed off saying I told you so. I guess Freud was right that not everyone finishes development of their super ego and, therefore, ends up with an infantile personality. Of course, then we have to live with them forever after.

And Pfizer was wrong.

My outfit -- ChangeWave Research -- regularly performs highly scientific and hyper-accurate surveys of many segments of the economy, including health care. And all, I repeat all, our surveys showed inhalable insulin would be a hit, wth more than 70% of new patients wanting to try an inhalble form of insulin. This same group said Byetta from Amylin would be a hit when Wall Street said it would not. And our surveys were right.

The real problem?

Right now, because it's in a total panic about the falling sales of Lipitor, an onslaught from generics aimed at its drugs coming off-patent, and a dry product pipeline ... Pfizer couldn't sell water in the desert unless it was bundled with Lipitor.

Pfizer was new to the diabetes market (and made the mistake Amylin avoided) and focused on the big guys, the leading endocrinologists and diabetes centers who already know how to manage diabetes with insulin and are not early adopters.

PFE ran ads that mentioned the word insulin once and did not go head to head with Exubera's strongpoint: no needles.

And they turned the product over to the sales force selling Lipitor, which is doing nothing but focusing on the world's largest-selling, and now one of the fastest-falling drugs.

How can a big company be so lame? The answer is in the word "big." Pfizer does not really know how to sell anything that is not an easy-to-sell, billion-dollar drug. The company is built around this sales and distribution model. Exubera is not a billion dollar product.

Anyone who thinks this is a simplistic answer has never worked for a big company. I worked for AT&T when it entered the computer market and it killed many products like Exubera that were absolutely world class and superior to competitors' offers, but it simply could not sell them due to the dynamics and focus of its sales force. Also, look at Xerox: It invented the graphical user interface, the laser printer, the mouse and Ethernet, and never sold more than a handful of these products.

Hopefully, the spirit of John Patton -- the man who invented Exubera and fought like hell for a generation to get it to market -- will prevail and Exubera (or other versions of inhalable insulin) will make it to market.

I also have a vested in interest in this as I had plans to write a book on the development of Exubera, then hit a wall with agents and publishers when the product was in limbo in the market. Maybe these events will kick start interest in the book.

And, finally, hopefully, more enlightened and better managed companies -- like Eli Lilly and Novo Nordisk, and their respective partners Alkermes and Aradigm -- will not cut and run like Pfizer did. So far, they have said they will stay the course and get products to market in 2010-2011 time frame.

More on Pfizer and the generic threat facing the company later this week.