Pfizer (NYSE: PFE ) , the world's largest drug maker, is having a very interesting week. The company has authorized a $10 billion share buyback program after losing about 15% of market in the face of heavy competition from generic drug makers.
Pfizer lost U.S. patent protection for its blockbuster cholesterol pill, Lipitor, at the end of last month. It quickly gained a rival from Ranbaxy Laboratories, which was cleared by U.S. regulators to sell copies of the drug.
The drug earned Pfizer $10.7 billion in revenue in 2010. But they can wave those figures goodbye: The first week the generic version was available (ending December 2) it took away 15% of Lipitor's market.
"Copycat Lipitor may generate as much as $650 million for Ranbaxy in its first 180 days of sale, according to the median estimate of five Mumbai-based analysts surveyed by Bloomberg."
Pfizer took another hit when WellPoint (NYSE: WLP ) , the largest insurer by enrollment, said it will support use of a generic version by its members by assigning a lower co-pay to the copycat than to the brand drug (via Bloomberg).
Buybacks and dividends
According to a company statement, under the new program Pfizer plans to repurchase about $5 billion in stock in 2012. The rest will come from 2013 and beyond.
In addition to a $10 billion share-buyback program, Pfizer will boost quarterly dividends from $0.20 to $0.22 per share. "The dividend increase and new share repurchase program are a testament to our continued commitment to enhancing shareholder value and to our continued confidence in the business."
Investing ideas
Interested to know what informed investors are thinking about the drug manufacturers industry?
We ran a screen on the major drug manufacturers industry for stocks seeing the most significant decreases in shares shorted month-over-month, indicating that short sellers are more bullish about these names than before.
All companies on the list below have market caps above $50 million, and a share price above $1.
Do you agree with short-sellers' optimism for these names? Use this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Bristol-Myers Squibb (NYSE: BMY ) : Develops, and delivers innovative medicines that help patients prevail over serious diseases. Market cap of $56.22B. Shares shorted have decreased from 32.59M to 28.62M month-over-month, a change representing 0.23% of the company's 1.69B share float.
2. Endocyte (Nasdaq: ECYT ) : Engages in developing targeted therapies for the treatment of cancer and inflammatory diseases. Market cap of $367.76M. Shares shorted have decreased from 817.21K to 766.20K month-over-month, a change representing 0.16% of the company's 31.70M share float.
3. Impax Laboratories (Nasdaq: IPXL ) : Engages in the development, manufacture, and marketing of bioequivalent pharmaceutical products. Market cap of $1.26B. Shares shorted have decreased from 4.05M to 3.93M month-over-month, a change representing 0.20% of the company's 59.90M share float.
4. Pfizer: Pfizer, a biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Market cap of $156.74B. Shares shorted have decreased from 69.28M to 62.50M month-over-month, a change representing 0.09% of the company's 7.68B share float.
5. Rigel Pharmaceuticals (Nasdaq: RIGL ) : Engages in the discovery and development of small-molecule drugs for the treatment of inflammatory/autoimmune diseases, as well as for certain cancers and metabolic diseases. Market cap of $527.18M. Shares shorted have decreased from 4.99M to 4.89M month-over-month, a change representing 0.18% of the company's 57.08M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Short data sourced from Yahoo! Finance.
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