Pfizer in 2012: Jumping Across the Patent Cliff

The year 2012 is nearing its end, and now's a good time to look at what happened throughout the year to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it deserves a spot in your portfolio.

Today, I'll look at Pfizer (NYSE: PFE  ) . As a member of the Dow Jones Industrials (DJINDICES: ^DJI  ) that sports the biggest market cap of any U.S. pharmaceutical company, Pfizer is the company behind well-known blockbuster drugs. Yet those medicines inevitably come off patent, creating temporary crises as the company scurries to get its pipeline back up to speed. Below, you'll find more on what moved shares of Pfizer this year.

Stats on Pfizer

Year-to-Date Stock Return

20.5%

Market Cap

$185 billion

1-Year Revenue Growth

(6.4%)

1-Year Net Income Growth

(15.4%)

Dividend Yield

3.5%

CAPS Rating

****

Source: S&P Capital IQ.

Why has Pfizer risen this year?
Perhaps the most surprising thing about Pfizer's performance in 2012 is that the stock has largely shrugged off what investors saw as a huge event a year ago. With blockbuster cholesterol drug Lipitor having been off patent for the entire year, Pfizer's revenue has predictably fallen sharply, even after some pretty impressive tactics to seize as many Lipitor sales as it possibly could. Even worse, the company has lost several other drugs to the patent cliff as well.

But the big news for Pfizer has been its mission to refocus its efforts on its pharmaceuticals business. Earlier this year, it sold off its infant nutrition division to Nestle, and it's also looking to spin off its animal health business. By doing so, Pfizer is eschewing the Johnson & Johnson (NYSE: JNJ  ) model of being essentially a health care conglomerate in favor of the strategy that Abbott Labs (NYSE: ABT  ) is pursuing as it, too, splits itself into drug and nondrug parts.

Pfizer has also had some pipeline successes. Last month, for instance, Pfizer and partner Bristol-Myers Squibb (NYSE: BMY  ) got approval in Europe for atrial fibrillation drug Eliquis. Even with setbacks, Pfizer has found ways to seek multiple uses for each drug, as recent studies of Lyrica in patients with epilepsy and fibromyalgia show.

Pfizer was even confident enough in its eventual success that it boosted its dividend by 10% this year. With an impressive yield and good price-appreciation, Pfizer has given investors just about everything they could have asked for so far in 2012.

To learn more about where Pfizer's going, you should get familiar with Abbott Labs and its impending split-up. It's a confusing event to understand, leaving many investors wondering what to do with these two stocks once they're separated. To help investors better understand the upcoming event, the Fool has created a premium report outlining both Abbott Labs and its AbbVie spinoff. Inside, we outline all of the must-know opportunities and risks facing both companies, so be sure to claim this two-for-one report by clicking here now.

Click here to add Pfizer to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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