Will These Two Drugs Turn Around Losses at Pfizer?

Pfizer (NYSE: PFE  ) is counting on an experimental breast cancer drug and expanded approval of a pneumonia vaccine to halt revenue losses caused by patent expirations.  During 2014, generic competition is expected to increase even more and negatively impact revenues to the tune of $3 billion.

The company's breast cancer drug palbociclib has completed phase 2 trials, and the positive results are encouraging. Pfizer executives mentioned in a recent conference call that they were talking to the FDA regarding approval for the drug. If the company is successful in gaining approval, some analysts estimate that the company could make an additional $3 to $5 billion in sales.

In addition to the breast cancer treatment, Pfizer is also completing a phase 3 trial to prove the effectiveness of its Prevnar vaccine for patients aged 65 and older. The vaccine is one of Pfizer's top selling products, bringing in over $1 billion in worldwide sales during the fourth quarter of 2013..

FDA approvals could impact 2015 revenue
For the fourth quarter of 2013, Pfizer reported net income of $2.57 billion; the amount was down 59% from the $6.32 billion reported in the same period in 2012. Fourth quarter reported diluted EPS was $0.39, down 54% from $0.85 reported in 2012.

The negative impact on revenues was attributed in part to reduction in royalties for Enbrel and Spiriva due to expiring collaboration agreements, continued erosion in Lipitor sales due to its previous patent expiration, and lower government purchases of the vaccine Prevnar. The dissolution of the company's animal health unit also played a part in decreasing revenue. The drug approval and other changes expected by Pfizer on palbociclib can provide a much-needed boost to revenue.

Competitors working on similar breast cancer therapies
Meanwhile, competitors Novartis and Eli Lilly and Co. are working on their own formulations for breast cancer.

For Novartis' fourth quarter results, the company reported that its breast cancer drug LEE011 moved into Phase 3 clinical testing. The company showed growth of 2% in fiscal 2013's fourth quarter net sales of $15.1 billion, better results than its rival Pfizer. Novartis has several growth products that generated $3.3 billion, or 40% of the pharmaceutical division's net sales. With generic competition impacting its branded drugs Zometa/Aclasta and Diovan, the company expects fiscal 2014 growth to be in the single digits.

Eli Lilly is grappling with the U.S. patent expiration of its antidepressant drug Cymbalta. Worldwide revenues in the fourth quarter of 2013 decreased 2% to $5.8 billion, compared to the same period in 2012. Cymbalta was the main cause of total U.S. revenue dropping 6% to $3 billion. Lilly expects revenue and earnings to decline in 2014. The company anticipates new opportunities going into 2015 and beyond. Lilly currently has three drugs in its oncology segment in Phase 3 trials; one of them, ramucirumab, has showed promise for its treatment of gastric cancer and other cancerous tumors.

My Foolish conclusion
As generics continue to impact the bottom line of these companies throughout 2014, the following year may bring better results as opportunities for generic drug makers decline. If Pfizer can gain the approvals it seeks, palbociclib and Prevnar could lead to higher growth in 2015.

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