As with a number of its pharmaceutical peers, Pfizer (PFE -0.12%) is struggling to overcome the loss of patents on many of its key blockbuster drugs. The company continues to invest in its pipeline and, in the long run, this is the most logical (and successful) means of arresting the decline in sales and ensuring the company achieves impressive levels of top-line growth.

However, Pfizer is seeking to combat the loss of one of its patents in a different manner. While it may not completely stop the decline in sales, it could go some way to improving the current outlook for the company and also buy it a little more time to find a replacement blockbuster.

Over-the-counter statin
Lipitor is a blockbuster cholesterol pill (owned by Pfizer) whose annual sales have fallen from more than $10 billion in 2010 to just above $2 billion in 2013. That's a fall of around 80% in just three years, and it highlights the hugely negative impact that generics can have on a blockbuster drug like Lipitor.

As well as seeking to replace Lipitor with another blockbuster drug, Pfizer is also pushing ahead with efforts to sell Lipitor over the counter. Pfizer recently commenced a clinical trial to see if consumers taking an over-the-counter Lipitor follow the instructions on the label and get their own blood tests to see if the drug is lowering their cholesterol.

Of course, doubts remain as to whether an over-the-counter version of Lipitor could ever be approved. Recent changes in clinical guidelines for treating people with cholesterol-reducing statins place greater weight on more complex assessments of general health factors (such as muscle weakness that can be caused by statins) than simple targets. However, if the over-the-counter version of Lipitor is passed, it is estimated that sales of more than $1 billion per year could be generated. Although this is substantially lower than the $10 billion from 2010, it is better than sales declining to lower than $1 billion as a result of continued generic pressure.

Pfizer is not the only company that has attempted to produce an over-the-counter version of a blockbuster drug. Merck (MRK -0.11%), for instance, had its proposals to produce an over-the-counter version of the statin Mevacor rejected by the FDA because of concerns that consumers couldn't correctly monitor the change in cholesterol levels and other potential side effects. Pfizer says that it will use "new and creative ways" to communicate usage instructions to overcome this potential hurdle.

Drug developments elsewhere
As with Pfizer, Merck is facing the challenge of countering the threat from generic competition. However, 2014 has seen positive developments surrounding its PD-1 drug, MK-3475. Indeed, Merck announced plans to partner with Pfizer and two other major biopharma companies (Amgen and Incyte) in January, with the group all set to combine MK-3475 with other drugs in clinical trials.

Despite this, it appears as though Bristol-Myers Squibb's (BMY 0.96%) competitor to MK-3475, nivolumab, could be a thorn in its side. Indeed, research released just this week showed that 62% of patients taking the immunotherapy were alive after one year and 43% were still alive after taking the drug for two years. The results seem to be positive, and nivolumab results could be a potential catalyst for the company in 2014.

Of course, Pfizer's attempts to sell an over-the-counter version of its Lipitor statin is not a means of replacing the blockbuster drug. Clearly, $1 billion of potential annual revenue from the over-the-counter drug (if it is approved) is not going to replace the $8 billion of annual revenue lost as a result of generic competition. To replace this, Pfizer will need to continue to develop its drug pipeline, and on this front it has enjoyed considerable success in recent months, with its breast cancer drug, palbociclib, meeting its goals for a midstage study. It is estimated that the drug could eventually generate more than $3 billion in annual sales, if approved.

An effective combination
So, Pfizer seems to be responding logically to the threat of generic competition resulting from patent expiration. Not only is it continuing to develop its drug pipeline and seek replacements for former blockbuster drugs, it is also seeking to mitigate the impact of generic drugs through developing an over-the-counter offering of Lipitor. Doing so could buy it some extra time (and revenue) and help the company to more effectively counter its patent woes.