Pfizer's Big Plans

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Pfizer (NYSE: PFE) has a problem that I think any of us would love to have -- how to spend $34 billion to best effect. What's more, the company is also beginning the preparations for one of the most anticipated drug launches that I can recall. Suffice it to say, it's not a boring time to be working in management at Pfizer.

First, let's address the quarter that was. Revenue growth wasn't great (up about 3%), though adjusted earnings did beat estimates and constituted about 10% growth from last year. Lipitor sales rose once again (by 9% this time), and I'm sure folks will be paying even more attention to this as generic versions of Merck's (NYSE: MRK) Zocor and Bristol-Myers' (NYSE: BMY) Pravachol vie for patient dollars. Keep in mind that while Lipitor may be superior in some clinical respects, there's often a harsh bottom-line aspect to medicine, and these cheaper meds may grab some Lipitor business.

Pfizer also talked a bit more about its plans for spending up to $34 billion over the next couple of years. Half of this will be directed toward the betterment of the business in the form of product (and perhaps company) acquisitions. The other half will go toward share repurchases over the next two years. For a little perspective, that's equal to about 10% of today's market cap.

While Pfizer has a number of products in late-stage development, all eyes are going to be fixed on the upcoming rollout of Exubera, the company's inhaled insulin product. Not only are shareholders in Pfizer and partner Nektar (Nasdaq: NKTR) keenly interested, but so too are would-be rivals like Lilly (NYSE: LLY), Alkermes (Nasdaq: ALKS), Novo Nordisk (NYSE: NVO), and MannKind (Nasdaq: MNKD). Pfizer is certainly putting muscle behind this much-ballyhooed drug (about 2,300 sales reps), and I'm sure a lot of people are waiting to see what patient acceptance and reimbursement is like.

As I see it, you only need pretty minimal expectations for Pfizer to look like an interesting stock at today's levels. There's a generous and secure dividend, plenty of cash to recharge the pipeline, and a pretty good history of performance. Put it together, and I'd argue that these shares are at least worth some due diligence for those interested in a health-care stock idea.

For more from the Foolish medicine cabinet:

• Wyeth Wins Again
• Nektar Full of Potential, Risk
• Novartis Pays for Its Shopping Spree

Pfizer is a Motley Fool Inside Value pick. Take the newsletter for a 30-day free spin.

Merck is a Motley Fool Income Investor selection.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).