What happened
Shares of Pfizer (PFE -0.17%) gained 20.5% in 2018, according to data from S&P Global Market Intelligence, while its industry was getting hammered. The iShares U.S. Pharmaceuticals ETF tanked 8.8% last year. Here's how America's largest pharmaceutical company outperformed its peers by a mile.
So what
In a nutshell, Pfizer outdid the industry average in 2018 because investors are finally convinced this is no longer the same company that tried to buy AstraZeneca for $106 billion in 2014. For one thing, CEO Ian Read stepped down last year. But investors have other reasons to be optimistic: Smarter, smaller acquisitions since the failed bid for the British pharma are beginning to pay off, and Lyrica's patent expiration this June is the last big one until 2026.
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In 2015, the company spent $17 billion to acquire Hospira, the largest supplier of sterile injectables and owner of several high-profile biosimilars. Biosimilars have gotten off to a rocky start, to say the least, and Hospira's troubled manufacturing facilities were still frustrating the FDA and causing a shortage of certain sterile injectables across the country in the second half of 2018. Despite a totally botched execution, and warehouses full of products it can't sell, Hospira businesses kicked in $4.5 billion in sales during the first nine months of the year. If Pfizer ever gets the troubled facilities it acquired up to scratch, this segment could be enormous.
The $14 billion purchase of Medivation also showed signs of success with two big approvals last year. Xtandi earned a label expansion in January to treat all castration-resistant prostate cancer patients, not just those with tumors that have already spread. In October, Talzenna earned approval to treat a large, genetically defined group of newly diagnosed breast cancer patients.
Now what
Talzenna is an easy-to-swallow tablet that significantly outperformed standard first-line chemotherapy during clinical studies. Look for a successful launch in 2019 that could begin adding $1 billion in annual revenue to Pfizer's top line by the end of the year.
In 2019, Pfizer could also launch a sorely needed new treatment for people people who inherit a faulty transthyretin gene that ends up causing heart damage. Tafamidis could give the company another blockbuster in a separate field, which means the next round of patent cliffs might be a little more spread out than last time.
Check out the latest Pfizer earnings call transcript.
