What happened

Pharmaceutical mega-titan Pfizer (NYSE:PFE) lost an eye-catching 10.2% of its value over the course of 2019, according to data from S&P Global Market Intelligence. Investors avoided this top drugmaker last year for two major reasons.

First, the drugmaker's decision to spin off its generic drug business, known as Upjohn, and merge it with Mylan, was not a big hit with Wall Street. Although this strategic move will remove a key overhang in the form of ongoing patent losses, it will also significantly reduce the company's free cash flow, lessening its firepower for value-creating business development transactions.

Second, Pfizer's top-selling pain medication, Lyrica, officially began facing generic competition in the middle of 2019. Unsurprisingly, its sales plummeted during the third quarter.  

A man with a look of shock on his face standing in front of a graph showing a downward trend.

Image Source: Getty Images.

So what

Wall Street rarely likes major shake-ups, especially when they are undertaken by industry stalwarts like Pfizer. Pfizer, however, clearly needed to change course. Despite the drugmaker's successful pivot to oncology as a main growth driver, it simply hasn't been able to generate healthy levels of top-line growth on a consistent basis due to an avalanche of patent expiries. The spin-off of its generic drug business should immediately remedy that fundamental problem. In fact, management expects the company's revenues to rise by an average of 6% annually for the period from 2021 through 2025.    

Now what

Is Pfizer's stock worth buying after last year's double-digit pullback? The answer is a resounding yes. The fact of the matter is that this pharmaceutical giant should be a far more compelling growth play than it has been in years past, thanks to management's decision to finally execute a much-needed split. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.