What happened

Shares of Pfizer (NYSE:PFE) were sinking by 5.4% as of 3:05 p.m. EST on Tuesday after the big drugmaker announced its 2019 fourth-quarter and full-year earnings results before the market open. Pfizer reported Q4 revenue of $12.7 billion, down 9% year over year. The company's adjusted earnings also dropped to $3.1 billion, or $0.55 per share, from $3.75 billion, or $0.63 per share, in the prior-year period.

Pfizer also provided full-year 2020 guidance, projecting revenue between $48.5 billion and $50.5 billion with adjusted diluted earnings per share between $2.82 and $2.92. Both ranges were below consensus Wall Street estimates.

Gloved hand holding a test tube

Image source: Getty Images.

So what

Investors were understandably disappointed with the Q4 update, especially with the company's guidance. However, the big picture arguably looks better than in recent years.

Pfizer's main problem right now is the declining sales for blockbuster nerve-pain drug Lyrica in the face of new generic competition. Lyrica is part of the company's Upjohn unit, which Pfizer plans to spin off and merge with Mylan into a new company. 

While this move isn't a perfect solution, it will enable the "new" Pfizer to achieve much stronger growth than the company has been delivering. Pfizer projects that sales for the company remaining after the spinoff of Upjohn will increase by 8% year over year in 2020.

Now what

The smartest thing for investors to do with pharmaceutical stocks is to focus on the prospects of their current drugs and pipeline candidates instead of the performance from one quarter. After the Upjohn-Mylan transaction is complete, Pfizer will have multiple growth drivers, notably including Eliquis, Ibrance, Vyndaqel, and Xeljanz, without any major anchors weighing it down, as is the case now with Lyrica.

In addition, Pfizer's pipeline includes plenty of promising candidates. Keep your eyes especially on the company's 20-valent pneumococcal conjugate vaccine PF-06482077. Pfizer plans to report results from three phase 3 clinical studies for the vaccine in the first half of this year.