The big news regarding Pfizer (NYSE:PFE) these days centers on its search for a COVID-19 vaccine, but that just obscures more important news for investors. This solid, 171-year-old, diversified pharmaceutical company with more than 88,000 employees looks to have a nice surprise in store for investors this year -- and it's still priced reasonably.

Of course, coming up with a coronavirus vaccine would be huge

It seems as if every pharmaceutical company is working on a COVID-19 vaccine these days, and that includes New York City-based Pfizer.

Doctor holding stethoscope with bubbles of medical logos.


Pfizer is collaborating with German pharmaceutical company BioNTech (NASDAQ:BNTX) on four vaccine possibilities. Its study will enroll up to 360 human test subjects, and the company said that if any of the treatments are successful, it could begin producing millions of doses of the vaccine this fall. 

There are a lot of ifs, however. None of the vaccines may be successful. Another company might come up with a better vaccine sooner. But it doesn't matter. Pfizer is a huge company with a remarkable stable of drugs, and its pipeline continues to produce.

First the bad news

Its first-quarter numbers, reported April 28, showed a 8% drop in revenue and a 12% slide in net income compared with the same quarter in 2019. Pfizer's regular pharma division actually saw an 11% rise in revenue, but its Upjohn division, which includes some of its older drugs, saw a 37% decline, some of which came from generic competition to nerve pain drug Lyrica and erectile dysfunction drug Viagra. 

Here's where it gets interesting

However, plans are in the works to combine Upjohn with Mylan (NASDAQ:MYL) to form a new company, which would be spun off from Pfizer sometime this summer. Investors who hold Pfizer shares will get 0.12 shares of the new company, Viatris, for every Pfizer share they own. Viatris would be the largest generic pharmaceuticals company in the world; meanwhile, Pfizer's freedom from Upjohn will position it for for stronger earnings growth, with sales of its branded drugs not brought down by declining sales on its generic drugs or trademark drugs facing generic price pressure. It already has several blockbuster drugs, such as Vyndaqel, Ibrance, Xeljanz, Eliquis and Prevnar, that won't face significant patent losses for five years.

On Thursday, the company announced positive results from a second phase 3 study on pneumococcal pneumonia vaccine (NCT03828617). On Friday, it said it was proceeding with a Phase 1b clinical study on PF-06939926, a gene therapy for boys with Duchenne muscular dystrophy that could prove a potential blockbuster drug. 

"Based on the encouraging preliminary efficacy data and manageable safety events from our phase 1b study, we believe we may have a potential breakthrough therapy for boys with Duchenne muscular dystrophy, a devastating disease for which there remains a significant medical need," said Seng Cheng, the chief scientific officer in Pfizer's Rare Disease Research Unit. 

This presents an opportunity

Pfizer has 10 consecutive years of dividend growth and an annualized dividend of $1.52 a share. But despite its age, it continues to progress. It had six new drugs on the market in 2019 and has an incredible 95 in its pipeline. It also should emerge a more profitable company once its spinoff of Upjohn is concluded this summer. At its current price of about $37 a share, it remains well off its 52-week high of $44.56, and with a P/E of 13.54 -- much lower than the industry average -- it offers significant value. 

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.