If you follow stock market news, chances are you have come across plenty of stories about Pfizer (PFE 0.63%) over the past three months. Pfizer is one of a number of companies racing to develop a safe and effective vaccine against COVID-19, the novel coronavirus that has taken the lives of more than 780,000 people worldwide, including over 170,000 Americans. Among about 30 companies in the running, Pfizer is widely considered one of the leaders of the pack. 

Pfizer investors have been on a volatile ride recently, especially since the company launched its COVID-19 efforts. Shares of the $213 billion market cap company are down about 2% compared to an increase of 5.08% for the S&P 500 year-to-date. With that said, Pfizer has a lot going on besides its new coronavirus programs. Let's take a closer look at the different aspects of Pfizer's business and see if the company is a good buy with or without the success of its vaccine candidate.

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A promising COVID-19 program

Pfizer teamed up with German biotech BioNTech (BNTX 2.32%) to develop a vaccine for the novel coronavirus. The partners started phase 1/2 clinical trials for at least four candidates in April. Two of these experimental vaccines, BNT162b1 and BNT162b2, emerged as the most promising of the bunch, and the U.S. Food and Drug Administration (FDA) granted both a fast track designation in July.

Pfizer and BioNTech opted to move only BNT162b2 into phase 2/3 trials on Jul. 27. The companies chose BNT162b2 over BNT162b1 because the former triggered a T-cell immune response, while the latter only produced an antibody response. T-cells are white blood cells that bind to and instruct virus-infected cells to self-destruct. A T-cell immune response provides longer lasting immunity than an antibody response alone, meaning that vaccine recipients could require fewer doses over time to protect against COVID-19. BNT162b2 also demonstrated a favorable overall tolerability profile compared to BNT162b1. Patients who received the BNT162b2 option had fewer negative side effects over a relatively short time period of one to two days.

Woman wearing a face mask with a question mark above her head.

Image source: Getty Images.

This phase 2/3 study will enroll up to 30,000 participants aged 18 to 65. The trial has two primary endpoints: To prevent patients who have yet to be infected by the SARS-CoV-2 virus from contracting the disease and to prevent the contraction of COVID-19 regardless of whether participants have previously been infected by the virus. Pfizer's plan is to have up to 100 million doses of the vaccine ready by the end of this year and 1.3 billion by the end of 2021. Its market entry is contingent on regulatory approval, but company leadership feels confident in its current path toward earning an Emergency Use Authorization from the FDA. This could happen as soon as October. 

In July, Pfizer and BioNTech signed an agreement with the U.S. Government to deliver 100 million doses of its vaccine for $1.95 billion with the option to add an additional 500 million doses. The companies penned similar deals with the governments of the U.K., Canada, and Japan. If their candidate proves safe and effective in final phases, these bulk sales could be highly lucrative for Pfizer and BioNTech. 

Making room for new pharmaceuticals 

In the second quarter that ended on Jun. 28, Pfizer's revenue declined by 9% to $11.8 billion from Q2 2019. Pfizer's net income also dropped by 32% to $3.4 billion. However, these results are less frightening than they appear for two major reasons.

First, Pfizer moved its consumer healthcare segment, which offered over-the-counter (OTC) products such as pain killers and vitamins, into a joint venture with GlaxoSmithKline (GSK -0.56%) in August 2019. This new entity is called GSK Consumer Healthcare, of which Pfizer holds a 32% stake and GlaxoSmithKline owns a 68% majority. With the leading market share in the U.S. and the second leading market share in China -- the two biggest OTC markets in the world -- GSK Consumer Healthcare is now the largest OTC business worldwide. Without the negative impact of this deal on revenue, Pfizer's sales during the second quarter would have declined by only 3%.

Second, Pfizer is in the process of spinning off its off-patent drug unit, Upjohn, to Mylan (MYL), a Netherlands-based pharmaceuticals company. This step away from generic drug manufacturing and distribution will also allow Pfizer to focus on its more profitable biopharma business. Pfizer's biopharma segment reported $9.8 billion in revenue, a 4% year-over-year increase, in the second quarter. Meanwhile, sales from its Upjohn division declined by 31% to $2 billion. Pfizer expects to complete the merger, which was originally delayed due to the coronavirus pandemic, by the end of the year. 

Several of Pfizer's products performed well during the second quarter. Sales of anticoagulant Eliquis increased by 17% year-over-year to $1.3 billion. Revenue from cancer drug Ibrance grew by 7% to $1.3 billion. Eliquis and Ibrance are Pfizer's top selling products, helping the company's biopharma revenue stay afloat despite some other drugs losing steam. Pfizer has dozens of ongoing clinical trials, including 23 phase 3 studies concerning potential therapies for a range of oncological, immunological, and rare diseases. Pfizer will be able to add more revenue sources to its biopharma business if they receive the appropriate regulatory approvals for these candidates.

Why you should consider buying

Pfizer is one of the frontrunners in the hunt for a COVID-19 vaccine, and if its efforts pan out, the company will handsomely profit. Besides its new vaccine candidate, Pfizer boasts blockbuster drugs such as Ibrance and Eliquis and is developing pipeline candidates that should replenish its lineup down the road. Pfizer has started to focus its business on biopharmaceuticals by clearing out its Upjohn unit, which had a negative impact on the bottom line, and spinning out its consumer healthcare segment into a commanding new venture with GlaxoSmithKline last year.

With a clear focus on its biopharma business and proven success of drugs like Eliquis and Ibrance, the company should be able to grow its revenue and profits at a decent clip, regardless of whether it benefits from COVID-19 vaccine efforts. As an added perk, Pfizer currently offers a dividend yield of 3.9% -- compared to an average of 1.8% for the S&P 500 -- and a reasonable cash payout ratio of 65.2%. The pharma company has raised its dividends by 35.7% over the past five years, making it a good option for investors in search of extra income. For all of these reasons, I believe Pfizer is a pharma stock worth buying today and holding for long haul.