Pfizer's (PFE 1.90%) biggest product right now is its coronavirus vaccine. The company and its partner BioNTech expect it to generate more than $33 billion this year. And Pfizer expects coronavirus vaccine revenue to account for 42% of its total revenue. The vaccine is definitely one good reason to buy shares of this big pharma player.
But there's another reason to get in on Pfizer shares and it has nothing to do with the COVID-19 vaccine. It's important to remember that Pfizer has a vast number of commercialized products, including seven blockbusters. Earlier this month, one of them got some good news -- news that should inspire us to take a close look at shares of this pharma giant.
Protecting a blockbuster
Eliquis, a blood thinner commercialized by Pfizer and partner Bristol Myers Squibb, won a very important decision in an appeals court. The court upheld an initial ruling protecting the blockbuster's patents -- including composition and formulation of the drug.
This means the very earliest a generic drugmaker can enter the market with a competing product is in April of 2028. It's possible Pfizer and Bristol Myers will face another appeal, but it's reasonable to be optimistic about their case after two courts already ruled in their favor.
This is excellent news for Pfizer, considering the revenue generated by Eliquis. Last year, Pfizer reported more than $4.9 billion in Eliquis alliance revenue and direct sales. That was a 17% increase from the previous year. And this was during the pandemic when access to healthcare unrelated to COVID suffered.
Eliquis continues to be one of Pfizer's biggest drugs. In the second quarter of this year, Eliquis generated more than $1.4 billion. That's a 16% increase from the year-earlier period and makes Eliquis Pfizer's second-biggest product after the coronavirus vaccine.
Of course, generic competition eventually will erode sales of this blockbuster. But the court ruling gives Pfizer seven years to develop products that may replace Eliquis as a top revenue generator.
A lot in the pipeline
Pfizer has a lot in the pipeline. One of the most exciting candidates is an oral treatment for coronavirus. This would be a pill individuals could take for a few days following early symptoms and could be a game changer -- and bring in billions of dollars in revenue. Pfizer started a phase 2/3 trial in July and aims to report data in the fourth quarter. The company also recently began a phase 3 trial for a respiratory syncytial vaccine candidate. There currently isn't a vaccine available for this common cause of severe respiratory illness.
Should you buy shares of Pfizer because of the Eliquis patent news? It's not the only reason to buy the stock, but it's one excellent reason. Add to that recurring blockbuster revenue from the coronavirus program. And let's not forget the company's other blockbusters.
Then again, we should remember the drug and vaccine candidates that may represent strong future revenue. All of this together is a solid recipe for success over time.
Pfizer stock has climbed 25% and is outperforming the S&P 500 index year to date.
Still, I don't think the shares have reflected all of the positive points right now and down the road. They trade at only about 11 times forward earnings estimates. By that measure, the stock today is a steal.
Pfizer stock has greatly underperformed the biotech players in the coronavirus vaccine space -- such as its own partner BioNTech and rival Moderna.
I don't expect that to change. It's much easier to quickly drive up the price of a company with a smaller market value than a big pharma player. But over time, Pfizer has serious potential to deliver revenue and profit gains -- and that should equal share performance. This month's news on the Eliquis patent is a huge step in the right direction.