Big pharma company Pfizer (PFE +1.73%) has been around for more than 170 years. But the coronavirus pandemic marked its opportunity to take center stage. Pfizer last year partnered with German biotech BioNTech and won the first Emergency Use Authorization for a coronavirus vaccine. Now, the duo are market leaders. They've fully vaccinated more than 99 million Americans.
At the same time, Pfizer stock hasn't exactly soared. It was little changed last year. And this year, the shares have climbed about 19%. So, is this the right time to buy Pfizer stock? Let's take a look at what you need to know before taking the plunge.
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Vaccine supply deals
First, let's focus on the coronavirus program and how it's contributing to revenue. Pfizer has signed deals with the U.S. for the delivery of as many as 500 million doses through the first quarter of next year. The company has a supply deal with the European Union through 2023 -- and that includes as many as 1.8 billion doses. Pfizer also has inked deals with other countries around the world.
This year alone, Pfizer expects the vaccine to generate $33.5 billion in revenue. The company splits profits with BioNTech. But this still leaves Pfizer with a massive amount of revenue from the product. In fact, Pfizer expects the vaccine to represent 42% of total company revenue this year.
Looking ahead, there is opportunity for Pfizer to generate similar -- or higher -- levels of revenue in the years to come. Experts predict the coronavirus is here to stay. Governments will want to be prepared. It's likely they'll order more doses accordingly. The U.S. Food and Drug Administration (FDA) just authorized a third dose of Pfizer's vaccine as a booster for some individuals -- those ages 65 and older or those in high-risk groups. Pfizer had requested booster authorization for everyone who received a primary series of its vaccine. So, this wasn't a major win. But it's possible the FDA will extend the authorization to more people down the road.
More doses needed
Boosters -- even for a small group -- mean more doses will be needed to vaccinate populations. That's because some people will require a total of three doses rather than only the primary series of two. Eventual authorization in children also will increase demand in the future. Pfizer plans to apply for authorization in this group soon. The company won authorization for teens back in May.
Pfizer's coronavirus work doesn't end with the vaccine. The company also is working on an oral treatment. The candidate is a protease inhibitor. It works by halting viral replication. The idea is doctors could prescribe such a pill to newly diagnosed patients -- stopping the virus before it gains ground. Pfizer started a phase 2/3 trial in July and expects to report data in the fourth quarter. If the report is positive, this drug candidate could represent another blockbuster on the horizon. That's because coronavirus treatments are limited right now. The company also is testing an intravenous protease inhibitor on hospitalized patients.
Beyond the coronavirus program, Pfizer offers plenty of other positives. The company has a total of seven blockbuster drugs. That includes well-known names like blood thinner Eliquis. Recently, an appeals court ruled in favor of Pfizer and partner Bristol Myers Squibb regarding patents for Eliquis. This means the earliest generics could launch is in 2028. This is great news for the near-to-midterm. But it's important to remember sales of the billion-dollar drug will start to slip once generics reach the market. And the same situation awaits Pfizer for other blockbusters. One of cancer drug Ibrance's key patents will expire in 2027, for instance.
Pfizer acquires Trillium
That said, there's reason to be optimistic Pfizer will bring other potential blockbusters to market in the meantime. The company has 100 candidates in the pipeline -- and 23 of those are in phase 3 trials. In another growth move, Pfizer recently said it would acquire Trillium Therapeutics. The deal strengthens Pfizer's position in oncology. And importantly, Pfizer says the acquisition may add to growth as of 2026. This is key, considering the timing of Pfizer's patent expirations.
Now, a bit about Pfizer's stock price. Biotech players in the coronavirus vaccine space -- such as BioNTech and Moderna -- have seen their shares soar. But Pfizer hasn't. Gains have been moderate.
Smaller biotechs are more dependent on one program than a big pharma company like Pfizer. So investors have placed heavier bets on them during the pandemic. This doesn't mean Pfizer won't benefit at all. I expect the shares to gain steadily over time. This, and an attractive dividend yield of 3.9%, make Pfizer a great addition to any long-term healthcare portfolio.
