When we think of growth companies, we may think of technology or biotech players first. The idea of a big pharmaceutical company set to offer amazing growth might seem unlikely. But one of today's big pharma companies actually represents an opportunity today.
We all probably know the name well: The company made headlines with its leadership in the billion-dollar coronavirus vaccine and treatment markets. I'm talking about Pfizer (PFE -0.19%).
The company should continue to bring in blockbuster revenue from its COVID-19 portfolio -- and it's heading for a phase of new growth, with 19 potential products it aims to launch in the coming 18 months. Let's find out more.
More than $55 billion in coronavirus product revenue
Pfizer has been around for more than 170 years. And it's built a portfolio of blockbuster products over time. But its biggest and most-well known product is its coronavirus vaccine. The company also sells popular coronavirus treatment Paxlovid. Pfizer said in November that in the full year 2022, it expected to generate more than $55 billion in revenue from the two products combined.
But investors have worried about two potential problems in the coming years. What will happen to coronavirus vaccine and treatment sales in a post-pandemic world? And how will Pfizer overcome the upcoming loss of patents on some of its best-selling drugs? The company recently offered answers to these questions -- and they indicate that a lot of growth could be on the horizon for Pfizer.
First, let's consider the coronavirus health crisis. Yes, vaccine sales surely will decline from their highest levels once the pandemic shifts to an endemic situation. Also, companies will start selling doses directly to distributors instead of to governments. That should equal less visibility on future sales.
But here's some good news. Pfizer predicts its coronavirus vaccine and treatment will remain "multibillion-dollar revenue generators for the foreseeable future." That's likely to happen for two reasons.
First, Pfizer plans on significantly lifting the price of its vaccine. Today, the company sells it to the U.S. for about $30 a dose. But Pfizer has spoken of increasing the price in a post-pandemic world to as much as $130 a dose.
Second, Pfizer may benefit from vaccine revenue as people go for annual booster shots. Rival Moderna says the coronavirus booster market is likely to follow in the footsteps of the flu vaccine market. That could result in recurrent revenue well into the future for vaccine makers. And since the coronavirus will continue to circulate in a post-pandemic world, there will still be plenty of need for treatments like Paxlovid.
Growth ahead -- in spite of patent loss
Now, let's consider Pfizer's product portfolio. Due to patent expirations, the company is set to lose $17 billion in revenue from 2025 through 2030. That may sound grim. But Pfizer is prepared to compensate and even thrive.
As mentioned above, the company expects to launch 19 new products or indications in the next year and a half; this is the most ever for Pfizer. And more than two-thirds of these candidates have blockbuster potential.
Pfizer developed 15 of these candidates in-house -- and they represent about $20 billion in 2030 sales. This could more than compensate for upcoming patent expirations.
But the growth doesn't stop there. Pfizer also has made several acquisitions and may pursue more. The company says business development opportunities could result in $25 billion of risk-adjusted revenues in 2030.
So, if Pfizer's clinical development and business development plans roll out smoothly, this big pharma could become a growth powerhouse by the end of this decade.
Today, Pfizer trades for a little more than 10 times forward earnings estimates. That's a lower valuation than for its big pharma rivals Merck and AbbVie. And it seems like a reasonable entry point for a company with dominance in the COVID market, and a potentially huge new phase of growth ahead.
All of this means that right now is a great time to get in on this surprising growth story -- and to benefit over time.
