Last year, pharmaceutical giant Pfizer (PFE 0.55%) encountered several issues, none more significant than the massive drop in revenue and earnings it experienced due to a shrinking coronavirus market. Investors reacted by selling off the stock, leading to a catastrophic performance for the drugmaker.
However, despite its recent struggles, there remain excellent reasons to invest in Pfizer stock. In fact, let's consider seven of them right now.
An incredible string of approvals
It's not that rare for drugmakers to go through periods of declining sales. Usually, it is because of patent cliffs. In Pfizer's case, it set the bar incredibly high in 2021 and 2022 thanks to its coronavirus products. Whatever the reason, there is a simple way to remedy matters for any pharmaceutical company that finds itself in this situation. The key is to launch brand-new products on the market, ones that will eventually fill the holes left by older ones whose sales are declining.
Last year, Pfizer was on a mission and planned to earn many brand-new approvals. That's precisely what the company did: As of the end of 2023, Pfizer earned seven new approvals from the U.S. Food and Drug Administration (FDA). Here is a list of the brand-new products Pfizer launched last year
| Drug | Indication |
|---|---|
| Zavzpret | Migraine |
| Litfulo | Alopecia areata |
| Ngenla | Growth hormone deficiency |
| Elrexfio | Multiple myeloma |
| Velsipity | Ulcerative colitis |
| Paxlovid | COVID-19 |
| Abrysvo | Respiratory syncytial virus |
Let's put that number in context. First, Pfizer usually manages only one or two new launches yearly, so seven is a highly unusual number for the company. Second, last year, no drugmaker other than Pfizer managed more than three approvals, meaning none had even half as many as Pfizer.
Third, the FDA gave the green light to 66 new drugs, vaccines, and biologics in 2023. With seven of them going to Pfizer, that means almost 11% of the FDA's approvals in the entire massive pharmaceutical industry were for products developed by a single company.
This speaks volumes about Pfizer's innovative potential and the work it was able to accomplish thanks to its success in the coronavirus market.
The future looks bright
Pfizer's newer products will take some time to ramp up their sales. However, the company's innovative wheel should keep running in the meantime. One major move Pfizer made last year was to acquire cancer expert Seagen for $43 billion. This relatively small oncology specialist has a massive cancer-centric pipeline and several products on the market. Thanks to Pfizer's backing, things could become even more exciting: The company was clearly after Seagen's innovative approach.
As CEO Albert Bourla said: "We are not buying the golden eggs. We are acquiring the goose that is laying the golden eggs. For us, what is extremely important, it is that we will maintain the Seagen capability to continue innovating and do -- under Pfizer's umbrellas, Pfizer's family to do way more if possible, than they were able to do it alone."
Pfizer has a pipeline full of programs even beyond its acquisition of Seagen. Perhaps the company's number of approvals won't be as impressive this year, but the drugmaker is doing exactly what it's supposed to do to turn the horrible performance it had last year around.
Patience will be rewarded
After the horror show it experienced last year, Pfizer looks attractively valued at current levels. The company's forward price-to-earnings ratio of 13.1 compares favorably to that of the pharmaceutical industry at 17.1. Investors who initiate a position today can also take advantage of the company's solid dividend program. Pfizer may not recover immediately, but the company's long-term prospects look attractive, given its rapidly rejuvenating lineup.
Those willing to hold the company's shares for five years or more will be glad they did so down the line.
