Some investors look at Pfizer (PFE 0.14%) as a has-been. That's understandable in some ways. Sales for the company's once-formidable COVID-19 franchise have tanked. So have Pfizer's overall revenue, profits, and share price.
However, there's an argument that Pfizer is more of a "will-be" than a has-been. Could the drugmaker even be a trillion-dollar stock by 2035?
NYSE: PFE
Key Data Points
How it could happen
The math is straightforward for how Pfizer could reach a market cap of $1 trillion over the next 11 or so years. Pfizer's market cap currently stands at close to $156 billion. To reach $1 trillion by the end of 2035, the stock would need to deliver an average compound annual growth rate of roughly 17.2%.
How Pfizer could pull off such strong growth isn't so straightforward. However, let's walk through a hypothetical scenario where it could happen.
First, the hemorrhaging from Pfizer's COVID-19 sales would need to stop. This could be the easiest box to check off. I expect that 2024 will be a trough year for Pfizer's COVID-19 sales. The company hopes to win approval for a combination COVID-flu vaccine next year that just might turn things around.
Second, Pfizer would need its new products to blow past expectations. The good news on this front is that the drugmaker notched a record number of U.S. Food and Drug Administration approvals in 2023. It already has several rising stars in its lineup, notably including RSV vaccine Abrysvo and migraine therapy Nurtec.
What the company would really need, though, is a game-changing new therapy targeting a massive market. Two such markets that come to mind are obesity and nonalcoholic steatohepatitis (NASH), which is also known as metabolic dysfunction-associated steatohepatitis (MASH). Pfizer has a handful of pipeline candidates that could be big winners in these indications. It could also potentially make a strategic acquisition or two that adds best-of-breed therapies to its portfolio.
What could get in the way
I intentionally left out a major obstacle in discussing a rosy scenario where Pfizer's market cap hits $1 trillion by 2035. The company faces a patent cliff for several of its top-selling drugs over the next few years.
Cancer drug Inlyta and autoimmune disease drug Xeljanz lose key U.S. patents in 2025. Patents for two other cancer drugs, Ibrance and Xtandi, expire in 2027. Blood thinner Eliquis will compete against generic rivals beginning in 2028. Several other products also lose exclusivity before 2035.
Granted, Pfizer thinks that its launches of new products and new indications for existing products will more than offset its anticipated revenue loss from the patent cliff. However, sales projections aren't always met. Pfizer could experience significant pipeline setbacks. Programs that it's counting on as future growth drivers could flop.
Gaining a big advantage in a huge market like obesity or NASH/MASH won't be easy, either. Eli Lilly and Novo Nordisk already have a big lead in the obesity market. Madrigal Pharmaceuticals has the NASH/MASH market to itself for now. Other companies could be on track to launch weight loss and NASH/MASH drugs in the next few years.
Why Pfizer is a good pick regardless
Some things are possible but not probable. The goal of Pfizer attaining a market cap of $1 trillion by 2035 belongs in this category. However, I think that the big pharma stock is a good pick for long-term investors regardless of whether or not it hits the trillion-dollar mark.
For one thing, Pfizer offers a fantastic dividend yield of more than 6%. The money the drugmaker uses to fund its dividend program won't help its market cap grow, but it will help shareholders make money.
I'm cautiously optimistic that Pfizer will be able to deliver solid (although not spectacular) share price growth over the next decade and beyond. The company certainly faces challenges, but it has a good strategy to address them with new product launches and strategic business development deals.
No one can know for sure exactly what Pfizer's future holds. My hunch, though, is that the company will be much bigger in 2035 than it is now -- even if its market cap isn't anywhere close to $1 trillion.
