Since just about any surprising news in the world of pharmaceuticals is apt to be bad, it's a good thing that Wyeth (NYSE:WYE) wasn't really packing any surprises this time around. Not only did the company not have any bad news to report, but it once again beat estimates and raised guidance. If this is a boring stock, at least it's the right kind of boring.
Sales rose more than 9% this quarter, as double-digit growth in the pharmaceutical business offset flat performance in the far smaller consumer health business. And while there are two sets of numbers you can consider for the income statement, either account shows double-digit growth in operating income and ongoing margin improvement.
Performance was certainly helped this time around by the sales growth in two of the company's largest drugs -- Enbrel (co-marketed with Amgen (NASDAQ:AMGN)) and the vaccine Prevnar. While the former grew 36% this quarter, the latter saw sales jump 60%. Clearly, that helped offset less-robust performance in Effexor (still far and away the company's largest revenue contributor) and Protonix.
Although Wyeth doesn't have the most exciting pipeline in large-cap pharma, it does have a pretty attractive risk-reward trade-off in the coming years. The only major patent expiries coming up are Zoton in '06 and Zosyn in '07. And while these might sound like the names of G.I. Joe villains, they contribute close to a billion dollars in revenue -- revenue that should be recovered from new approvals like a replacement for Effexor, as well as drugs for schizophrenia and osteoporosis.
To that end, the company and King Pharmaceuticals (NYSE:KG) recently restructured their marketing agreement for the drug Altace. Under the new agreement, Wyeth will free up sales force capacity to help launch those expected new drugs in 2007, as King will have sole responsibility for selling Altace.
Wyeth isn't the highest-potential pharmaceutical stock I follow, but then, it also doesn't have the same risks that companies like Pfizer (NYSE:PFE) and Merck (NYSE:MRK) carry. If you want a reasonably solid pharmaceutical investment idea with pretty good odds of continuing to meet or beat expectations, Wyeth might be your ticket.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
