Today, let's look at three things investors should be watching regarding Pfizer, as they will provide us with better insight into the company.
1. Pfizer's patent cliff
The patent cliff is merciless, and it's hitting pharmaceutical companies harder in 2012 than it ever has. This year alone, some $29 billion worth of branded drugs is set to lose patent expiration and be open to competition from generic-drug makers. Pfizer is no different, and, as I opined earlier this year, its patent cliff may be one of the worst of all.
In 2011, Pfizer lost patent exclusivity on cholesterol medication Lipitor, the best-selling drug in the world, which accounted for $9.6 billion, or 14.2%, of its total revenue in 2011. Keep in mind we're talking about a company with well over 100 branded and generic drugs in its portfolio, and one drug amounted to more than 14% of total sales last year! In addition to seeing Lipitor sales begin to landslide down a cliff, it lost glaucoma drug Xalatan last year as well and is set to lose a small army worth of important drugs through 2014, including Geodon and Detrol this year, and Celebrex in 2014. All told, close to one-quarter of Pfizer's revenue stream is at risk of generic competition.
Unlike Bristol-Myers Squibb
2. Pfizer's pipeline camels
Pfizer isn't shooting fish in a barrel waiting for Lipitor sales to completely fizzle out; it does have drugs capable of delivering strong growth potential beyond 2014, although it remains to be seen whether they can pick up the $15 billion in slack at jeopardy from generic competition through 2014.
Pfizer's new cash camel is Lyrica, a treatment for fibromyalgia and diabetes-related nerve pain, which has quietly become a $4 billion-per-year drug. Sales of the drug jumped 14% in the second quarter, with international growth demonstrating enormous strength, up 18%. However, Pfizer isn't relying on just one camel to lead to it to water. In addition to Lyrica, sales of ear infection and meningitis drug Prevnar 13 rose by 12% worldwide, with Enbrel and Celebrex tacking on solid gains of 8% and 6%, respectively.
Though much smaller in scale, Pfizer also had some noticeable outperformers in EpiPen, which is used to treat patients with severe allergic reactions, and Sulperazon, a treatment for upper respiratory and urinary tract infections. EpiPen sales jumped by 46% in the U.S., while Sulperazon (which is available only internationally) saw sales rise 45%. Keep your eye on these cash camels as Pfizer attempts to make up for its patent-cliff woes with these FDA-approved drugs.
3. Pfizer's pipeline and potential animal-health spin-off
According to Pfizer's most recent pipeline update in early August, it had 87 (yes, 87!) drugs current in the clinical or regulatory approval stages. That leaves room for a plethora of potential blockbusters and also room for some epic failures.
One pipeline drug in particular that could have massive implications for Pfizer and development partner Bristol-Myers is their oral anti-coagulant, Eliquis. The market potential for the drug is gigantic; however, the FDA has delayed its review on multiple occasions as it seeks more data from Pfizer and Bristol-Myers.
Another drug that was closely watched and is now shelved is Pfizer's Alzheimer's drug, bapineuzumab (a.k.a. bapi). Partnered with Johnson & Johnson
One final "by the way": Keep your eyes peeled for more details on Pfizer's recently announced spinoff of its animal-health business that it's named Zoetis. Pfizer will be selling up to a 20% stake in the company to help raise around $100 million to pay down debt. The IPO is set to take place sometime in the first half of 2013.
Now that you know what to watch for, it should be easier to analyze Pfizer's successes and pitfalls in the future and hopefully give you a competitive investing edge.
If you're craving even more info on Pfizer, I would recommend adding the stock to your free and personalized Watchlist so you can keep up on all of the latest news with the company.
Just as Pfizer is seeking to uncover and commercialize the next disruptive technology in the biotechnology sector, our analysts are seeking out the next disruptive technology that could revolutionize the tech sector. In our latest special report, you can find out the identity of three stocks they think are set to lead the next industrial revolution. Get this special report for free, for a limited time!
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on Motley Fool CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of, and creating a diagonal call position in, Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
3 Dividend Stocks That Pay You More Than ExxonMobil Does
The oil giant pays its shareholders well, but there are opportunities out there for even higher payouts.
The 1 Word That Explains Why Pfizer's Future Looks Brighter Than Its Past
The big drugmaker had a clear message at the J.P. Morgan Healthcare Conference -- and it's a good one for investors.
3 Scorching-Hot Healthcare Stocks -- Are They Buys?
These three companies gained at least 400% in 2017. Can the good times continue?