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While the Dow Drops, Pfizer Leads Big Pharma's Great Day

By Dan Carroll - Mar 26, 2014 at 2:30PM

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Johnson & Johnson also hits the high marks today as health care puts in a solid outing for investors

What was a good day for the market has turned into a disappointment in the afternoon session, as the Dow Jones Industrial Average ( ^DJI ) has dropped 56 points into the red as of 2:30 p.m. EDT after kicking off trading by going up nearly 100. However, for the third day in a row Big Pharma is making waves, with Pfizer ( PFE 1.57% ) once again reporting well-received news and joining the Dow's best-performing stocks. Let's catch up on what you need to know.

Good news for industrials
The market was buoyed in early trading by optimism from the latest economic report. American durable goods orders put on a shocker last month, tilting up by 2.2% after economists had projected flatness following January's 1.3% decline. Granted, the success was due almost entirely to a great month from the transportation industries, as orders for cars and aircraft jumped substantially. Without those jumps, durable goods orders only managed a 0.2% gain -- but after January's pessimistic result, it's nonetheless a good sign for the industrial sector that durable goods orders have made headway. The industrial sector is largely cyclical, and it will take a return to orders and further investment and spending to light a fire under the top companies after years of the post-recession downturn.

Source: Wikimedia Commons

Today's biggest movers haven't come from industrials, but rather health care. Pfizer's stock has popped by 1.6%, another strong gain for shareholders in what has turned out to be a great week for this pharma giant. Pfizer reported earlier today that a phase 3B clinical trial of human growth hormone replacement drug Genotropin aced its results in treating small children. Pfizer aimed to boost its safety and effectiveness data for the drug in treating this age group through the trial, and it's a win for investors. Genotropin is already among Pfizer's stronger sellers in its diverse drug portfolio, racking up more than $700 million in sales in 2013, but the therapy's revenue has declined in each of the last two years. Anything Pfizer can do to help stave off further declines will give the company's promising up-and-coming drugs more time to catch up.

Pfizer has a bright future if it can make the most out of its younger therapies. Pfizer's experimental meningococcal B vaccine rLP2086, while not expected to become one of the company's top sellers in the near future, recently received a coveted FDA breakthrough therapy status. That will hasten the vaccine's path toward approval, although Pfizer investors shouldn't get overly excited: peak sales estimates for the vaccine see annual sales in the low hundreds of millions of dollars. Still, if rLP2086 can earn approval, it would be another solid performer in Pfizer's broad pipeline of successful therapies.

Elsewhere on the Dow today, Johnson & Johnson ( JNJ 2.25% ) is is up 0.5% despite little news, ranking among the Dow's best stocks on a sleepy day for most blue-chip risers. Like Pfizer, J&J is one big-ticket pharmaceutical stock that sports a future full of promise. The company's late-stage drug pipeline might not be as robust as Pfizer's, but as of late January, Johnson & Johnson boasted more than 18 drug programs in phase 3 trials or later, and the company already has seven promising drugs due to be submitted for approval between 2014 and 2017. While J&J's growth in medical devices and consumer health care have waned somewhat as of late -- particularly as the company's synergies regarding its purchase of orthopedics leader Synthes have filed out -- the health care colossus's pharmaceutical division looks as strong as ever.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$54.57 (1.57%) $0.84
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$159.43 (2.25%) $3.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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