Health care is a tricky business. Arguably nothing is more precious than good health. Further, people are often at their most vulnerable when they make health-care decisions. Lacking the knowledge to determine what's best for them, they place their well-being in the hands of others, including the companies that make modern health care possible. For firms catering to this market, gaining and keeping consumers' trust is crucial for success, more so than in any other industry.
Pfizer's (NYSE:PFE) ability to maintain that trust appears to be in trouble. The drugmaker has worked hard to burnish its image. An ad campaign touts the firm's good works in advancing medicine. Pfizer also has responded to the needs of uninsured Americans.
All of these efforts might be for naught, however. When recent studies seemed to link Celebrex to heart problems, Pfizer suggested that it had not seen prior evidence of such a connection. The group Public Citizen, though, has accused it of withholding data from a 1999 trial in which Alzheimer's patients taking Celebrex had an elevated incidence of cardiovascular events. It appears that Pharmacia, the company that Pfizer purchased in 2002 to gain control of Celebrex and another pain drug, Bextra, did not in fact conceal the data, and admittedly the study was fairly small. But Pharmacia's, and later Pfizer's, failure to fully follow up on this study is disconcerting, especially given that Merck's (NYSE:MRK) rival drug, Vioxx, was known to carry a cardiovascular risk.
In light of its problems, Pfizer still appears to be in good shape financially. Its recent fourth-quarter and year-end results were fairly positive. The company also has plenty of resources to find new blockbusters or even buy innovating companies, as seen in its plan to purchase biopharmaceutical firm Angiosyn. Nevertheless, while it appears Pfizer will survive, it needs the public's trust to thrive.
Merck is a Motley Fool Income Investor recommendation.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
