Hurry up and wait: That seems to be the story for a lot of drug stocks these days. Wait to see if Pfizer's
For better or worse, that's pretty much the story with Wyeth
Growth was definitely lacking in the fourth quarter. Sales were up just 2% (5% excluding the impact of currencies), and the adjusted net profit actually fell a bit (6.5%) from last year's level.
You don't have to look too far to find a culprit for Wyeth's sluggish growth -- total pharmaceutical sales were up just 3% in the quarter. And while drugs like Prevnar and Enbrel showed good growth, Effexor was a bit weak despite receiving a follow-on approval for use in panic disorder. Of course, it should be remembered that the whole depression category is in a bit of flux, with worries about the safety of the drugs (especially in adolescents) and the impact of Lilly's
If I may look ahead a bit here, Wyeth's pipeline could deliver some growth in the next couple of years. Two new drug applications have already been filed -- one for an oral contraceptive and the other for a depression drug. The depression drug, desvenlafaxine, is a metabolite of Effexor; it should offer less drug interaction worries and could be worth at least as much as its parent drug in terms of sales. Other drugs, including a compound for osteoporosis and a treatment for renal cell cancer, should contribute a few hundred million dollars each in sales, and a new schizophrenia drug has at least an outside shot of making an even bigger contribution.
Now for the "yeah, but" part of the story. Wyeth's stock enjoyed a good run at the end of 2005, and that move took the stock from a discount to more or less fair value. I do like the company's above-average growth prospects, but would want more of a discount before buying the shares myself.
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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.