Pfizer - zu Unrecht im Keller

Looking forward, Pfizer faces the impending patent loss of billions of dollars worth of annual revenue. Patent expiration is looming over several products: Zoloft in 2006, the antidepressant that totaled $3.3 billion in 2005 sales; and in 2007, Pfizer loses blood-pressure treatment Norvasc ($4.7 billion in 2005 sales) and allergy treatment Zyrtec ($1.3 billion).

Lipitor's problems could get worse. Lipitor is a huge drug for Pfizer, with 2005 sales of $12.2 billion. But revenue growth is flattening. Some analysts believe that patients are switching over to Merck's (up $0.34 to $34.85, Research) cholesterol drug Zocor, which totaled $4.4 billion in 2005 sales but is losing patent protection in June. When a branded drug loses patent protection, the price typically plunges 80 percent within one year in the face of generic competition. Patients could be switching to Zocor now in anticipation of that price plunge.

"The biggest problem Lipitor is having is product substitution," said Al Rauch, an analyst for A.G. Edwards. "[Lipitor] patients are being put on branded Zocor, so they can be put on generic Zocor later on."
Now for the good news

But Pfizer (Research) is hardly giving up.

The company is slashing $4 billion in costs to offset its patent losses.

And it has several drugs on tap. The Food and Drug Administration recently approved Exubera, the first inhalable form of insulin, and Pfizer has seen fast-growing sales for its recently launched nerve pain treatment Lyrica.

Barbara Ryan, analyst for Deutsche Bank North America, projects an annual sales peak of $2 billion for Exubera and $900 million for Lyrica. Sutent, a cancer treatment recently approved by the FDA, could peak at $750 million to $1 billion, said Ryan.

Ryan thinks the stock is under-priced. Ryan said the drug giant has plenty of problems that are well-known to investors, while the opportunities presented by its pipeline are largely ignored. "There's a lot of bad news priced into the stock and not much good news," said Ryan.

Too much riding on torcetrapib?

The biggest piece of potential big news for Pfizer is an experimental drug called torcetrapib. Pfizer is conducting studies to combine Lipitor, which lowers LDL or "bad" cholesterol, with torcetrapib, which increases HDL or "good" cholesterol. The company is expected to release the findings of this study late this year.

"The market potential is many, many, many billions of dollars if the profile is attractive," said Ryan.

Torcetrapib could potentially add $8 billion in annual sales, totaling $20 billion with Lipitor sales included, according to Rauch, the A.G. Edwards analyst. The company hopes to file the drug with the FDA in 2007, and could have it on the market by 2008 if the FDA approves it.

But Rauch, who rates Pfizer a "hold," is concerned there's too much riding on torcetrapib.

Rauch said that Pfizer needs to make some serious money to fill the impending gap of patent loss, and its future depends heavily on torcetrapib data. If Pfizer's torcetrapib study fails, then it postpones the drug's market entry by at least two years, said Rauch. If that happens, Pfizer would lose billions of dollars in potential revenue and would put extra pressure on the stock, said Rauch.

"The Lipitor-torcetrapib data is the single biggest thing that people are watching in Pfizer," said Rauch. "It makes people nervous, and people who are risk averse will stay away from the stock. A lot of people are waiting on the sidelines to see what will happen."

The analysts for this story do not own Pfizer shares, though Deutsche Bank North America and a relative of Rauch do own Pfizer shares.

"Seitdem fehlt mir der Mut, deutsche Standard-Aktien zu kaufen,"

Das verstehe ich überhaupt nicht. Die deutschen Aktien sind seit 10
Monaten der Renner. Ihnen verdanke ich einen Haufen Geld. Die Prog-
nose für DL ist derzeit in Europa einzigartig: der Ifo-Index steht so
hoch, wie seit 1991 nicht mehr (105,7)!

Stattdessen ackerst Du und mühst Du Dich mit Ami-Aktien. Nichts
dagegen, ich halte selbst auch einige. Aber ohne die "Bringer" aus
dem Dax könnte ich mir diesen Luxus gar nicht leisten. Vollends
graust mir bei dem Gedanken, NUR Amis im Depot zu haben.

Setz ein paar EURO auf den wahren Gewinner des SCHERING-Deals:
ALLIANZ. Die sind an allen beteiligt, und werden jetzt ihre SCHERINGS
zum Höchstpreis los: mit 1,7 Mrd. sind sie dabei. Auch bei den anderen
Deals von LINDE bis KARSTADT sitzen sie mit ihm Boot. Und voll alledem
ist (noch) NICHTS eingepreist!
Oder kauf DAIMLER. Wenn Zetsche die Leichen aus dem Keller geräumt
hat, stehen die irgendwann bei 100,-.

Merck KGaA sehe ich nur als kurzen Deal, bis der SCHERING-Malus draußen
ist. Für BAYER beginnt eine Zeit des Leidens. SCHERING ist achtkant zu
teuer: für ein rentables Return-on-Investment müßte SCHERING über 2 Mrd.
per anno einfahren; mehr als das Vierfache des Gewinns 2005. Das wird
BAYER noch an den Rand des Irrsinns bringen.  Kurzum:
"Wenn jemand soviel Schlechtes widerfährt, dann ist das einen Shortie wert.."