Pfizer's New Business Model Makes For An Ideal Investment
Despite the latest setback in clinical trials for Pfizer's (PFE) closely monitored Alzheimer's drug, and the loss of its drug Lipitor's exclusivity, we maintain that the company has solid financials and long-term strategic planning.
- (1888PressRelease) August 28, 2012 - The company has embarked on cost reduction and productivity initiatives, which bode well for its post-Lipitor future.
Pfizer's Q2 2012 EPS came in at 62 cents, well ahead of the consensus estimate of 54 cents. Revenue and margin performance were commendable in light of the recent exclusivity loss of its blockbuster drug, Lipitor, as well as other drugs such as Caduet, Xalatan, and Geodon.
Pfizer's new initiatives seek to focus on the company's strength by prioritizing areas that have the greatest scientific and commercial potential. This will involve acquisitions (e.g., Wyeth in 2009) that result in synergies and cost reductions across the company. Part of the rationale behind Pfizer's acquisition of Wyeth Pharmaceuticals in 2009 was to counter the pressure to be expected on revenues once competition from generic drugs builds following Lipitor's patent expiration. What made the deal particularly lucrative for Pfizer was Wyeth's production of biologic drugs, such as Prevnar, a vaccine that prevents pneumonia and meningitis, which are less prone to generic brand competition.
Traditionally, companies screened innumerable compounds to find those most suited to their needs, which involved heavy spending on labs and on other tools for research in the hopes of discovering the next blockbuster drug.
Source URL: http://seekingalpha.com/article/827561-pfizer-s-new-business-model-makes-for-an-ideal-investment
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