Should Investors Worry About Fall In Pfizer Inc. (PFE)’s Lipitor Sales?


Pfizer Inc. (NYSE:PFE)’s Lipitor was one of the best-selling drugs under the patent protection until a few years ago. After it has turned into generic, there was a drastic fall in sales number primarily because several generic versions of the drug entered the market to control cholesterol. Also, there are other pharmaceutical companies that are either selling drugs or developing drugs to compete for cholesterol. That was because the number of people  affected by cholesterol is increasing every year throughout the world. However, the key question is should the investors be worried about the drop in sales of Lipitor drug. Let’s take a look at how other drugs of the company are doing to offset the weakness.

Newest Drugs Boost Sales

Pfizer Inc. (NYSE:PFE)’s Lipitor witnessed 7% drop in sales to $454 million in the third quarter from $490 million. However, it was not the only drug to record a fall in sales. Most of the products in the established product business witnessed a drop in sales of 16% in the September quarter. Other products like Lyrica GEP, Zyvox, and Celebrex recorded a YOY drop of 44%, 51%, and 72% respectively in the third quarter. Most of the fall in revenue was due to patent expiry. As much as 20 drugs have lost patent expiry since 2011 and that resulted in continuous drop in revenue also during the same period. As a result of patent protection expiry, there is an estimation of $28 billion revenue loss from 2010 till next year.

Despite the drop in revenue, Pfizer Inc. (NYSE:PFE) managed to post revenue growth for the fourth consecutive quarter, excluding the currency impact. Including the currency effect, it suffered 2% fall in revenue to $12.09 billion. That was primarily because of new drugs’ surging sales, as well as, key products sales thought they might have been older slightly. Such drugs included Eliquis to prevent heart attacks, as well as, strokes, Ibrance, Rhematoid and Prevnar 13. The last three drugs were meant for treating cancer, arthritis, and pneumonia, as well as, ear and other infections. In short, global innovative pharmaceuticals’ sales increased 29% to $3.23 billion in the September quarter. As a result, the company’s adjusted earnings, as well as, revenue came in above the Street analysts’ expectations.

Ongoing Furor Over Prescription Drug Prices

During the earnings conference call with analysts, Pfizer Inc. (NYSE:PFE) CEO, Ian Read, tried to convince the analysts on the ongoing furor over the prescription drug prices. That was especially in respect of some firms bumping up prices for old drugs. He said that the condition has not changed, and will continue the same process. Reed said that public policy should consider the role of medicines, as well as, the value they bring to the complete system of the healthcare. The CEO also wanted the company to protect the marketplace system in the America enabling them to follow innovative treatments. The CEO was responding to the fact that the establishment has refused to set limits on drug prices.

Boosting Of Look

Pfizer Inc. (NYSE:PFE) CEO, Reed, said that the country should be given credit for preserving the marketplace system enabling the drug makers to follow innovative treatments. He said that there were no limitations on pricing of drugs in the United States like most of other nations do. The company has boosted its current year adjusted earnings forecast to $2.16 – $2.20 a share from $2.04 – $2.10 a share provided on September 3 following the completion of its acquisition of Hospira Inc (NYSE:HSP). That is better than the Street analysts’ expectations of $2.09 a share.

The acquisition of Hospira also makes Pfizer the top manufacturer of sterile injectable drugs in the world. That clearly suggested that the company is not worried about the drop in Lipitor or other patent expired drugs. The drug maker also believes that the new drugs class would be lucrative by reducing the prices to some extent.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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