Pfizer Seems to Be Dancing to a Tune of Failure?
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Pfizer (NYSE: PFE), one of the niche market leaders in the major drug manufacturing industry, is currently submerged in highly competitive waters. Other players like Sanofi (NYSE: SNY) and Merck (NYSE: MRK) are tired of playing second fiddle. This is clearly evident in the aggressiveness that these two avid competitors exhibit.
The overall situation in the pharmaceutical industry also adds on Pfizer’s backlog of bottlenecks. Most players’ patents have since been thrown out of the window in what analysts are calling a ‘patent cliff.’ Pfizer, for instance, lost patent on its emblematic drug Lipitor. The drug was manufactured to put a leash on cholesterol and by the end of 2010, accounted for around 15.8% of Pfizer’s total revenue. The loss of patents is the probable reason why Pfizer is expanding and pushing newer products into its already congested pipeline.
FDA-the common enemy
The unending challenges at Pfizer spell a lot of bearish thoughts. The Food and Drug Administration, which by the way is deemed by pharmaceuticals to be the grim reaper in the industry, recently swung its scythe at Pfizer.
The FDA has raised a number of questions regarding Pfizer’s Facitinib drug - a drug that was designed with the sole purpose of spearheading notable breakthroughs in the fight against Rheumatoid Arthritis. The FDA is insistent that the drug’s safety and effectiveness is still uncertain. The drug is apparently designed to treat arthritis in a different fashion as opposed to other approved drugs in the market. I personally believe that Pfizer chose a distinctive approach in its attempt to pioneer a possible breakthrough and in the process create new patents.
All the same, Pfizer’s bold move has unveiled a frightening possibility; one that will dent its image and derail its progress in the market. The FDA has not only coined the drug ineffective and unsafe but has gone on to openly issue remarks on some of the risks involved with the drug. The FDA was not hesitant to associate the drug with a malignant form of cancer-lymphoma to be exact. The regulatory and approvals body also went on to link the drug to risks of fatal infections.
In response, Pfizer has indirectly denied the implicating claims. It goes on to state that the side effects of the drug are common to similar drugs in the market. Of course this is the rational thing to do. Nonetheless, it still raises a lot of questions.
Is Pfizer getting fidgety? Was the drug manufactured hastily in an attempt to salvage the deplorable state of affairs at Pfizer? All these and more are some of the unvoiced yet crucial questions that Pfizer stakeholders will be asking.
From bad to worse
The FDA shows no clemency when it comes to suffocating the prosperity of supposedly harmful drugs. It, nonetheless, acts indiscriminately and everyone and anyone is a victim. This is the reason, why I personally call it ‘the common enemy.’
Moving away from the common enemy to an enemy that is vested within Pfizer, it becomes clearly evident that things could go from bad to worse. Pfizer seems to be dancing to a tune of failure. It recently failed to meet endpoints in a diabetes study that involved the megahit Lyrica Nerve-pain drug. Such failures in trial processes are quite normal and honestly give no reasons for alarm or panic. However, the timing couldn’t be any worse. At the moment, any whiff of small failure can offset unimaginable movements in the pharmaceutical industry.
The silver lining
On a long term study, Pfizer’s Pristiq has yielded positive results. Pristiq, which became Pfizer’s property at the wake of the 2009 Wyeth acquisition, has proven to be an effective anti-depressant. When compared to Placebo, the study reveals incredible results. Indeed numbers do not lie. The study reveals that patients taking 50 mg a day of Pristiq exhibit a relapse probability of 14.5% on a six month basis - this is less than half the 30.2% posted in Placebo results. The drug has lesser discontinuation symptoms as opposed to Placebo.
With the fight against cancer creating a sort of bandwagon effect, Pfizer has also bolstered activities in the niche. It has taken note of other players that have made interesting breakthroughs. This has compelled it to improve on its undertakings. This is clearly evident in the Committee for Human Medicinal Product’s standpoint on the marketing authorization of kidney cancer drug Axitinib. The drug was approved in the U.S early this year and possibilities are that the European Medicines Agency will approve of the drug following CHMP’s positive outlook.
As a round up, I would advocate for Pfizer in the long haul. However, on a short term basis, it is not a good buy. The dust has not yet settled and it needs to get back to the drawing board and set along a new path. Nonetheless, I am not downright bearish as Pfizer’s fundamentals are still impressive.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Pfizer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.