Pfizer's Big Chance
Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When we think of big pharma companies, the company we think about constantly is Pfizer (NYSE: PFE), especially as the company recently announced it will start selling Viagra online. This is a bold move, and I think that Pfizer has the financial backing to make it work.
There are other problems that Pfizer has to deal with here, like counterfeit pills from online pharmacies. Pfizer knows that this problem will continue to eat into millions of dollars in sales, if they don't do anything about it.
Still, the company is doing something none of the other big pharmas have considered against this problem. On May 6, Pfizer said that it would begin to sell its Viagra drug online to consumers with a prescription. Viagra's sales in the year 2002, were around $1.7 billion per year
GlaxoSmithKline (NYSE: GSK) co-developed an erectile dysfunction drug with Bayer. This drug, known as Levitra, was approved by the FDA in Sept. 1, 2003. Both drug companies hoped that Levitra would become as popular as Viagra. Around 2006 Levitra had sales of $464 million, which was nowhere near Pfizer's $1.6 billion in Viagra sales that same period. GlaxoSmithKline, and Merck later acquired rights from Bayer AG to sell Levitra in the United States.
Eli Lilly (NYSE: LLY) had Cialis, which had sales come in at $971 million in 2006. Still despite Viagra having the upper hand, Cialis was able to catch up over the years. Cialis overtook the top spot in 2011 for the erectile dysfunction market, but in 2012 both companies came close to each other. Pfizer's Viagra made a little over $2 billion, compared to Cialis which only made $1.927 billion in the same year. Cialis also has some advantages over other competitors. For instance patients can take the drug with alcohol. The drug also lasts 31 hours longer than all the other competitors out on the market.
There was another erectile dysfunction drug approved on April 27, 2012, known as Stendra. The biotech company that has rights to Stendra is VIVUS (NASDAQ: VVUS). Vivus has not sold any pills yet, but the company states they are now actively looking for a partner to market it in the United States and other territories.
So far all the drugs for erectile dysfunction including Stendra, use the same enzyme, PDE5. So what makes Stendra comparable, or better than the other ED drugs from big pharma? The difference is that Stendra is able to work right away -- around 15 to 30 minutes before sexual activity. So it seems that Pfizer will have more competition, even with the already hugely competitive erectile dysfunction market.
Pfizer's big Chance
I think this is a bold move, one that may be necessary for future sales to thrive. Now men don't have to feel embarrassed about having to go to a pharmacy to buy Viagra, and they don't have to buy the counterfeit versions. Pfizer persuades consumers by giving three free pills for free on the first order, and then 30% off the price on the second bottle ordered. It is important to stop the counterfeit selling of Viagra, because it could mean huge losses for Pfizer. In essence the erectile dysfunction market is now estimated to be around $5 billion.
Pfizer has a market cap of $206 billion. The company still has 39% of the $5 billion dollar erectile dysfunction market, and may be stronger after this bold new move. The company is the first to sell online directly to consumers, so it is taking a chance to sustain its Viagra sales. The idea was grand, because Viagra will not go off patent until the year 2020. That gives the company plenty of time to continue obtaining sales, especially on this drug that pulls in $2 billion per year.
If all pans out with the online selling, Pfizer will be the first company to accomplish this. This would put them in the lead against other competitors, and I feel that Pfizer would be in a good position for long term growth.
As the company currently makes annual sales of Viagra of $2 billion, I believe that it can keep growing with its new online initiative. It will take time to set up selling online to consumers, but Pfizer has the financial backing with $25 billion on hand. Whether Pfizer makes it big with online selling of Viagra remains to be seen, but one thing for sure many other big pharmaceuticals will be watching.
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