Rob Black's Healthcare Stock Report

| About: Pfizer Inc. (PFE)

Stanford University Medical Center is banning its physicians from accepting industry gifts of any size, including drug samples. That means no more free meals, free tickets to sporting events, free pens or any of the other myriad freebies showered on doctors by drug companies hoping to boost their sales. The move is intended to limit the influence of pharmaceutical and other biomedical companies in the medical center's activities.

Pfizer (NYSE:PFE) faces the challenge of offsetting exclusivity losses on multiple products with 2004 sales of $11.1 billion (25% of total human pharmaceutical sales), a level that will approach virtually go to zero in the next three years due to generic erosion. In addition, the unplanned loss of $1.1 billion Bextra (withdrawn due to a serious skin reactions, not cardiovascular risk) added additional stress to Pfizer’s outlook.

In the face of these events, we would be discouraged if not for Pfizer’s new product cycle led by a combination of four major opportunities (Lyrica, Sutent, Exubera, and Lipitor/torcetrapib) and a host of supporting compounds (Zeven, Eraxis, varenicline, fesoterodine, and asenapine). Analysts note that three of Pfizer’s four key new products are already approved thus removing a substantial portion of regulatory risk. The four compounds account for 90% of our projected $8.5 billion in five-year incremental pharmaceutical revenues.