When Pfizer (PFE) acquired Wyeth a few years ago, one of the objectives was to gain access to its key vaccine, Prevnar. The company has been investing in expanding the vaccine portfolio since then and expects some returns in the next few years. Currently, Pfizer’s vaccine segment almost solely relies on the Prevnar franchise, but there is significant scope of expanding in other areas. The vaccine for Methicillin-Resistant Staphylococcus Aureus (MRSA) bacteria is in Phase II trials and has the potential to be the largest vaccine in the industry if it confers the breadth of coverage and reduces the need for anti-biotic treatment. MRSA is a strain of staph bacteria that’s become resistant to antibiotics commonly used to treat ordinary staph infections. MRSA infects 53 million people worldwide and causes higher number of deaths in the U.S. than AIDS (acquired immuno deficiency syndrome).  In addition to this, Pfizer has Meningococcal B vaccine in phase 3 trials. Meningococcal disease has high mortality rate if left untreated.
Prevenar 13 is a pneumococcal conjugate vaccine that prevents invasive disease caused by Streptococcus pneumoniae, and was previously being administered to children aged 6 weeks to 17 years and adults aged 50 years and above. The recent approval in Europe has opened up a big market for Pfizer and will aid its growth in 2013 and beyond. With no significant competition in the market, the Prevenar franchise has the potential to make up for the company’s revenue losses due to expiration of several patents. Prevenar is currently Pfizer’s second biggest brand in terms of sales after Lyrica, and could well become the biggest brand in the next couple of years. We expect the franchise’s sales to increase from $4.1 billion in 2012 to $7 billion by the end of our forecast period.
Research firm Datamonitor expects the U.S. pneumococcal vaccine market to grow to $2 billion by 2019, which will be almost entirely dominated by Prevenar 13. In addition to this, it expects top five European markets to account for almost $3.5 billion in pneumococcal vaccine sales by 2019, with Prevenar 13 having a near monopoly again. We believe that Pfizer will leverage its monopolistic position in the market and build Prevenar into a very strong franchise over the next few years.
The Opportunity In MRSA Vaccination
Methicillin-Resistant Staphylococcus Aureus (MRSA) is a bacteria that is resistant to many antibiotics. MRSA infections range from skin infections to life-threatening bloodstream infections, pneumonia and surgical site infections. The Center for Disease Control and Prevention (CDC) has statistics from 2005, which state that roughly 478,000 patients were admitted in U.S. hospitals during the year with a diagnosis of Staphylococcus Aureus infection.  Out of these, approximately 58% cases were due to MRSA, the antibiotic resistant strain of the bacteria.  Moreover, this percentage has been increasing over the years due to excessive use of antibiotics which has influenced the bacteria to mutate into a new strain that is resistant to most antibiotic treatments. According to CDC, approximately 2% of Staphylococcus Aureus infections in U.S. ICUs (intensive care units) were due to MRSA in 1974.  This figure jumped to 22% by 1995, and to 64% by 2004. 
If Pfizer is successful, it may as well stop a potential epidemic and resolve a serious health concern. The total market for MRSA vaccination could be between $3 billion to $4 billion a year, and is likely to grow going forward.  The figure could be bigger if we include regular Staphylococcus Aureus infections.
Our price estimate for Pfizer stands at 33.90, implying a premium of about 20% to the market price.
- FEATURE-Pfizer takes its shot at a vaccine for evasive superbug, Reuters, May 23 2013
- Methicillin-resistant Staphylococcus aureus (MRSA) Infections, CDC
Disclosure: No positions