Recent trials for Pfizer’s (NYSE:PFE) Prevnar 13 vaccine showed encouraging results and could potentially boost the franchise’s sales going forward. The vaccine is useful for people who are at higher risk of contracting pneumococcal diseases due to their age or underlying chronic medical conditions that weaken the immune system, making it easier for opportunistic infections to spread. The study was conducted among patients aged 65 years and older, and the results indicate that those who were immunized with the vaccine reduced the chance of developing invasive Streptococcus pneumoniae infections in bloodstream by 75%.  These results are indicative of Prevnar’s efficacy and could help Pfizer grow its sales and maintain its market dominance. The franchise has a strong presence in the U.S. and Europe, as we discuss below.
Our price estimate for Pfizer stands at $33.56, implying a premium of about 5% to the market price.
Prevnar 13 Is Dominant In The U.S.
The U.S. pneumococcal vaccine market stood at roughly $1.4 billion 2010 and is expected to reach $2 billion by 2019.  The snapshot below is taken from a publicly available Datamonitor report preview and essentially showcases Prevnar 13′s dominance in the U.S. market. Bulk of the sales comes from the infant age group, which suggests that the recent trial results can lead to incremental revenue growth resulting from vaccines sales to elderly patients.
Source: Pipeline and Commercial Insight: Pneumococcal and Meningococcal Vaccines, Datamonitor
Prevnar 13 Expanding Its Presence In Europe
Prevnar 13 was initially introduced in Europe for infants and young children, and has since been approved in over 120 countries for use in infants and young children as well as in over 80 countries for use in adults of age 50 years and above. In 2013, the vaccine’s approval for young and middle aged adults practically made it available to the entire population of Europe, which stands at well over 700 million.
The European Commission’s approval for expanded use has opened up a big market for Pfizer and will aid its growth in 2014 and beyond. With no significant competition in the market, the Prevnar franchise has the potential to make up for the company’s revenue losses due to the expiration of several patents. Prevnar 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 $3.97 billion in 2013 to $5.1 billion by the end of our forecast period. Research firm Datamonitor expects top five European markets to account for almost $3.5 billion in pneumococcal vaccine sales by 2019, with Prevnar 13 having a near monopoly again. We believe that Pfizer will leverage its monopolistic position in the market and build Prevnar into a very strong franchise over the next few years.
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