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By Renee O'Farrell

Pfizer (NYSE:PFE), which a favorite pick for Fisher Asset Management, Adage Capital Management and Diamond Hill Capital, was hit hard by the patent expiration of the popular cholesterol drug Lipitor. Lipitor brought in $9.6 billion in sales last year - that is a hard amount to make up. Pfizer has enjoyed strong growth in emerging markets and has been able to realize solid gains in its Enbrel, Lyrica and Prevnar lines - the company even initiated a variety of cost-saving measures - but is it enough?

Apparently not.

Pfizer reported its first-quarter performance on May 1. The company surpassed analyst estimates regarding its earnings, coming in at 58 cents a share over expectations of 56 cents a share. It may have beat analyst estimates by 3.6% but the good news ends there. Its reported earnings were 3.3% behind the same quarter last year. Pfizer's revenue also fell short. At $15.4 billion, it fell short of analyst expectations of $15.47 billion and came in at 6.7% less than the same quarter last year. Even after mixed first-quarter results, we still recommend Pfizer as a buy (check out our previous article here about why Pfizer is a good long-term investment).

Pfizer is trading at less than $23 a share right now. Consensus estimates put the company's earnings at $2.25 a share this year, down from $2.31 in 2011. Analysts are slightly more encouraged going forward - they estimate Pfizer will earn $2.34 a share in 2013, putting the company's forward price-to-earnings ratio at 9.83 times its future earnings. This is a significant discount to its peers' average forward price-to-earnings ratio of 17.13, but so is its earnings growth. Analysts are estimating Pfizer will average an earnings growth of just 2.56% a year over the next five years, compared with expectations for its industry of almost 7%.

That doesn't mean that Pfizer isn't a good investment - Pfizer is a good company - but it will take a long position to fully realize its value. The company has a strong strategy in place but it is going to take some time for that to pay off. "Pfizer has been shedding businesses outside its core medicine franchise in part to boost its shares," writes the Wall Street Journal. Pfizer is also in the middle of a share repurchase program, which is sure to add value to shareholders. The company bought back $9 billion in shares in 2011; it will repurchase another $5 billion in shares this year.

Rival Johnson & Johnson (NYSE:JNJ) was also rocked by patent expiration lately - in this case from bacterial infection treatment Levaquin - and a manufacturing suspension for cancer treatment drug Doxil. Right now, Johnson & Johnson is trading at $65 a share. Analysts look for the company's earning to increase marginally this year, moving from $5 a share in 2011, to $5.13 in 2012. They are slightly more encouraged looking forward. Analysts estimate Johnson & Johnson will earn $5.44 a share in 2013, which puts its forward price-to-earnings ratio at roughly 12 times its future earnings - a premium to Pfizer.

Competitor Merck (NYSE:MRK) is facing issues of its own. The company is facing a variety of lawsuits right now - it is dealing with over 2,300 cases of allegations that its drug Fosamax causes jaw problems and issues relating to the illegal marketing of the drug Vioxx. Merck is trading at $39 a share and its earnings forecast is not encouraging. Analysts expect the company's earnings to grow to $3.81 a share this year, up from $3.77 a share last year, then fall to $3.70 a share next year. This puts its forward price-to-earnings ratio at 10.54 times its future earnings - that may be lower than its industry's average but it is higher than Pfizer and Pfizer has a stronger outlook.

Bristol-Myers Squibb (NYSE:BMY) is not facing fall out from patent expirations right now, but it will soon. Popular drugs such as Plavix and Abilify are due to expire in the near future. The company is trading at $33.50 a share right now. Analysts are expecting the company's earnings to fall from $2.28 last year to $1.97 this year and $1.92 next year, making its forward price-to-earnings ratio 17.45 and the highest of the big pharma companies we looked at here - hardly worth the risk.

I still say Pfizer is a great bet for investors who are willing to hang on to it long enough to allow the company's strategy to pay off. It seems "slow but steady" really does win the race, at least in big pharma.

Source: Slow But Steady Wins The Race In Big Pharma