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Pfizer (PFE) is at a transformational point in its history. The company, which is the largest drug manufacturer in the world, is now splitting up and downsizing. In April, it sold off its profitable infant formula business to Nestle (OTC:NSRGY) for $11.9 billion. On Aug. 13, it announced that it had filed to sell a 20% stake in Zoetis, its animal health care unit. Zoetis is estimated to have a value of as much as $15 billion, and its IPO is scheduled for the early part of next year.

Pfizer executives plan to concentrate on its lucrative but risky pharmaceutical business. The task of the pharmaceutical division will be to replace revenues that will be lost when some of its biggest selling drugs lose patent exclusivity. In 2011, Pfizer lost the world's top selling drug Lipitor to the patent cliff. Lipitor had annual sales of $9.6 billion, which accounted for over 14% of Pfizer's total revenues. Pfizer also has a number of other drugs that will also be losing patent exclusivity by the end of 2014. Pfizer does, however, have drugs in its pipeline that have the potential to stem those losses.

Positives for Pfizer Moving Forward

On Sept. 4, the Food and Drug Administration (FDA) approved a Pfizer drug called Bosulif, which treats chronic myelogenous leukemia (CML), a blood and bone marrow disease that usually affects older adults. According to the company, about 26,000 Americans live with the cancer, and 5,430 people in the U.S. are expected to be diagnosed with it annually. The medicine is expected to reach global sales of as high as $341 million by 2016.

Pfizer also announced on Sept. 4 that its oral drug Inlyta had received European approval as a second-line treatment for kidney cancer patients who do not respond to an initial chemotherapy. According to the company, the drug significantly extended progression-free survival in patients who failed to respond to treatment with Pfizer's Sutent. The drug, which is used for patients with renal cell carcinoma, affects 102,000 people in Europe every year.

On Sept. 7, it was announced that Pfizer had entered into a settlement agreement with Mylan (MYL) in regard to Tolterodine Tartrate ER, which is its generic version of Pfizer's Detrol LA. Detrol LA is a treatment for overactive bladders. Under the terms of the agreement, Mylan may begin to sell the product on Jan. 1, 2014, or earlier under certain limited circumstances, and no later than March 1, 2014, subject to final approval from the FDA. Tolterodine Tartrate ER had U.S. sales of approximately $599 million for the year ending June 31, 2012.

The Pfizer rheumatoid arthritis drug Tofacitinib was expected to get an FDA decision on Aug. 21. However, the decision was extended by three months to Nov. 21. Tofacitinib is a treatment for people with moderate to severe rheumatoid arthritis. If approved, Tofacitinib will be the first drug in the lucrative rheumatoid arthritis area for a new class of drugs known as Janus Kinase. It should be noted that Tofacitinib will be competing against other rheumatoid arthritis drugs, namely Humira from Abbott (ABT) and Remicide from Johnson & Johnson (JNJ).

Another pipeline drug that could become a blockbuster drug for Pfizer is Eliquis. Eliquis is a treatment for Atrial fibrillation (irregular heartbeat). The drug which was considered to be headed for approval from the FDA and European medical authorities, is now under consideration from both. Most experts still believe that the drug will receive approval. The FDA advisory committee voted 8-to-2 in favor of the drug, but put off final approval pending additional clinical trial information. Pfizer is developing the drug with its partner Bristol-Myers Squibb (BMY). It was considered a good sign that the FDA did not request that the companies complete any new studies. The avoidance of the advisory committee stage seemed to bode well for the drug's approval prospects, appearing to signal that FDA and BMS/Pfizer had worked out any outstanding issues keeping the drug from reaching the market. If the drug is approved it would be a major addition to revenues, as it is estimated that 5.8 million Americans and 6 million Europeans have atrial fibrillation. There are estimates that the drug will dominate the blood thinner space and have revenues of $2 billion in the U.S. by 2016 and $3.2 billion by 2018.

Negative News for Pfizer Moving Forward

On Aug. 13, Pfizer announced that it has entered into an agreement with AstraZeneca (AZN) for the over-the-counter rights for Nexium (esomeprazole magnesium), a prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. Under the terms of the agreement, Pfizer will make an upfront payment of $250 million for the exclusive global right to market Nexium in the United States, Europe, and the rest of the world. As a result of this agreement, Pfizer revised its guidance range from $1.23 to $1.38 per share to $1.21 to $1.36 per share.

Final Thoughts

Despite the fact that Pfizer's second-quarter year-over-year revenues were down by 9.5%, the stock price has climbed by 33% over the last 52 weeks. The reason that the stock price has climbed is because investors are confident about Pfizer's plans for the future. Investors like that Pfizer is spinning off Zoetis, and they are optimistic about Pfizer's drug pipeline. I agree with investor sentiment, as I believe Pfizer will grow revenues and its stock price will continue to move higher.

Source: Pfizer Is Headed Higher On Impressive Pipeline