Shiv Kapoor

Pfizer Is Worth Another Look

PFE is definitely worth a close look; hell its a screaming buy. The PFE big problem is that if science does not deliver, the necessary catalyst is lacking. And after 10 years, repair is going to take time. My view is that there is a strong case for major pharma, even if science is slow in delivery. Ultimately it comes down to considering whether a non research based pharma (generic) can survive. My view is that as time goes by, the marketing machine of big pharma will be the single most important asset for big pharma. Generic sellers will end up being low cost contract manufacturers for major pharma. If PFE decides to compete once Lipitor goes generic they can; with their marketing the Ranbaxy's of the world will not stand a chance unless they work with big pharma on the contract manufacture side. Generics manufacturers have nothing by way of an entry barrier and they cannot compete on sheer resource & scale. Even on the product, the correct cocktail is better than only the active ingredient; so one could argue that PFE will make the best "generic" Lipitor! But then how many people are willing to wait.

And that overseas cash hoard; there are millions of ways to monetize it, a non US acquisition (even a reverse acquisition possibly a takeover combined with an inversion), expansion outside US (the natural growth market is non US anyway), and then there is patience - remember the ability to defer taxes creates opportunities for permanent timing differences (i.e. you save the tax forever and not just the time value of money). Few years ago companies were allowed to remit foreign profits back to US to stimulate the economy; that time is coming again. As always, everything to do with the US tax code is over complicated, but when the opportunity comes, it can be exploited.
Personally, I believe US corporations are well positioned in the global world better than anywhere else. Yet, I wish that the tax code did not strangle business as it does today.