Shiv Kapoor

Even Fatter Yields for Pfizer; M&A Targets in the Sector

Agree. Looks like PFE has now got new direction. At last the management is re-energized.
1. Pipeline is looking good; that they achieved phase 3 size targets a full year ahead.
2. They have a very good in-licensing strategy.
3. They are focused on EM’s revenues to reduce fall off after patent expiry because EM’s buy brands.
4. They are cutting costs to right size the business post Lipitor.
5. They have recently re-focused on biologics and stem cell. This is not merely high margin & growth business; it is also an area where patents are easier to protect & extend. Besides, even post patent the drug is hard to replicate.
6. They are exiting a significant area of past success with confidence; presumably because cardio, obesity, bone etc, is dominated by synthetic drugs which carry major patent cliff risks and RoI is no longer great.
7. They are entering generics to monetize their marketing advantage and decimate the competition.
8. They have paid to eliminate management distraction from litigation on Celebrex & Dextra.
9. Their cash hoard will serve them well in riding out a prolonged recession and their dividend yield should limit down-side caused by an extended depression.
10. The results should begin to show soon as there has been sufficient passage of time since initiation of efforts.
I have never doubted Pfizer's long term science will pay off; their IP is not valued. Now have I ever doubted the industry growth potential; demographics point to growth potential together with the fact that several therapeutic areas do not have cures today. I have never doubted their marketing prowess. The only thing I had reservations on was the present management; and now that looks to have changed.