Pfizer: 2012 Review And 2013 Outlook

| About: Pfizer Inc. (PFE)
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As 2012 nears its end, we find it prudent to take a look at what happened to the pharmaceutical companies currently under our coverage in 2012, and what to expect from them in 2013. Despite several major patent expiries, 2012 has been a great year for drugmakers as they witnessed a sharp run up in their stock prices. Below we take a look at the largest drugmaker Pfizer (NYSE:PFE), which entered 2012 without the exclusivity of Lipitor after it lost U.S. patent for its largest selling drug in November 2011. However, as the market usually discounts known events well in advance, Pfizer’s stock soared almost 30% from lows it made in December 2011 on the hopes of the approval for new drugs and broader usage of current drugs.

A Look At Pfizer's 2012

This past year has been a mixed bag for the drugmaker as it lost patent protection of its blockbuster drug, Enbrel. Pfizer also faced some setbacks pertaining to its pipeline as the approval for its billion dollars potential drug Eliquis, a part of the antithrombotic family that helps prevent clotting, was delayed by the FDA. Further, the agency rejected its application for orphan central nervous system drug, Tafamidus, seeking more data and clinical trials to prove the efficacy of the drug.

Despite these setbacks, recent approval for Tofacitinib, a drug to fight Rheumatoid Arthritis (RA), and Pfizer’s trump card in autoimmune market came to the rescue for the drugmaker. One of the most promising keys for future growth for is Prevenar 13, a pneumonia vaccine that also received a boost as the U.S. Centers for Disease Control and Prevention (CDC) recommended it for adults aged 19 years or older with impaired immune system. Further, the vaccine received World Health Organization (WHO) qualification for use in adults aged 50 years and above, which means WHO member countries can now use the vaccine for older patients.

Also, the company won a patent case over the generic version of pain drug Lyrica, which has given Pfizer exclusive sales rights of its second largest selling drug until 2018. Lyrica also got approval for broader use to treat neuropathic pain from spinal cord injury, which has opened a much larger market. In addition, the drug company settled lawsuits with Mylan And Impax over generic Detrol LA, delaying the generic competition until 2014.

Due to patent expiries, Pfizer took several other measures including increase its focus on core pharma business along with reducing staff. The company completed sale of its nutritional business for a $11.9 billion cash deal, while IPO of its animal business Zoetis in on track.

What to Expect in 2013

While 2013 earnings may remain affected on account of lost sales due to patent expiries for Enbrel and Detrol, among others, Pfizer may breathe a sigh of relief with no major patent losses in 2013. However, our eyes are on Eliquis, which is currently approved in many countries (excluding the U.S.) for preventing blood clots in patients who have knee or hip replacements and nonvalvular atrial fibrillation (NVAF, a type of abnormal/irregular heart beat) patients. Nonetheless, FDA approval, which will open a much larger market is still evading the drug. But, we believe Eliquis has a decent chance of being approved in March 2013, considering the fact that it is already approved in Europe and there are impressive results from clinical trials to lend support to it.

We will also be closely watching its vaccine Prevenar 13, whose expected growth hinges mostly on broader recommendations the vaccine is awaiting, including the extension to young adults of ages 18 and 19. The vaccine is also awaiting the U.S. CDC recommendations for all adults aged 50 years and above. Health plans in the U.S. usually wait for the CDC recommendations to cover a vaccine’s use. While the FDA approved the vaccine for the above age group in December 2011, the CDC is waiting for the efficacy results of an ongoing clinical study (Pfizer expects to complete the trials by 2013) before deciding on broader recommendations. All of these approvals will open a bigger market for the vaccine and will drive its growth.

The impending IPO of its animal business will also be much sought after as to how much valuation Pfizer can get it for. While 2012 did not see big acquisitions, one can expect some big ticket acquisitions in 2013, especially in emerging markets. Rumors were making the rounds that one of its Indian suppliers, Stride Acrolab’s specialty injectables unit Agila could be the prime target.

Disclosure: No positions.