Pfizer (PFE) has recently been struggling to get an edge in the pharmaceutical industry. Not only is it struggling to get a major drug approved, but it also is on the defensive in several ways. Based on the recent news events surrounding the company, I find little reason to invest in Pfizer stock, and I don't think it will be able to maintain its price (over $22) as it sits so near its 52-week high. Not only that, but Pfizer's P/E ratio sits at 21.30, certainly too high for a company dealing with a string of bad news.
Delays in approval are never good things for pharmaceutical companies, especially considering the demand for new treatments. Bristol Myers Squibb (BMY) and Pfizer have failed to receive approval for their "top experimental drug," which is a blood thinner called Eliquis. The U.S. Food and Drug Administration is not seeking new studies at the moment, so this is not such terrible news for the companies. It does want clarification on its completed trials though, so it remains unclear as to how this will play out for the two companies. Either way, this will have at least a temporarily negative effect on the stock prices for both companies.
This is not the only rejection that Pfizer is dealing with at the moment. A European committee has decided that Pfizer cannot market its Gaucher disease drug Elelyso because competitor Shire (SHPGY) has exclusive rights for treating the disease. Since Elelyso is similar to Shire's Vpriv, Pfizer will not be able to market its drug in Europe. This is another setback for the company, as this is one more development that will prevent Pfizer from moving forward with its plans.
Pfizer is also facing potential struggles related to its patent on its antidepressant Pristiq. It is currently suing Watson Pharmaceuticals (WPI) for introducing a generic version of the drug, claiming that it violates Pfizer's patent. In the end, however, this will not pose such a major problem to Pfizer. Due to the lawsuit, the U.S. Food and Drug Administration will not be approving Watson's generic drug until August 2015 or the end of the litigation. This lawsuit will keep the generic drug off the market for a while, therefore, regardless of the outcome. Investors should watch for developments in this lawsuit, but I think Pfizer has a good case and will come out ahead when all is said and done. It should continue to enjoy a generic-free market for Pristiq for some time to come.
Another development is much more negative, and Pfizer will face a poor reaction from its investors. A set of emails have recently been released, and they demonstrate that Pfizer employees misled consumers about its arthritis drug Celebrex. The employees were not truthful about the dangers of the drug, and I would be surprised if this did not lead to legal ramifications for the company. It will also turn investors away from Pfizer stock, as the company appears dishonest and corrupt. This adds to the bad news about Eliquis and Elelyso, so Pfizer stock seems to be in quite a bad position at the moment.
There are some positive developments for the company though. For example, the Committee for Medicinal Products for Human Use (CHMP) gave support for Pfizer's Enbrel and Abbott Laboratories' (ABT) Humira. Pfizer also reported positive real-world data for its Xiapex. It has demonstrated that Xiapex delivers an "improved range of movement to Dupuytren's contracture patients," which is consistent with the results of a previous clinical study. The new study also showed that its positive outcomes can be delivered through fewer injections and hospital visits than had been previously believed. This is certainly welcomed news, but the target market for Xiapex may prove too small to be very effective in the market.
It has also received some good press, as a report indicates that it will remain the top antibacterial drug manufacturer in 2012. The expiration of patents, however, will lead it to lose revenue and market share. This positive news may only be temporary, therefore, and investors should carefully monitor this company's place in the industry as time moves forward. It has a few good things going for it this year, but it may fall from the top of the industry in the future.
Those few things led Pfizer to hit its 52 week high late last quarter, but that also came immediately after announcing its dividend. Investors were certainly elated, but I'm afraid Pfizer won't find as much success in the coming quarters. The company showed a 12.5% increase in sales over the last year, but this new set of drugs seem to come with new complications.
Pfizer is struggling to gain approval for Eliquis or Elelyso, and it appears corrupt as its employees have misled consumers about its arthritis drug Celebrex. It must defend its patent on Pristiq, and it will likely fall from the top of the antibacterial drug industry by 2016. The company is releasing positive study results and will probably receive approval for additional indications of its Enbrel, but these are not big enough of events to overshadow the negative news stories.
I do not have high hopes for Pfizer stock at the moment, and I think it will struggle even more when it comes to the big picture. I recommend staying away from Pfizer until one of these rejections turns around, or if the combination of Humira and Xiapex looks strong enough to carry Pfizer forward. There's just too little to gain for now to justify paying more than $22 for Pfizer.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.