Pfizer : Does it Have Room to Grow Further?

The criticism from some investors is that Pfizer enjoyed its fame and now it is old news. It may be reasonable to think like that especially following the company’s solid COVID-19 revenue stream which has now crumbled. The company’s overall revenue, profits, and share prices have also dropped.

Yet some analysts believe that the drug maker has potential. As of now, the market capitalisation of Pfizer is around $156 billion. But could the company achieve the $1 trillion level in the next decade, let’s say? Some analysts believe that this may be possible as long as the company makes some drastic changes.

Pfizer can achieve strong growth if it makes drastic changes

First of all, Pfizer will need to stop losing money from the sales of its COVID-19 vaccine. 2024 looks promising and analysts believe that the drug maker will increase sales of its COVID-19 vaccine and that it will get approval for a COVID-flu vaccine next year, which may attract more people.

Additionally, Pfizer’s products will need to start performing significantly better than expected. The silver lining here is that the drugmaker secured a new record number of United States Food and Drug Administration approvals in 2023. The company has several rising stars in its portfolio, particularly Abrysvo, an RSV vaccine candidate, and Nurtec, which treats migraines.

New Markets

Beyond that, analysts have also noted that the company must identify a revolutionary new approach that will provide a therapy for a big market. Some have suggested obesity and non alcoholic steatohepatitis (NASH), which is also referred to as metabolic dysfunction-associated steatohepatitis (MASH). Pfizer has a limited number of candidates which can be game changers in these markets.

The cancer drug Inlyta and the autoimmune disease drug Xeljanz expire their U.S. patents in 2025. Patents for the other two anti-cancer medications, namely Ibrance and Xtandi, expire in 2027. Direct competition between Eliquis, a blood-thinning drug, and its generic rivals will begin in 2028. Besides, the exclusivity of other products will also be gone before 2035.

New products to boost revenue

On the other hand, Pfizer predicts that the launch of its new products and new indications will offset any losses in revenue from the expiration of its patents. However, things may change, and sales projections may fail to be fulfilled or the company may experience disruptions in its pipeline. It is also possible that programs that it foresees as primary growth drivers may not work in the future.

Getting a significant boost in markets like obesity or NASH/MASH is not going to be an easy thing to do, either. In the obesity sector, Eli Lilly and Novo Nordisk have already got a big head start. Madrigal Pharmaceuticals now has the NASH/MASH market all to itself. Other companies may enter the market with weight loss and NASH/MASH drugs during the next several years.

Is Pfizer a good pick for investors?

It is a sound stock investment for the long-term. For one, Pfizer has a dividend yield of more than 6% which is the highest in the industry. The capital which the pharmaceutical company spends on its dividend program will not add to the market cap, but rather, it will help shareholders to make money.

Pfizer will give shareholders good (although not excellent) earnings growth for the next decade and the next. The business certainly has challenges to tackle, but it has a good strategy in place to overcome them by bringing out new products and entering into strategic business development deals.

Nobody knows exactly what lies ahead for Pfizer. However, the company will be much bigger in the future than it is now — even though its market cap won’t be anywhere near the $1 trillion playfully suggested by some analysts.

Pfizer to sell Haleon shares for $3.5 billion

According to various media releases on the 19th of March, UK-based global consumer health company Haleon (HLN.L) reported that top shareholder Pfizer (PFE.N), offloaded a roughly $3.5 billion stake in Haleon, bringing down its holding in the British company to 22.6%. Haleon was formed in July 2019 by merging drugmaker GSK and Pfizer’s consumer-healthcare businesses.

Pfizer previously held a 32% stake, followed by second-largest shareholder GSK (GSK.L), which has a 4.2% holding.

This is Pfizer’s first stake sale

This is the first sale of Haleon’s stock by Pfizer since the company was separated from GSK and held its initial public offering in 2022. This comes three years after the formation of Haleon which combined the consumer healthcare units of its parent companies. Last year, Pfizer announced that it was to divest its ownership in a “slow and gradual” manner over the course of several months.

Also, GSK, which began with an interest of 12.9%, has been decreasing its stake over the last year with the last sale being in January.

Pfizer sold 594 million ordinary shares priced at £3.08 pounds each, and about 196.5 million ADSs (American Depository Shares), at $7.85 each, which totalled approximately $3.1 billion.

This is more than the 630 million stock sale Haleon announced on Monday (18 March 2024). The company behind Sensodyne toothpaste and Advil painkillers is going to buy back £315 million ($399.92 million) worth of shares from the market. Haleon’s portfolio also includes products such as Aquafresh mouthwash and Panadol.

On the 21st of March, the sale and the buyback were closed and Pfizer’s shares were subject to a 90-day lock-up period in order to execute the sale.

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