Pfizer (PFE) Stock Price Drivers

Stock Price Drivers R&D Productivity R&D productivity is a measure of the growth in operating profits achieved from investments in R&D. Pfizer's late-stage assets, products in phase III of its pipeline, are expected to generate sales $16.58 billion over 2012-2017, of which $6.1 will be retained as operating income as the company has an average operating margin of 36.8% in the pharmaceutical sector. To develop those late-stage assets, the company has spent $23.4 billion over the last three years (2010-2012). The ratio of Pfizer's operating profit to R&D is therefore 26%. Which is lower than of JGJ, a higher R&D productivity ratio is good for pharmaceutical companies. Patent Cliff Major pharmaceuticals are currently facing what is called the 'patent cliff'. The patent cliff refers to the steep drop in sales of a blockbuster drug following the expiry of the patent controlling its production. Pfizer lost exclusivity over Lipitor, which was the bestselling drug in the world, in November 2011. The expiry of the drug's patent was followed by a rapid decline in sales, which fell to $4 billion from $12 billion prior to the patent's expiration. Other Pfizer drugs whose patents have expired include: Drug Name Patent Expiry Lipitor % decline in sales after expiry December 2011 58.8% YoY Caduet December 2011 52% YoY Detrol November 2012 13.8% YoY Xalatan March 2011 35.5% YoY Effexor July 2010 60.5% YoY Revatio September 2012 44.4% YoY Patent Expiries in Future Celebrex 2Q2014 Relpax 2Q2017 Lyrica 3Q2019 Detrol LA 2Q2020 SOURCES: Company Data, SEC filings, Bloomberg Professional Services BIDNESS etc. DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein or to suggest approval for or affiliation with Bidness Etc.