Morningstar | Cost-saving plans and recent product launches should offset patent losses and drive growth.
Pfizer's foundation remains solid, based on strong cash flows generated from a basket of diverse drugs. The company's large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business. Pfizer's size establishes one of the largest economies of scale in the pharmaceutical industry. In a business where drug development needs a lot of shots on goal to be successful, Pfizer has the financial resources and the established research power to support the development of more new drugs. Also, after many years of struggling to bring out important new drugs, Pfizer is now launching several potential blockbusters in cancer, heart disease, and immunology. Pfizer's vast financial resources support a leading salesforce. Pfizer's commitment to postapproval studies provides its salespeople with an armamentarium of data for their marketing campaigns. Further, Pfizer's leading salesforces in emerging countries position the company to benefit from the dramatically increasing wealth in nations such as Brazil, Russia, India, China, and Turkey. While entrenched as an industry leader, Pfizer faces challenges in the near term. The loss of patent protection on several drugs will weigh on future growth. In particular, the recent 2017 patent loss on Viagra and the eventual 2019-20 U.S. patent losses on Lyrica will slow long-term growth. However, we believe Pfizer's operations can withstand the upcoming generic competition, and the 2009 acquisition of Wyeth helps insulate Pfizer from any one particular patent loss. Following the merger, Pfizer has a much stronger position in the vaccine industry with pneumococcal vaccine Prevnar 13. Vaccines tend to be more resistant to generic competition because of the manufacturing complexity and relatively lower prices.Pfizer is a research-based biopharmaceutical company. The company is engaged in discovering, developing, manufacturing and distributing of healthcare products, including medicines and vaccines. The company manages its commercial operations through three businesses: Pfizer Biopharmaceuticals Group, which includes Oncology, Inflammation and Immunology, Rare Disease, Hospital, Vaccines and Internal Medicine business units, as well as a hospital business unit; Upjohn, which includes the company's solid oral dose brands such as Lyrica, Lipitor, Norvasc, Celebrex, Viagra, and certain generic medicines; and Consumer Healthcare, which is an over-the-counter medicines business.
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