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How Pfizer’s Blockbuster Products Are Offsetting Its Growth

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Mar. 31 2016, Updated 5:07 p.m. ET

Products offsetting growth

Pfizer’s (PFE) growth has been impacted negatively by some of its blockbuster drugs, including Enbrel, Celebrex, Lyrica, Zyvox, and Lipitor. These drugs are continuously losing their market shares to the generic competition following their patent expiries.

How Pfizer's Blockbuster Products Are Offsetting Growth

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Enbrel

Enbrel, a drug for the treatment of rheumatic disorders, is marketed by Pfizer for outside the US and Canadian markets. The marketing rights for the US and Canadian markets are with Amgen (AMGN). Overall, revenue fell by ~13.5% in 2015 compared to 2014 for outside the United States and Canada, and revenue fell by ~9.7% in 4Q15, following lower demand for the drug.

Analysts estimate a further fall of ~12% in Enbrel’s 1Q16 revenues compared to its 1Q15 revenues due to a lower demand.

Some TNF inhibitors used for the treatment of rheumatic disorders include Abbott’s (ABT) Humira, Merck & Co. (MRK) and Johnson & Johnson’s (JNJ) Remicade, and JNJ’s Simponi.

Celebrex

Celebrex is a non-steroidal anti-inflammatory drug (or NSAID) used to reduce pain and inflammation. Celebrex lost its exclusivity in December 2014, and its revenue has fallen by over 70% in the last year.

Celebrex’s revenue will fall further until the drug absorbs the effects of its patent expiry and the pricing pressures it faces due to its generic competition. For 1Q16, analysts estimate a fall of ~14% in Celebrex’s revenue compared to 1Q15.

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Viagra

Viagra, an erectile dysfunction drug, is one of Pfizer’s blockbuster drugs. The drug has lost its patent protection in a few countries including the European Union, Australia, and Japan.

The positive growth in Viagra’s revenues for most of 2015 show that the product has absorbed the effect of its patent expiry and pricing pressures. Its revenues will now grow based on demand for the drug. However, analysts estimate a fall of ~3.5% in Viagra’s 1Q16 revenue.

Lyrica

Lyrica, a drug used to relieve pain from damaged nerves due to diabetes, lost its exclusivity in certain countries of the European Union. This lead to a fall in its revenue in the second half of 2015. Analysts’ estimate a further fall of ~7% during 1Q16, mainly due to lower sales in Europe.

Other products

Pfizer’s other products include the following:

  • Zyvox, an antibiotic, lost exclusivity in May 2015, and its revenues have fallen by ~25% in the last two quarters.
  • Lipitor, a drug for reducing cholesterol and triglycerides in the blood, is losing its market share to generic competition in developed markets.

No further loss of exclusivity has been reported during the second half of 2015 and 1Q16, so no other major changes in the company’s revenues are expected.

Investors can consider ETFs such as the VanEck Vectors Pharmaceutical ETF (PPH), which holds 5.6% of its total assets in Pfizer, or the iShares U.S. Pharmaceuticals ETF (IHE), which holds nearly 8.8% of its total assets in Pfizer, in order to diversify risk.

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