Pfizer (NYSE:PFE) had been marketing an antibiotic drug Zyvox as a better drug compared to a generic drug, Vancomycin. However, the company relied upon flawed clinical trials to validate its claim. This has resulted into company paying $3.3 million to Oregon Department of Justice to settle a two-year investigation of the claims which the drug made. Zyvox earned revenues of c. $ 1.2 billion in 2011. On a related note, Pfizer also declared in it annual filing with SEC for 2011 that it has received inquiries for another drug Lyrica. Pfizer competes with Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK) and Abbott Laboratories (NYSE:ABT) in the pharmaceuticals segment.
Zyvox is an anti-infective drug and Lyrica is a drug for central nervous system ailments. These are two key markets for Pfizer and its credibility may get hampered if similar incidents happen in future. This will directly result in Pfizer losing market share to its competitors.
The Food and Drug Administration (FDA) recently rejected Ridaforolimus, a drug for a rare form of cancer developed by Merck (NYSE:MRK) and Ariad Pharmaceuticals (NASDAQ:ARIA) whereas Votrient, a similar drug from GlaxoSmithKline (NYSE:GSK) has been approved. This will impact future revenues for Merck in Oncology segment which forms nearly 2.5% of Trefis Price Estimate for Merck.
The majority of cancer treatments currently are focused on killing the cancerous cells through Chemotherapy and other forms of treatment. Nearly 10,000 patients are diagnosed each year with cancer and supports the need for cancer drugs. As such, the rejection of this drug could mean a big loss for Merck in future.
We currently have a $41 Trefis price estimate for Merck, which stands nearly 10% above its market price. Anti-infectives and oncology segments account for nearly 25% and 2.5% of its value.
On the other hand, anti-infective drugs and central nervous system drugs form nearly 17% and 12% of the $25 Trefis price estimate for Pfizer.