Pfizer‘s (NYSE:PFE) Zithromax, an antibiotic used in the treatment of different types of infections, such as respiratory infections, skin infections, ear infections, and sexually transmitted diseases, caused by bacteria, is found to increase deaths due to heart failure. Separately, another drug Xalcori was successful in completely curing three types of deadly tumors in children. Pfizer’s Oncology (cancer) franchise has been very active and, according to our estimates, the company will nearly double its market share in this segment despite competition with stronger players like Roche (PINK:RHHBY), Amgen (NASDAQ:AMGN), Johnson and Johnson (NYSE:JNJ) and Novartis (NYSE:NVS).
Our price estimate for Pfizer stands at $25.11, implying a premium of 11% to the current market price.
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Zithromax may lose market
Despite having lost its patent back in 2005, Zithromax grossed $453 million in revenue in 2011 and is expected to bring in at least $400 million in sales for the next 4-5 years. However, this may get tougher with this recent study which confirmed cardiovascular deaths in patients who used Zithromax for treating bacterial infections. 
Pfizer commands nearly 20% market share in anti-infectives drug market and is expected to penetrate further with the help of a range of products such as Prevnar/Prevenar, Zyvox, Vfend and Zosyn. If Zithromax revenues decline, it would be a let down for the anti-infectives segment, where non-Prevenar market share is already expected to decline. Prevenar & Other anti-infective drugs division contributes nearly 17% value to our $25.11 price estimate.
Xalcori: A strong step in Oncologics
Xalcori was successful in some children, according to American Society of Clinical Oncology. It is found to completely eradicate indications of three deadly tumors relating to the nerves, blood and soft tissue. 
In cases of blood cancer called anaplastic large cell lymphomathese, all signs of cancer vanished in seven of eight kids under treatment. The drug also partially eliminated indications of a rare nerve cell cancer, neuroblastoma, in 2 of 27 kids, who had failed standard therapy, while it showed positive results in another 2 of 7 children with inflammatory myofibroblastic tumor, a rare malignancy of soft tissues.
Pfizer’s oncologics segment is evolving and is expected to grab a larger pie of the global oncologic drugs market, going forward. And the success of Xalcori bodes well with Pfizer’s pursuits. Oncologic drugs form nearly 10% of $25.11 Trefis price estimate for PFE.Notes:
- Antibiotic Zithromax Carries Increase of Heart Death, businessweek.com, May 17, 2012 [↩]
- Pfizer Lung Drug Stops Deadly Child Cancers in Study, bloomberg.com, May 18, 2012 [↩]