Pfizer Heads To $25 As WHO Backs Prevenar Vaccine For Adults

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Pfizer‘s (NYSE:PFE) blockbuster drug Prevenar 13 (or Prevnar 13 in the U.S., Canada and Taiwan) got a major boost as the drug received World Health Organization (WHO) qualification for use in adults aged 50 years and above. [1] Prevenar is a vaccine currently used in preventing invasive pneumococcal diseases in infants and young children. This lends support to our expectation of continued rapid growth in Prevenar sales, going forward.

According to the World Health Organization estimates, nearly 1.6 million people die each year from pneumococcal infections. The recommendation will open a larger market for the company’s Prevenar franchise as WHO member countries can now use the vaccines for older patients. Currently, Prevenar 13 is the only pneumococcal conjugate vaccine approved for use in adults 50 years old and above.

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The company, however, will have to wait to realize the full sales potential of Prevenar as the Centers for Disease Control and Prevention (CDC) is yet to recommend a much broader use of the vaccine, for adults aged 50 years and above. Health plans usually wait for the CDC recommendations to cover a vaccine’s use. While the FDA approved Prevenar for the above age group last December, the CDC is waiting for the efficacy results of an ongoing clinical study of Prevenar 13 before deciding on broader recommendation. Pfizer expects to complete the trials by 2013. We expect the drug to eventually receive approval as the CDC recently recommended Prevenar 13 for adults aged 19 years or older with impaired immune system.

Pfizer has a strong presence in anti-infectives drug market, and we expect it to penetrate further with help from a range of products such as Prevenar, Zyvox, Vfend and Zosyn. In 2011, Prevenar generated about $3.7 billion in sales,  and we expect it to nearly double in a few years following the broader recommendations even as the vaccine competes with Merck‘s (NYSE:MRK) Pneumovax.

However, if Pfizer doesn’t get the much-awaited broader recommendation from the CDC, the drug’s sales could witness stagnant growth. This will have a significant impact on the company’s value as Prevnar & Prevenar division contributes nearly 12% value to our current $25 price estimate, which we are in the process of updating and revising to reflect the recent developments.

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Notes:
  1. World Health Organization Grants Expansion To The Prequalification For Prevenar 13 To Include Adults 50 Years Of Age And Older, Pfizer Press Release, Sept 12 2012 []
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