Pfizer’s $26 Value Finds Support With Strong Prevnar Vaccine Outlook

by Trefis Team
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Pfizer‘s (NYSE:PFE) blockbuster vaccine Prevenar 13 (or Prevnar 13 in the U.S., Canada and Taiwan) has shown as strong an immune response in adults aged 18 to 49 as in those aged above 50 years in a phase III trial. [1] Prevenar is currently used in preventing invasive pneumococcal diseases in infants and young children. It is also the only pneumococcal conjugate vaccine approved for use in adults 50 years and above. The results support our expectation of continued rapid growth in Prevenar sales, which will help Pfizer gain broader recommendations for the vaccine, opening a larger market for the Prevenar franchise.

See our complete analysis for Pfizer

Pfizer has a strong presence in the 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 remains the market leader even as the vaccine competes with Merck‘s (NYSE:MRK) Pneumovax.

We expect the vaccine sales to more than double by the end of our forecast period as the U.S. Centers for Disease Control and Prevention (CDC) recently recommended Prevenar 13 for adults aged 19 years or older with impaired immune system. Further, the vaccine received World Health Organization (WHO) qualification for use in adults aged 50 years and above, which means WHO member countries can now use the vaccine for older patients.

This expected growth, however, hinges much on broader recommendations the vaccine is awaiting, including extension to young adults of ages 18 and 19. But, we believe, the positive results from the clinical trial will strengthen Pfizer’s bid to get approval for the vaccine.

The vaccine is also awaiting the CDC recommendations for all 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 (Pfizer expects to complete the trials by 2013) of Prevenar 13 before deciding on broader recommendations.

If Pfizer doesn’t get these much-awaited recommendations, the drug’s sales could witness stagnant growth. Prevnar & Prevenar division contributes nearly 10% value to our current price estimate.

We currently have a $26 price estimate  for Pfizer, in-line with the current market price. The stock has soared 40% this year to converge with our price estimate.

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Notes:
  1. Trial suggests Prevnar may also protect ages 18-49, Reuters, Oct 4 2012 []
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