Pfizer (NYSE:PFE) holds a strong position in the central nervous system (CNS) drug market with a nearly 10% market share, thanks to its drug Lyrica, which was recently found ineffective for diabetes and HIV patients. Lyrica affects chemicals in the brain that transmit pain signals and slows down brain impulses that cause seizures. We estimate Pfizer’s market share to grow, but a declining global CNS market and reduced target patients can impact our forecast. Meanwhile, Pfizer’s another drug Tofacitinib is under trial and is said to have serious risks to infections and malignancies by the US Food and Drug Administration (FDA). The company operates in pharmaceuticals, animal health, consumer healthcare and nutrition, and it competes with key players in the healthcare sector such as Merck (NYSE:MRK), Johnson and Johnson (NYSE:JNJ) and Abbott Labs (NYSE:ABT).
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The global central nervous system drug market is expected to decline at an annual rate of 2-3% in the near future, and we expect Pfizer to gain at least 12.5% market share by the end of 2017. However, concerns loom over its ability to do so because of its shrinking target patients which now excludes HIV and diabetes patients.  Lyrica and other central nervous system drugs form nearly 12% of our $25.11 price estimate for PFE.
By tweaking the chart below, you will see how a change in Pfizer’s market share in central nervous system drug market impacts our price estimate for the stock.
Tofacitinib Side Effects
According to the FDA, Tofacitinib, a drug developed by Pfizer for the treatment of Rheumatoid arthritis, carries risks of serious infections and malignancies. Tofacitinib is an auto-immune drug that is presently under trial, and the FDA ruling is due by August 2012. Rheumatoid Arthritis has very few medications and Tofacitinib, if approved, would be the first drug after the success of Abbott’s Humira in this segment.  Abbott has the largest market share in the auto-immune drug market, thanks to the success of Humira.
We have a $25.11 price estimate for Pfizer, which is nearly 10% above the current market price, aided by its diversified product portfolio and a strong product pipeline.Notes:
- Pfizer’s Lyrica falls short in two pain studies, newsday.com, May 6, 2012 [↩]
- Pfizer Arthritis Pill Raises Safety Concerns, FDA Staff Says, Bloomberg.com, May 8, 2012 [↩]