Pfizer Update: EU Panel Recommends Oncology Drug Xalkori

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Pfizer (NYSE:PFE) received a positive opinion from the European Medicines Agency (EMA) for conditional approval of its oncology drug Xalkori. The advisory panel of the agency recommended that the drug be conditionally approved for use in cancer patients who have received at least one treatment for lung cancer. ((Pfizer gets positive EU review of cancer drug, Bloomberg BusinessWeek, July 20 2012)) While the recommendation is non-binding, we expect the company to eventually receive approval in the lucrative EU market, which could boost the drug’s sales even as it faces stiff competition from players like Roche (PINK:RHHBY), Amgen (NASDAQ:AMGN), Johnson and Johnson (NYSE:JNJ) and Novartis (NYSE:NVS) in the oncologics market.

Our price estimate for Pfizer stands at $25, implying a premium of 5% to the current market price.

See our complete analysis for Pfizer

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The treatment issues in lung cancer are aggravated as the symptoms typically appear after the disease reaches the advanced stage. For the same reason, it provides huge opportunities for pharmaceutical companies such as Pfizer. Xalkori is an oral monotherapy for the treatment of lung cancer, and it received the US FDA approval for on-small cell lung cancer last August.

This news adds to the list of  recent positive developments for the drug, including a positive outcome of the American Society of Clinical Oncology’s study and the recent launch in Canada. The study conducted by the American Society of Clinical Oncology found the drug to completely eradicate indications of three deadly tumors relating to nerves, blood and soft tissue in some children.

Pfizer’s oncologics segment is evolving and is expected to grab a larger share of the global oncologic drugs market, going forward. These events lend support to our expectation that the company will nearly double its market share in this segment. Currently, oncologic drugs contribute nearly 10% to our $25 price estimate for the company.

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