Anti-infective drugs form the second biggest business segment for Pfizer (NYSE:PFE) accounting for about 15% of its value according to our estimates. These drugs are designed and developed to counteract infections and include anti-septics, disinfectants, anti-biotics, anti-fungal and virucidal agents. Pfizer has a strong position in the anti-infective drugs market with well known brands such as Prevnar franchise of vaccines Zyrtec, Zithromax, Zyvox and Diflucan. Revenues from this segment constituted close to 14% of the company’s total revenues in 2012, and going forward we expect the proportion to slightly increase due to a mixed impact of the ramp up of Prevenar 13 sales partially offset by the loss of patent exclusivity for certain other drugs.
Like other major pharmaceutical companies, Pfizer is also facing patent expiry issues and plans to focus its R&D on growing immunology and oncology markets (read Will There Be Further R&D Cuts From Pfizer?) In addition to this, the company is facing currency headwinds and expects a slight decline in its overall revenues for 2013. The positive outlook for Prevnar and Prevenar 13 is something to cheer about for Pfizer amid all of these issues.
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Prevenar 13 Will Boost Sales
Pfizer has received approval in Europe to expand the usage of Prevenar 13 to adults aged 18-49.  Prevenar 13 is a pneumococcal conjugate vaccine that prevents invasive disease caused by Streptococcus pneumoniae, and was previously being administered to children aged 6 weeks to 17 years and adults aged 50 years and above. European approval will open up a big market for Pfizer and will aid its growth in 2013 and beyond. With no significant competition in the market, the Prevenar franchise has the potential to make up for the company’s revenue losses due to expiration of several patents. Prevenar is currently Pfizer’s 2nd biggest brand in terms of sales after Lyrica and could well become the biggest brand in the next couple of years. We expect the franchise’s sales to increase from $4.1 billion in 2012 to $7 billion by the end of our forecast period.
Prevenar 13 was first introduced for infants and young children in 2009 in Europe and has since been approved in over 120 countries for use in infants and young children as well as in over 80 countries for use in adults of age 50 years and above. With the recent approval, the vaccine is now practically available to the entire population of Europe, which stands at well over 700 million. The vaccine is useful for people who are at higher risk of contracting pneumococcal diseases due to their age or underlying chronic medical conditions that weaken the immune system making it easier for opportunistic infections to spread.
Research firm Datamonitor expects the U.S. pneumococcal vaccine market to grow to $2 billion by 2019, which will be almost entirely dominated by Prevenar 13. In addition to this, it expects top five European markets to account for almost $3.5 billion in pneumococcal vaccine sales by 2019, with Prevenar 13 having a near monopoly again. We believe that Pfizer will leverage its monopolistic position in the market and build Prevenar into a very strong franchise over the next few years.
The Outlook For Other Anti-infective Drugs
Pfizer’s revenues from other anti-infective drugs (excluding Prevnar and Prevenar) have declined in the past two years and stood at $3.6 billion in 2012. The revenue slump is going to be steeper going forward as some of the key drugs lose their patents. Zyvox will lose patent protection in 2015, and Vfend and Tygacil in 2016. In addition, the competition from other branded drugs and other forms of treatment options as well as the presence of generics will put downward pressure on prices and impact Pfizer’s growth.
The silver lining is that Pfizer’s R&D pipeline holds some promise, and the success of some of these drugs can change the course the company’s growth. The vaccine for Methicillin-Resistant Staphylococcus Aureus (MRSA) bacteria is in Phase 2 trials and has the potential to be the largest vaccine in the industry if it confers the breadth of coverage and reduces the need for anti-biotic treatment. MRSA infects 53 million people worldwide, and causes higher number of deaths in the U.S. than AIDS (acquired immuno deficiency syndrome). 
Our price estimate for Pfizer stands at 33.90, implying a premium of about 20% to the market price.
- Pfizer Receives European Approval To Expand Use Of Prevenar 13* To Adults Aged 18 To 49 Years For The Prevention Of Invasive Pneumococcal Disease, Pfizer Press Release, July 10 2013 [↩]
- FEATURE-Pfizer takes its shot at a vaccine for evasive superbug, Reuters, May 23 2013 [↩]