The Outlook For Pfizer’s Anti-Infective Drugs Business
Pfizer’s (NYSE:PFE) anti-infective drugs account for close to 12% of the company’s value, according to our estimates. Most of this value can be attributed to a single drug family – Prevnar. The company has 10 drugs in its anti-infective portfolio, including Zyvox, Vfend, Zmax and Tygacil, among others. We expect Pfizer’s anti-infective franchise to face headwinds going forward, given that patents will soon expire for some of its drugs. While Prevnar’s patent will expire in 2026, its sales have slowed down in recent quarters. In Q3 2017, Prevnar sales were down 1% to around $1.5 billion. Pfizer stated that it saw a decline in vaccination rate among adults in 2016, and this situation may persist in the near term. This casts some doubt over Prevnar’s ability to realize its full potential.
Prevnar could potentially be administered to 12 million infants annually, translating into annual revenue of $6.5 billion. Additionally, as the vaccine can be administered to adults and adolescents as well, the untapped potential remains significant. Even if we assume that vaccine doses are given to just 2% of adults in key developed countries (U.S., Europe, Japan & Australia) it could add nearly $2.3 billion in the vaccine’s annual revenue at the rate of 1 dose per adult. This would add up to potential sales of $8.5 billion. However, given the slowdown in vaccination rates and the recent decline in sales, we expect Prevnar sales to remain in the $5-6 billion range throughout our forecast period. We don’t expect any significant drop in sales given that the patent is valid until 2026 in most parts of the world, and it faces little threat from generic competition as of now.
Looking forward, unlike other therapeutic areas, Pfizer does not have new anti-infective compounds in its phase 3 trials. This suggests that we are not likely to see any new launches in the near term, so the growth in the anti-infective segment will mostly depend upon how Prevnar expands further. The chart below shows the historical and expected revenue trajectory of Pfizer’s anti-infective portfolio.
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We currently have a price estimate of $35 for Pfizer, which is around its current market price.
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