Pfizer’s Neuroscience Drug Portfolio Looks More Or Less Mature
Pfizer (NYSE:PFE) recently announced that it will end research into new drugs for Alzheimer’s and Parkinson’s diseases, resulting in 300 layoffs from its Neuroscience segment. Neuroscience drugs account for just around 5% of the company’s value, according to our estimates. Most of Pfizer’s value can be attributed to its Biosimilars, Consumer Healthcare & Other Pharma segment. In this note, we focus on the company’s Neuroscience segment. In the chart below we show Pfizer’s historical as well as forecast revenue breakdown.
Pfizer’s Neuroscience portfolio consists of Lyrica, Effexor, Zoloft, Pristiq, Neurontin, Xanax/Xanax XR and Relpax. In addition, our estimates also include probability-adjusted future revenues from some neuroscience drugs in Pfizer’s phase 3 pipeline. The segment sales grew from just under $5 billion in 2009 to over $7 billion in 2016. However, we forecast the sales to decline substantially in the coming years to just around $2 billion by the end of our forecast period in 2024. Our forecast is primarily driven by the fact that most of the Neuroscience drugs have lost patent protection or are expected to lose it in the near term. Lyrica, which is Pfizer’s biggest neuroscience drug, earned nearly $5 billion in revenues in 2016, accounting for about 70% of the division’s sales. The drug lost its EU patent protection in 2014 and is expected to lose its patent exclusivity in the U.S. in 2018. Additionally, Effexor, Zoloft, Neurontin and Xanax have already lost their patent protection. The combined sales of these drugs accounted for nearly 14% of Pfizer’s neuroscience drug sales in 2016. Relpax, which is used to treat migraines in adults, saw its U.S. patent expire at the end of 2016. Pristiq, which is indicated for treating depression, is patent protected in the U.S. until 2022. However, an alternate version of the drug has been approved by the FDA. We believe the Pristiq’s growth could suffer because of this.
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Pfizer does not have any recently launched Neuroscience drugs, which suggests that it is highly unlikely that the decline in Neuroscience drug revenues will halt any time soon, thereby indicating that the portfolio is more or less mature. Looking forward, Pfizer has 1 new Neuroscience compound under registration – Tafamidis Meglumine – which is used for the treatment of a rare disease transthyretin familial amyloid polyneuropathy. It is a fast track orphan drug. We estimate that Tafamidis Meglumine’s peak sales are likely to be on the lower side (~ $500 million) as the disease for which it is indicated, has only 8,000 – 10,000 patients worldwide.
We currently have a price estimate of $35 for Pfizer, which is around its current market price.
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