12:00 AM
Jul 22, 2002
 |  BioCentury  |  Strategy

Pfizer: Safer - if not greater - growth

Pfizer Inc., which for some time has promised to file 15 new NDAs in the next five years, has raised that goal to "20 in 5" following last week's announcement that it plans to acquire Pharmacia Corp.

But PFE did not raise its previously stated 16% EPS growth target for the 2002-2004 period. Instead it gave guidance that the combined entity would have slightly lower growth in revenues and increased net profits. The implication is two-fold: the benefits of the acquisition come from one-time cost-cutting, and the company will need the five additional NDAs to maintain the same growth rate off a larger base.

PFE positioned the deal as one that reduces risk in a time of "irrational gloom" by creating a company of increased size, diversification and marketing power. Management implied that such a strategy is mandated by the increased cost of R&D, the stricter and slower regulatory environment, political pressure on pricing, and intellectual property challenges.

Indeed, PFE CEO Henry McKinnell described generics makers in India and the U.S. as thieves "worse than Napster" trying to steal technology.

Despite this downbeat description of the political and economic environment, PFE (New York, N.Y.) is in a comfortable intellectual property position regarding its top marketed products, with no major patent expirations before 2010. And indeed, the company last week reported first half 2002 EPS of $0.72, up 14% over 2001.

PFE confirmed its prior guidance, excluding merger-related costs, for full year EPS of $1.58, a 21% increase over 2001.

Both the 2001 and 2002 numbers are for PFE alone. In the company's conference call last week, CFO David Shedlarz said compounded annual revenue growth for PFE...

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