Lyrica Patent Expiration

Can Pfizer Overcome Release Of Generic Version Of Lyrica

Loss of patent protection for Lipitor was a great downfall for Pfizer, that the company is now taking care of Lyrica (pregabalin). Lyrica became most popular in 2014, with $5.2 billion of sales to add to Pfizer’s profits. However, that same year, the drug lost exclusivity in European countries, and Pfizer was faced with worldwide decrease in sales of Lyrica. During the first 3 quarters of 2016, Lyrica accounted for 9.5% or $3.7 billion in total sales of Pfizer.

In the three quarters of 2016 indicated, Lyrica demonstrated an increase of 15% under Innovative Health, and such value amounted to $3.1 billion. Provided that Lyrica is protected by United States patent, its revenue is categorized under IH business. In the United States, revenue of Lyrica increased by 19% because of increasing volume and price.

However, product patent for Lyrica in United States is expected to expired in 2018. Afterward, people can only expect its revenue to fall. For people investing in iShares US Healthcare ETF, they may be given backdoor access to diversified exposure to Pfizer, which holds 6.6% of IYH’s total investments in assets.

LYRICA TAKES PART IN EH BUSINESS

Under Essential Health (EH) business, Lyrica’s demonstrated a decrease in revenue because of loss of patent protection in specific places in Europe. The decrease reached 33% to $623 million during the first three quarters of 2016. Lyrica was a former member of Peri-LOE products line-up, which includes those that are waiting to lose patent protection or have already lost it.

Lyrica’s competitors include Johnson & Johnson’s Topamax, GlaxoSmithKline’s Lamictal, and Shire’s Buccolam.

PREDICTIONS FOR PFIZER’S REVENUE

At present, Pfizer already suffers from 4.2% decrease in stocks. The company has made a number of acquisitions to redeem itself, but it seems that investors are not that interested with their offer. Pfizer is struggling revenue losses brought about by patent expiry of one its top line drug. The downtrend has been going on for five years not. In 2015, the company’s revenue was $48.9 billion, which was comparatively lower than the $67 billion it earned in 2010.

However, Pfizer seems to be unable to recover no how much more asset it acquires. In 2016, the expected revenue for the company is $52.9 billion, which is 8.3 increase from that of previous year. For 2017 and 2018, the expected increases are $55.4 billion and $57 billion, respectively. Pfizer’s growth is assumed to depend on Ibrance, Xeljanz, Eliquis, and avelumab.

FACTORS THAT WILL DRIVE TOP LINE GROWTH

As previously described, Pfizer acquired multiple assets for the purpose of hastening its IH business growth. Some of the key assets that the company acquired include Crisaborole from Anacor Pharmaceuticals and Xtandi from Medivation.

Pfizer also acquired Hospira’s Sterile Injectables and AstraZeneca’s small-molecule anti-infective businesses.

For those who intending to invest, they should place their bets on ETFs, including iShares US Healthcare ETF. IYH accounts for 6.6% of ETF on Pfizer, 10.1% in Johnson & Johnson, and 4.9% in Merck & Co.

ADVICE OF ANALYSTS

Based on Reuters consensus involving 21 brokerage companies last December 2016, most analysts (61.9%) suggest buying on Pfizer. Among these analysts, 23.8% provided “strong buys” recommendations, whereas 38.1% suggested just “buys.” Meanwhile, a still considerable number of analysts (33.3%) gave “hold” ratings, whereas very few (4.8%) suggested “sells” on Pfizer stocks.

People may gain access to Pfizer through investment in VanEck Vectors Pharmaceutical ETF, whose 5% of total holdings is owned by Pfizer.

PFIZER’S MEAN TARGET PRICE

On December 8 last year, mean target price for Pfizer is $37.85, which indicates a 22.3% increase from the $30.94 closing price calculated on that same day.

However, mean price still showed a decrease compared with $39.58 estimated on September 8, 2016.

ANALYSTS’ SUGGESTIONS FOR PFIZER’S PEERS

Four analyst participated in a Reuters survey on December 8, 2016. One (25%) of them gave “strong buy” ratings on AstraZeneca, whereas three (75%) suggested “hold” on stocks. With mean target price of $34.12, investors may gain return potential of 29.9% in AstraZeneca in the coming year.

Another Reuters surveyed included 20 analysts. Among the participants, 40% recommended “buy” on Merck & Co., and the rest (60%) suggested “buy.” Mean target price Merck & Co. was $68 last December 8. This poses a potential return of 13.1% for its closing price of $60.12.

On December 8, 2016, Reuters consensus consisting of three analysts yielded results of 33.3% “buy” recommendations on Sanofi and 66.7% “hold” recommendations on stocks. A total of 33.3% was allotted for “strong buy” ratings for mean target price of $50.67 for Sanofi. This price has return potential of 27.4% in the coming year.

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