Is $PFE (+1,91%) a turnaround candidate?
After the hype surrounding the corona vaccines, Pfizer is in crisis: the share price has collapsed, sales are weakening and new blockbusters are a long time coming. But what is the real situation? Is there any hope of a turnaround - or will the shares remain a construction site?
A look at the current situation
Pfizer is in a difficult situation. After peaking during the pandemic, the share price has stabilized at around 25 euros, a far cry
far from the peak values of over 40 euros. Sales in the third quarter of 2024 amounted to USD 17.7 billion - an increase of 31% compared to the previous year. However, excluding the COVID-19 products Paxlovid and Comirnaty, growth remains moderate at 14%. Pfizer is struggling to stabilize its sales in other areas, while older drugs such as Ibrance (-13%) or Xeljanz (-36%) are increasingly losing market share.
The dividend yield of around 6.5 % appears attractive at first glance, but is it sustainable? Pfizer paid out USD 7.1 billion in dividends in the first nine months of the year, while spending on research and development amounted to USD 7.8 billion. The dividend is currently still covered, but is heavily dependent on future growth impetus.
Where is the money currently coming from?
Pfizer continues to generate a large part of its revenue from products that played a key role during the pandemic. The most important sources of revenue in the third quarter of 2024 were
- 1. Paxlovid2.7 billion USD (+ 2.5 billion USD compared to the previous year).
- 2. Comirnaty (COVID-19 vaccine)1.4 billion USD (+9 %).
- 3. Eliquis (anticoagulant): USD 1.6 billion (+9 %).
- 4. Prevnar (pneumococcal vaccine): USD 1.8 billion.
- 5. Vyndaqel (treatment of transthyretin amyloidosis): USD 1.4 billion (+63 %).
- 6. Ibrance (breast cancer treatment): USD 1.1 billion (-13 %).
- 7. Xtandi (prostate cancer): USD 561 million (+28 %).
- 8. Padcev (new cancer therapy): USD 409 million.
- 9. Nurtec ODT/Vydura (migraine): USD 337 million (+45%).
- 10. Abrysvo (RSV vaccine): USD 356 million.
Comparing these figures with the previous year, it is clear that COVID-19 products continue to play a significant role, while other areas need to grow more strongly to fill the gap.
The pipeline: Hope in 108 acts?
With 108 projects in the pipeline, Pfizer has a promising basis, at least on paper. This is broken down as follows:
- Phase 1: 46 projects.
- Phase 2: 28 projects.
- Phase 3: 30 projects.
- Phase 4 (registration): 4 projects.
Products in registration
ADCETRIS (brentuximab vedotin): A therapy for diffuse large B-cell lymphoma (DLBCL). The global market for DLBCL therapies is estimated to be worth around USD 5 billion by 2027.
COVID-19 vaccine (in collaboration with $BNTX (+3,14%)
): Extension of approval for children aged 5 to 11 years in the USA. The market for COVID-19 vaccines remains significant, particularly with a focus on younger age groups.
COVID-19 vaccine (in collaboration with
$BNTX (+3,14%)
): Extension of approval for children aged 6 months to 4 years in the USA. Vaccination of this age group is crucial to contain the pandemic.
NGENLA (Somatrogon): Treatment for growth hormone deficiency in adults (in the EU as an orphan drug classified). The market for growth hormone therapies is estimated to be worth around USD 4 billion by 2025.
Although these products offer significant sales potential, it is unlikely that they alone will be sufficient for a complete turnaround of Pfizer. A sustained recovery requires a continuous pipeline of innovative products, successful launches and effective market strategies. However, the products and acquisitions can make an important contribution to the stabilization and future growth of the company.
Blockbuster of the future?
Progress in the areas of oncology, vaccines and innovative drugs such as weight loss products are particularly important. Pfizer is investing heavily in research and development, with a budget of USD 11 to 12 billion for 2024. Some of the most promising projects are
Danugliprone (Phase 2): A GLP-1 agonist for weight loss. But Pfizer is struggling with problems here: The original twice-daily formulation was discontinued due to severe side effects - nausea and vomiting - nausea and vomiting. The sufferer may think with a twinkle in his eye, 'actually works great'. But there must be gentler ways to lose weight. Pfizer is now concentrating on a once-daily dose. Results have not yet been communicated, but should come in 2024. The market for weight loss drugs is huge and could grow to over USD 50 billion by 2030, but the competition is fierce. $NOVO B (+5,32%) (Wegovy, Ozempic) $LLY (+0,32%) (Orforglipron) are already leading the way here.
mRNA combivaccines (COVID-19 and influenza - phase 3)This vaccine is in phase 3 and, if successfully approved, could become a sales driver as the market for combined vaccines is estimated at over USD 10 billion.
Oncology therapies (phase 3): Pfizer is working on several cancer therapies, including Talzenna (prostate cancer) and Braftovi/Mektovi (lung cancer). Both are in phase 3 and could generate initial sales from 2025.
Abrysvo (RSV vaccine - Approved)This vaccine is already approved and addresses a market that is expected to grow to over 8 billion USD by 2027.
The challenges: Competition and problems
Despite its promising pipeline, Pfizer faces a number of obstacles. Especially in the area of weight loss drugs, the competition from Novo Nordisk and Eli Lilly is immense. With Semaglutide (Ozempic/Wegovy) and Orforglipron, both companies already have established products or candidates that have performed excellently in clinical trials. Pfizer must make rapid progress here to avoid falling further behind.
Another problem is the dependence on COVID-19 products. While Paxlovid and Comirnaty continue to generate sales in the short term, demand is declining sharply as the pandemic increasingly fades into the background. Without new blockbusters, it will be difficult to compensate for these revenues.
Conclusion: Is Pfizer a turnaround candidate?
The answer is: Yes, but with conditions. With innovative products such as Danuglipron and new cancer therapies, the pipeline certainly offers potential, but Pfizer is under immense pressure. The competition is strong and time is running out - especially in the field of weight loss drugs. The dividend is also only secure in the long term if new products are successfully launched on the market.
Pfizer has the resources to achieve a turnaround, but investors need patience. If the company achieves initial success with its new drugs in 2025 or 2026, the share price could recover. Until then, however, it remains a shaky candidate - with a lot of risk, but also a lot of potential.
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