New York – Pfizer Inc.’s decision to scrap development of a crucial medicine sent its shares plummeting Monday as analysts fretted about its future and speculated about which companies it might purchase to shore up its pipeline.
Shares of Pfizer plunged $2.96, or 11 percent, to $24.90 in afternoon trading on the New York Stock Exchange after the company disclosed Saturday that it halted development of cholesterol treatment torcetrapib because of an unexpected number of deaths and other complications in the trial.
Torcetrapib was supposed to fill the void when Pfizer’s best-selling drug, cholesterol treatment Lipitor, which posted $12.2 billion in sales last year, loses its patent, which could be as early as 2010.
Its loss was a kick in the teeth to a company already hard hit by numerous patent expirations that will rob it of $14 billion in revenues annually between 2005 and 2007.
Now the revenue gap is looming larger than ever. Analysts said Pfizer has some interesting products in its pipeline but none that comes close to torcetrapib’s promise, intensifying the pressure to find new drugs.
Pfizer can fund a substantial shopping spree: It has roughly $13 billion in cash and short- term assets, and will reap $13.5 billion after completing the sale of its consumer-products division to Johnson & Johnson, which is expected by year-end.
As much as analysts believe Pfizer will act swiftly to bring new products into the fold, they caution it is no panacea. This year, Pfizer has canceled at least two drug-development deals: Last month, it pulled out of its deal with drugmaker Organon to develop schizophrenia treatment asenapine, and over the summer it returned its development and marketing rights on sleeping pill Indiplon to Neurocrine Biosciences Inc.
Zacks Independent Research analyst Jason Napodano acknowledges that Pfizer’s attractive yield and stock-buyback program bolster shares. Still, he said, “Those aren’t long- term strategies.”
