Pfizer Inc. (PFE), one of the most well-known large-cap pharma companies in the world, had a challenging year with its top-line remaining under pressure and not too many updates on the regulatory/pipeline front.
Although Pfizer’s earnings track record was better-than-expected in the last three quarters, the top-line remains under pressure with several erstwhile blockbuster drugs facing generic competition.
The company ended 2014 with yet another blockbuster drug, Celebrex, losing patent protection. The impact of Celebrex generics, which entered the market in Dec 2014, will be felt in the upcoming quarters. Alliance revenues are also under pressure with the expiry of certain agreements including one with Amgen (AMGN) for Enbrel.
Meanwhile, significant pipeline or regulatory updates were missing last year. Apart from label expansions and approval of vaccines like Trumenba, a key update was the FDA’s decision to grant priority review to the company’s new drug application for its experimental cancer treatment, Ibrance (palbociclib).
Pfizer was also in the news last year due to its attempt to acquire AstraZeneca (AZN). Although AstraZeneca made it clear it was not interested in Pfizer’s offer, rumors regarding acquisition talks surfaced again later in 2014. While the AstraZeneca deal did not happen, Pfizer did complete a few small acquisitions and entered into collaboration agreements mainly targeting immuno-oncology, a key focus area for pharma and biotech companies.
A Look at Some Pharma Stocks That Fared Better than Pfizer
With Pfizer gaining just 5.88% in 2014, here’s a look at some peers that fared better in 2014 and look well-positioned this year.
Indianapolis-based Eli Lilly and Company (LLY), which has been facing headwinds in the form of generic competition and pricing pressure, looks positioned to return to earnings growth in 2015. The Zacks Rank #3 (Hold) stock, which saw its shares gain 40.51% in 2014, surpassed earnings expectations in two of the last three quarters and is also slated to report better-than-expected earnings in the fourth quarter.
Even though Lilly will be facing several headwinds this year — including foreign exchange; products like Cialis, Forteo, Strattera and Effient; the diabetes franchise; and the ex-U.S. animal health segment — should perform well. New products — Cyramza, Trulicity and Jardiance — should also do well. 2015 will be eventful on the pipeline and regulatory front as well with several phase III data readouts and multiple regulatory actions expected.
UK-based AstraZeneca, a Zacks Rank #3 stock, is another company that fared better than Pfizer in 2014. The company’s track record was pretty decent with earnings surpassing expectations in two of the last three quarters. AstraZeneca was up 25.23% last year. Apart from being in the news related to Pfizer’s interest in acquiring the company, AstraZeneca also gained approval for quite a few products last year and provided positive pipeline updates. The company’s immuno-oncology pipeline also looks interesting.
Swiss pharma company Novartis (NVS), a Zacks Rank #3 stock with a strong presence in the oncology and ophthalmology markets, gained 21.68% in 2014. The company, which is facing generic competition for quite a few products, is working on reorganizing its portfolio so that it can focus on core therapeutic areas. Novartis has a deep pipeline and is also progressing with the development of biosimilars especially its biosimilar version of Amgen’s Neupogen. Its experimental heart failure treatment, LCZ696, also represents huge commercial potential.
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