Arthritis Drugs Put a Hurt on Merck and Pfizer

What About Pfizer?

While Pfizer has defended the safety of its COX-2 products, at least two analysts have upgraded their ratings on the stock based on the theory that Merck's pain will be Pfizer's gain.

"Celebrex and Bextra demand is off the charts," said David Moskowitz, who raised his rating on Pfizer to outperform from market perform, in a report to clients Wednesday. "Based on our trade sources, demand for Celebrex and Bextra is soaring at the wholesale level, and premiums are being paid for supplies of the product. We believe that Pfizer is shipping all it can at this point."

Moskowitz said the data from NDC Health, which monitors prescriptions, show that 58% of the initial switches from Vioxx are going to the Pfizer products while other people were seeking to switch to other painkillers such as naproxen.

"Given that Celebrex is in the same class as Vioxx, there have been concerns that Celebrex might also harbor some unrecognized safety issues," he said. However, Moskowitz said that independent safety committees supervising three ongoing COX-2-related trials showed "no indications of any increased cardiovascular risk among study patients in any of the trials." (He doesn't own shares; his firm doesn't have an investment banking relationship with the company.)

One analyst with what could be termed a cautious buy recommendation is Robert Hazlett, of SunTrust Robinson Humphrey. "Though the jury is still out, and the FDA may certainly ask that more clinical work be completed, we apply only a small probability to the risk that Celebrex will be saddled with the same types of negative cardiovascular effects that Vioxx has shown," he said in a research report issued Monday. "We expect investor response to near- and medium-term Celebrex prescriptions to be positive."

Hazlett said he expected the withdrawal of Vioxx would add $195 million to Pfizer's COX-2 product sales this year, pushing revenue to $4.48 billion. But the real gains will come in 2005, 2006 and 2007. Next year, for example, Vioxx refugees could add $1.1 billion to Pfizer's COX-2 revenue, boosting sales to $5.74 billion. (He doesn't own shares; his firm has had a non-investment banking relationship with Pfizer.)

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