Pfizer Followers Aren't Impressed

Boris and other Pfizer watchers say it's not too early to worry about 2010 or 2011, when Lipitor will lose its U.S. patent. Pfizer prevailed in a patent suit involving India's Ranbaxy Laboratories for the basic patent that expires in March 2010, and an appeals court recently upheld Pfizer's victory.

However, Ranbaxy last year won a challenge to a patent on a calcium salt of Lipitor. This patent expires in June 2011. Pfizer executives said this week that they will petition the U.S. Patent and Trademark Office to correct what they call a "technical defect" in the calcium-salt patent. Pfizer says it lost the patent challenge because of the technicality.

Although Pfizer predicts sales growth will resume in 2009 and 2010 after a flat performance between 2006 and 2008, many analysts worry that Pfizer lacks the firepower to offset a generics attack on Lipitor, which represents more than 25% of revenue. That's one reason why the number of buy ratings has declined to seven from 12 in the last three months, while the number of hold recommendations has climbed to 16 from 10.

"Pfizer's pipeline is inadequate to paint the company as a growth story or allow it to pay the generous dividend once Lipitor sales are eroded by generics in 2010 or 2011," says Catherine Arnold of Credit Suisse in an analysis of Pfizer's restructuring plans. Arnold is neutral on the stock. Her firm has had a recent investment banking relationship.