Pfizer Followers Aren't Impressed

Shares of Pfizer(PFE Quote) continued sinking Tuesday as investors remained lukewarm about the drug giant's massive makeover.

By late afternoon, shares were off 74 cents, or 2.8%, to $26.21. On Monday, the stock dropped 1% after Pfizer said it would fire 10% of its worldwide staff, or about 10,000 people, by the end of 2008. Pfizer also reported fourth-quarter and full-year 2006 earnings that narrowly beat Wall Street estimates.

Most analysts with buy ratings stood their ground, and those with neutral ratings remained on the fence. But Bear Stearns analyst John Boris dropped his rating to peer-perform from outperform.

Boris' enthusiasm has waned due to what he says is greater pressure on Lipitor as insurers and pharmacy benefit management companies press doctors and patients to take generic cholesterol drugs, most notably cheap versions of Merck's(MRK Quote) Zocor.

Consolidation among PBM companies and a greater push for Medicare recipients to choose generic cholesterol drugs would expand pressure on Lipitor's sales, Boris says in a research note. Generic Zocor costs 5 cents to 16 cents a day, while Lipitor's daily cost is $2.39 to $3.41, he says.

Although Lipitor produced a 6% sales gain to $12.89 billion last year, fourth-quarter sales dropped by 1% worldwide and 6% in the U.S. Pfizer executives forecast modest worldwide sales growth for Lipitor this year, but Boris expects a 2% total decline and a 5% drop in the U.S. Bear Stearns helped Pfizer sell its consumer products division to Johnson & Johnson(JNJ Quote) last year.