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Pfizer's Drug Problem: Lipitor

Since Merck's (MRK - Get Report) Zocor lost patent protection in June 2006, generic versions of the cholesterol fighter have been taking pieces out of Lipitor's U.S. market share week after week.

Lipitor's importance to its maker, Pfizer (PFE - Get Report), is readily apparent -- not only is it the company's biggest product, it's also the world's top-selling prescription drug. The continuing challenge is beating back increasingly fierce competition.

"Pfizer is in a tough spot," says Joseph Tooley of A.G. Edwards. "Generic Zocor is a game-changer. It's growing at a rapid pace."

For the four weeks ended June 1, Lipitor had a 32.7% market share of U.S. prescriptions, down from 40.9% a year earlier. Generic Zocor now has a 23% share, according to a recent report from Tooley's firm, citing data from the medical-products-tracking firm IMS Health.

At the same time, Lipitor's dominance is shrinking while the total market is growing. U.S. prescription volume rose 10.3% in the past year, but Lipitor's volume dropped 12%.

Pfizer has regained a tiny amount of lost prescriptions thanks to Caduet, which combines Lipitor and the blood-pressure drug Norvasc. Still, Caduet's market share is up to only 1.6% from 1.2% a year ago.

"Caduet appears to be gaining some traction," says Tooley, noting that the drug remains a small player. Tooley, who doesn't own shares, has a hold rating on Pfizer. His firm has had a recent noninvestment banking relationship with the drugmaker.

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