Pfizer ( PFE) is preparing for its third-quarter earnings announcement with a theme that could be called "All Lipitor, All the Time."

Neither uncertainty about COX-2 arthritis drugs, nor looming generic competition for big drugs, nor regulatory setbacks garners as much attention these days as Lipitor.

From patent challenges and product-line extensions to managed-care decisions and research prospects, Lipitor is the focal point. For Pfizer, the goal is to protect and expand the cholesterol drug that produced $10.9 billion in sales last year and 24% of corporate revenue.

Any jolt to Lipitor would certainly weaken Pfizer, whose stock continues to meander between a 52-week low of $21.99 and a 52-week high of $30.50, and it will probably do so until Wall Street has less uncertainty about patent challenges to the drug. The stock closed at $24.13 Tuesday.

Pfizer will issue third-quarter results Thursday. The consensus prediction from Thomson First Call is for a profit of 48 cents a share, excluding items, and revenue of $12.52 billion. Last year, Pfizer earned 55 cents, before items, with revenue of $12.83 billion.

Recent Lipitor news has been positive. Last month, the Food and Drug Administration approved the drug for reducing the risk of stroke and heart attack in people with the most common form of diabetes and who have certain risk factors. The agency also cleared Lipitor for reducing the risk of stroke in some nondiabetics.

The bigger story came when a British court rejected a challenge to Lipitor's main patent, which expires in late 2011. The court declared invalid a separate patent that expires in 2010. Pfizer would have had to lose both challenges to allow generic competition in the U.K.

New Fight

The British case was simply a warm-up for a similar court battle in the U.S., where Lipitor sales totaled $6.6 billion last year. Analysts say investors shouldn't draw any conclusions from the British ruling because U.K. and U.S. patent laws are different.

A loss in the U.S. would be devastating. Moody's Investors Service said Tuesday that a defeat could knock down Pfizer's Aaa rating by one notch and "further pressure beyond the one notch downgrade could occur, depending on the appeals process and the timing of a generic launch."

Without Lipitor in the U.S. in 2007, Pfizer's cash flow from operations and free cash flow could decline by as much as $5 billion, Moody's estimates.

The ratings agency has a negative outlook for Pfizer. "Over time, if the Lipitor patent rulings are favorable for Pfizer and if Moody's becomes more confident that the specified financial ratios will be readily attained and remain sustainable, the outlook on Pfizer's Aaa rating is likely to stabilize," the firm says.

Next year two big cholesterol drugs, Pravachol from Bristol-Myers Squibb ( BMY) and Zocor from Merck ( MRK) lose patent protection.

Analysts can't quantify the impact on Lipitor, partly because physicians don't like to switch patients from cholesterol medications if the drugs work well and side effects aren't a factor. Another question is how third-party payers will respond to the expected flood of generic Pravachol and Zocor. Pharmacy benefits manager Express Scripts ( ESRX) offered a glimpse last week, saying it would steer customers away from Lipitor and to generic Zocor.

A few years from now, Pfizer will learn if the FDA accepts a combination drug containing Lipitor and the experimental product torcetrapib. The combo drug is now in late-stage clinical testing.

If the trials are successful, analysts expect the combination pill to reach the U.S. market in 2008. The pill is another reason Pfizer needs to win the Lipitor patent battle in the U.S. If the company can charge a premium price for Lipitor, it will be easier to implement its long-term financial strategy of persuading doctors to switch patients to the combination pill prior to Lipitor's patent expiration.

Should a host of generic Lipitor pills become available before the combination pill reaches the market, Pfizer will have a tough time convincing patients to switch to the expensive combo pill.

Taxing Matters

While Lipitor may lead any discussion of Pfizer's future, the drug company does face other issues.

One of them is the situation with dalbavancin, an experimental antibiotic designed to fight skin and soft tissue infections, and at the same time help Pfizer overcome the patent expiration in November of the antibiotic Zithromax. Dalbavancin is the crown jewel in Pfizer's recent $1.9 billion acquisition of Vicuron Pharmaceuticals.

The FDA was supposed to rule on the antibiotic Sept. 21, after having delayed its review for 90 days. But the deadline came and went without comment from Pfizer or the agency. Analysts speculate that the FDA granted conditional approval, meaning Pfizer might have been asked to provide additional information.

Then there's the COX-2 franchise. These arthritis drugs have come under regulatory scrutiny since Merck withdrew Vioxx 13 months ago. Pfizer's biggest COX-2 product, Celebrex, remains on the market, albeit with a stronger safety warning about cardiovascular risk and other side effects that's been applied to all prescription pain relievers.

Bextra remains on the sidelines after Pfizer suspended sales in early April following an FDA request. Last month, the FDA rejected parecoxib, a cousin of Bextra, as a treatment for acute pain following surgery. The injectable drug is still available in some foreign markets under the brand name Dynastat.

Another matter is the money. Pfizer and others are benefiting from a measure President Bush signed last year, allowing them to bring back profits from foreign units for domestic use at a tax rate of 5.25% instead of the usual 35%.

Pfizer has repatriated $36.9 billion, but it hasn't offered many details. Several months ago, Chairman and CEO Hank McKinnell said repatriation is "strengthening Pfizer's ability to pursue strategic opportunities while enhancing the company's flexibility to invest in our R&D pipeline and new product potential in the U.S."

Stockholders would be happy to hear more of that.

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