A mixture of disappointing deals, poor marketing and bad luck, unfolding during a plague of patent expirations, has put long-term investors in Pfizer ( PFE) in a bind and analysts in a surly mood.

Over the past five years, Pfizer's stock is down 28%, lagging both the S&P 500-stock index and the Amex Pharmaceutical Index, which contains Big Pharma stocks, including Pfizer.

Even under Jeffrey Kindler, who has been restructuring the company since becoming CEO in July 2006, shares are off 15% in the last 12 months.

While analysts have been grumbling, however, drug-industry management experts are more optimistic -- or at least less anxious -- about Pfizer's turnaround prospects, given its financial strength and still-strong credit rating.

"It's fixable. They have tons of cash sitting in the bank," says Prof. Mahmud Hassan, director of the pharmaceutical MBA program at Rutgers, the state university of New Jersey, who tells investors to be patient.

"Most investors are myopic," he says. "Look at the Vioxx situation. When people saw Vioxx wasn't as big a problem as they thought, Merck's ( MRK) stock picked up."

Merck and Schering-Plough ( SGP), which is cleaning up past regulatory problems, have had more dramatic setbacks than Pfizer, but they have since become more attractive to Wall Street.

Each of those stocks enjoy more buy ratings than the combined total of hold and sell ratings, according to Thomson First Call. But only seven of 26 analysts think Pfizer is a buy.

Management gurus say Pfizer is experiencing similar problems to those faced by all Big Pharma companies, but on a grander scale due to its size. The most prominent issue is how to make R&D more productive to offset the damage done when key products lose patent protection.

(The company will host an analyst conference Thursday night in Hong Kong.)

Since taking control of Pfizer, Kindler has announced a series of steps, from cutting jobs to paring bureaucracy to making more focused decisions on research and dealmaking. Many top managers during the tenure of Kindler's predecessor, Hank McKinnell, are gone or planning to go.

"It appears the new management team has shed much of the 'arrogance' that has plagued the company in the past," says Clifford Cramer, director of the health care and pharmaceutical management program at the Columbia Graduate School of Business. The old way "led to bureaucratic intransigence, uneven relationships with key customers, overpaying on several external transactions and alienating investors," he says.

But how fast can a management overhaul lead to fixing Pfizer? "It is unlikely that the company will pursue any dramatic change in strategic direction," says Cramer, a former Merck executive. "There is probably little they can do to materially change the sales and earnings growth prospects between now and the Lipitor patent expiration."

The cholesterol drug will lose protection of its major U.S. patent in March 2010. If Pfizer wins a dispute involving another Lipitor patent, protection could be extended to June 2011. Lipitor accounted for 26% of corporate revenue for the first nine months of 2007. Since mid-2006, several other big drugs have lost U.S. patent exclusivity, including the antidepressant Zoloft and the blood-pressure medication Norvasc. Another big seller, the allergy drug Zyrtec, faces U.S. patent expiration in December.

Pfizer has had trouble finding products to pick up the slack, instead producing expensive, headline-grabbing disappointments.

It canceled work on the cholesterol drug torcetrapib 12 months ago after late-stage clinical trials showed an unexpected rate of patient deaths. The inhaled insulin Exubera made it to the market, then performed so badly that Pfizer recently dropped it and returned its rights to partner Nektar Therapeutics ( NKTR).

In June 2006, Pfizer canceled a marketing deal with Neurocrine Biosciences ( NBIX) when that company's insomnia drug Indiplon ran into delays at the Food and Drug Administration. Neurocrine is seeking FDA approval on its own.

And although Pfizer hoped the 2005 acquisition of Vicuron Pharmaceuticals would yield quick FDA approval and big sales for two anti-infectives, the deal has been a disappointment. One antibiotic still awaits FDA action, while an antifungal that reached the market has had meager sales.

"When you're aggressive, you make mistakes," says Hassan of Rutgers, adding that Pfizer moved too quickly on the Neurocrine and Vicuron deals. "I think they have learned from their mistakes."

Hassan and other management experts believe Pfizer will focus on strategic acquisitions and collaborations -- smaller companies with products in earlier stages of clinical development rather than bigger companies with mature products and large sales forces. More joint ventures, licensing deals and agreements with universities are necessary, they say.

Pfizer's dilemma reminds David Finegold of the old studio system for the movie industry. The studios once controlled every aspect of production -- from hiring stars to raising money.

"Now, they put together deals," says Finegold, dean of the School of Management and Labor Relations at Rutgers. "Pfizer and other large pharmaceutical companies are recognizing that they need more partnerships and new ways to promote innovation."

But some Wall Street analysts say Pfizer might try to blast itself out of its doldrums with another megamerger, such as Warner-Lambert in 2000 (which yielded Lipitor) and Pharmacia in 2003 (which yielded the arthritis drug Celebrex). They suggest the next big target could be Biogen Idec ( BIIB), which said in October that it would entertain takeover offers.

However, "Biogen Idec is a bad idea" for Pfizer, says William Trombetta, professor of pharmaceutical marketing at the Erivan K. Haub School of Business at St. Joseph's University in Philadelphia. Big mergers "don't work for the most part." He'd rather see Pfizer pursuing small companies with experimental products in early clinical trials.

And why would Pfizer want to make a giant acquisition when it has been cutting payroll? Pfizer had 98,000 employees in 2006, down from 122,000 in 2003. Kindler wants to cut staff by another 10% by the end of 2008.

Although Lipitor is a star, the industry's big merger strategy has been flawed because buyers thought they could achieve R&D synergies, says Prof. Joel Shalowitz, director of the health industry management program at Northwestern University's Kellogg School of Management.

"They found that R&D wasn't scalable," he says. "You can't scale it, but you can focus it. You no longer have to be all things to all people. Fifteen years ago, you needed a broader array of pharmaceuticals."

Pfizer could become more profitable even if it becomes smaller, developing more drugs with "lower volumes and higher margins," Shalowitz says. Putting a greater emphasis on disease prevention, like Merck has done with its growing vaccines business, is one way to improve, he adds.

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