Expect Generic Competition to Weigh on Pfizer

Pfizer’s core drugs (pneumococcal vaccine Prevnar 13, cancer drug Ibrance, immunology drug Xeljanz and cardiovascular drug Eliquis) posted solid growth, offsetting generic competition to erectile dysfunction drug Viagra (U.S.) neuroscience drug Lyrica (Europe) and immunology drug Enbrel (Europe). While we expect some improvement in top-line growth over the next two years, we project just 2% annualized sales growth over the next five years, as generic competition will continue to weigh on Pfizer’s growth potential. Additionally, while Ibrance posted 27% growth in the U.S., the pricing pressures in Europe are concerning and likely due to stricter European pricing controls, as well as increased competition from Novartis. Nevertheless, we expect Ibrance will post sales close to $8 billion in 2021 ($1.5 billion ahead of consensus), driven by a first-mover advantage and excellent clinical data.

To achieve faster growth, Pfizer needs to improve its pipeline prospects, and while its early-stage pipeline is making progress, the recent setback to 4-1BB drug utomilumab dampens the outlook for a key differentiated drug. While utomilumab is continuing in early-stage studies, Pfizer’s decision to not move the combination of the drug with Bavencio into phase 3 studies likely means this cancer drug holds less potential than early data had suggested. Moreover, several of Pfizer’s recently approved drugs (SGLT-2 drug Steglatro and PD-L1 drug Bavencio) are entering markets after competitors, limiting market share gains.

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