Major pharmaceutical company, Pfizer [NYSE: PFE], is seeking another miracle pill with similar earning potential as Viagra to boost revenue. Viagra, a brand name popular pill among men, is used to treat erectile dysfunction. However, it now faces heavy competition from the generic version of the drug, Sildenafil which is sold by the same company.
Back in 2000, 92 percent of the global market who used prescribed erectile dysfunction pills, chose Viagra. But that number has dwindled to 50 percent by 2007. In 2017, Pfizer lost the patent for Viagra, resulting in a lack of growth for the company. Pfizer is now seeking to create another miracle pill, however its efforts may be limited as the company recently announced cost cutting plans in Research and Development.
Pfizer plans to spend between USD$7.4 billion to US$7.9 billion in Research and Development when compared to USD$7.7 billion spent last year. Pfizer is facing competition from companies such as Johnson and Johnson and Merck, who are projected to spend USD$10 billion in that field.
Pfizer does not seem to be in good financial standing as evidenced in the 300 jobs that were cut in January. It has been reported that the company ended its research programs in the treatment of Alzheimer’s and Parkinson’s disease, to fund other projects. Pfizer also made it known that the company may sell its consumer healthcare business which owns over the counter drugs such as, Advil, Centrum multivitamin and Chapstick lip balm.
According to Tufts Center for the Study of Drug Development, it takes an average US$2.6 billion to bring a new drug on the market. That is considered a hefty sum as in 20 years there have been 19 treatments that have generated US$1 billion in annual revenue for the last 5 years. Because of this, Pfizer chose a model where it shares the risk and benefits with other companies such as Merck and Bristol Myers Squibb.
Pfizer has had other profitable drugs such as Lipitor for cholesterol, Zoloft which is an antidepressant and Celebrex an anti- inflammatory drug, but none has matched the selling power of Viagra.
In 2017, Pfizer made revenue of US$52.5 billion compared to US$52.8 made in 2016, a less than 1 percent decrease. Net income on the other hand, did not disappoint as the company amassed US$21.3 billion in 2017 compared to US$7.2 billion in 2016. Pfizer trades on the New York Stock Exchange at US$35.73.
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