Anticipation: The $43 Billion Wager Shapes Up to Boost Pfizer's Shares in 2025.
Anticipation: The $43 Billion Wager Shapes Up to Boost Pfizer's Shares in 2025.
Pfizer (PFE, 0.23%) emerged as a renowned figure in the stock market during the initial stages of the pandemic, being the first to introduce a coronavirus vaccine. The company raked in billions due to its coronavirus vaccine and treatment, amassing a record-breaking total revenue of over $100 billion in 2022.
However, in the recent past, Pfizer's earnings and share price have witnessed a drop, coinciding with the decrease in demand for its coronavirus-related products. Moreover, some of Pfizer's prominent products are set to lose patent protection towards the end of the decade, which is expected to negatively impact its revenue. Reflecting this situation, the stock has plummeted by more than 50% over the past three years.
Despite these challenges, Pfizer has been proactive in revitalizing its growth and sustaining its newfound momentum in the long term. The company has committed an immense $43 billion towards a specific program to fortify its prowess in this critical treatment area and accelerate growth. I believe this strategic move will propel Pfizer's stock to soar in 2025. Let's delve deeper.
Pfizer's moment in the limelight
Let's examine Pfizer's journey thus far. Established 175 years ago, Pfizer was mainly known for peddling a multitude of drugs for diverse therapeutic indications. However, it was during the pandemic that Pfizer truly captured the attention of the world with the introduction of its coronavirus-related products. Though these products led to substantial growth for the company, the market demand subsequently dwindled, leading to a decline in revenue.
Simultaneously, key patents on several significant Pfizer drugs, such as blood thinner Eliquis and breast cancer drug Ibrance, are approaching their expiration dates. Pfizer herself predicts that she will lose around $17 billion in revenue between 2025 and 2030 due to the loss of patent protection.
To counter these challenges and the decrease in coronavirus product sales, Pfizer adopted a remarkable strategy by launching an unprecedented number of new products. In a span of just 18 months, the company introduced 19 new products or indications to the market. Additionally, Pfizer set its sights on acquisitions to expand, which is where the $43 billion bet comes in. In 2022, Pfizer shelled out this astronomical sum to acquire Seagen, a specialty oncology company focusing on antibody-drug conjugates (ADCs). ADCs leverage the targeting capabilities of monoclonal antibodies, delivering potent drugs directly to cancer cells.
Seagen's offerings boost Pfizer's growth
At the time of the acquisition, Seagen had several drugs in the market, which have since brought substantial growth to Pfizer. Adcetris for Hodgkin lymphoma, Padcev for bladder cancer, Tukysa for breast cancer, and Tivdak for cervical cancer have all witnessed a surge in sales in recent quarters. Notably, Padcev's revenue doubled, reaching over $400 million in the most recent quarter. Furthermore, the Seagen acquisition provided Pfizer with a robust ADC pipeline, with several candidates currently undergoing phase 3 trials. Pfizer aspires to have at least eight oncology blockbusters in the market by 2030, and this extensive pipeline could make this ambition a reality.
Thus, Pfizer's bet appears set to yield significant returns in the long run – but why am I optimistic about the Seagen purchase driving gains as early as 2025? First, Pfizer appears relatively inexpensive today, trading at around 8x forward earnings estimates, considering its long-term potential in oncology and overall. Second, the Seagen products, as previously mentioned, are already generating substantial growth for the company. In the most recent quarter, Pfizer's oncology portfolio, which includes Seagen products and Pfizer's homegrown products, saw revenue growth surpass 30%. Pfizer vaulted to third place among the largest U.S. oncology companies by sales in the first half of the year.
Pfizer has set its most ambitious objectives for 2030, but the majority of this growth is expected to manifest in the coming months and years. As these revenue gains and new product launches materialize, the stock is poised to progress. Consequently, my prediction is that this substantial oncology investment will help Pfizer's stock ascend in 2025 – making this an opportune moment to incorporate this pharmaceutical titan into your investment portfolio.
- Given Pfizer's significant investment of $43 billion in a specialized program to strengthen its position in the critical treatment area and accelerate growth, it is exploring financial opportunities in the field of oncology to offset the revenue loss due to patent expirations and decreasing demand for coronavirus-related products.
- In light of the challenges Pfizer is facing with the expiration of patents on drugs like Eliquis and Ibrance, and the decline in demand for its coronavirus products, the company's strategic acquisition of Seagen for $43 billion in 2022 is a calculated move to inject new finance into its oncology division, leveraging Seagen's portfolio of successful drugs and robust ADC pipeline to boost revenue and share price in the near future.