Pfizer's future

Dear Mr. Berko: I own 200 shares of Pfizer, which I bought at $26 in late 2011. I have a nice profit in Pfizer, but I'm concerned that Hillary Clinton's rightful criticism of high drug prices will hurt Pfizer's profits. Is the outlook still bullish? - SK, Minneapolis Dear SK: English proctologist Benjamin "Big Ben" Dover, who is retired from private practice, would say, "Don't ascribe long-term consequences to short-term events." Pfizer is here to stay, and so are high drug prices. In the constant conflict between corporate America and the government, the government wins the battles, corporate America wins the wars and we the taxpayers foot the bill. We're screwed! Pfizer (PFE-$32.50) got started in 1849, when cousins Charlie Pfizer and Charlie Erhart decided to combine their chemistry and confectionery expertise to produce santonin. Santonin, a tasty almond-flavored remedy for intestinal worms, a common ailment of the times, became an instant success. Pfizer's office, warehouse, factory and laboratory were in a 2,800-square-foot building in Brooklyn, New York. During the Civil War, the Two Charlies manufactured and sold painkillers, preservatives, disinfectants, iodine, morphine, chloroform and other products, helping patients be more comfortable. By 1906, revenues exceeded $3 million, and the Two Charlies were on their way to making history. They found a Golconda in 1941. In response to Uncle Sam's request to provide World War II service members with a new antibiotic, Pfizer mass-produced penicillin and cemented its place in medical history. Today Pfizer does business in 181 countries, has 110,000 employees and produces over 340 prescription drugs and vaccines, generating $49 billion in annual revenues this year. And 60 percent of those revenues derive from overseas. Credit Suisse, Thomson Reuters, Argus Financial Services and Morningstar are bullish on PFE. And they're impressed with its pipeline. According to Dr. Dover, Pfizer's tofacitinib pill, for rheumatoid arthritis, was given a green light by the Food and Drug Administration. The brand name is Xeljanz, and it's among PFE's most important drugs because it's more effective than AbbVie's Humira without many of the side effects. It will carry a $25,000 annual price tag (on a par with the yearly cost of Humira), and annual revenues are expected to be $2.5 billion to $3 billion. Eliquis, a drug for atrial fibrillation, is also expected to be a $2 billion-plus blockbuster. But I'm not sure about Eliquis. One doc I talked to believes Eliquis is a godsend for A-fib, but two others told me they won't prescribe it because the side effects are unacceptable. PFE has seen solid growth in its Lyrica (controls negative effects of fibromyalgia) and Prevnar (a pneumonia vaccine for seniors) franchises. PFE's oncology business continues to impress Wall Street, particularly Ibrance, which costs $9,850 a month and treats metastatic breast cancer. How can we concentrate on getting well when thinking about paying Obamacare drug prices? The recent $16 billion Hospira acquisition makes PFE the world's leading provider of injectable drugs and infusion technologies. Hospira will add $4.8 billion to PFE's revenues and will immediately add earnings of 12 cents a share during the first year. This amount is likely to grow in the coming years, allowing PFE to increase the number of high-quality generic injectables and biosimilars it can offer the public. This was a masterful stroke, as PFE's vast financial resources will enable Hospira to develop a larger and extremely profitable product line. This will become increasingly evident as PFE's sales force in emerging countries allows the company to benefit from dramatically increasing wealth in such nations as Russia, Brazil, India, China and Turkey. PFE's recent acquisition of Ireland's Allergan, creating the world's largest pharmaceutical company, is too recent to comment upon in detail. The inversion will hugely lower taxes, and PFE's share price, earnings and dividends should post record results over the next few years. It will probably take 16 months to smoothly and effectively bring these companies together. With revenues of $90 billion and an attractive 3.5 percent dividend, PFE could become an unstoppable moneymaking behemoth. I believe PFE must be in every investor's growth and income portfolio. Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. © 2015 Creators.com Published: Thu, Dec 24, 2015