The Blue Chip Stock That’s in for Some Healthy Competition

Wednesday is the dawn of a new era for Pfizer Inc. (NYSE: PFE), as it will give rise to some serious competition for the pharmaceutical giant’s wildly successful heart drug Lipitor. Pfizer’s Lipitor patent expires tomorrow, and other pharmaceutical companies are lining up, ready to introduce their own generic, cheaper versions of the drug.

No fewer than 10 companies are set to roll out generic Lipitor brands in the coming months. As the Financial Post wrote today, some industry experts forecast that Pfizer’s hold on the Lipitor market could eventually be reduced to about 10 percent. What sort of impact might that have on the blue chip stock? That may depend on how Pfizer fills the void in other areas.

Lipitor is Pfizer’s biggest money maker, generating about $11 billion a year for a company that produced $67.8 billion in revenue last year. But Pfizer is the world’s largest drug maker. It sells plenty of other medicines. The company’s animal health drug sales, for example, were up 21 percent in the third quarter, and Pfizer is set to introduce an adult vaccine called Prevnar 13, pending FDA approval. Overall the company’s net income has increased 60 percent over the first three quarters of 2011.

So while its Lipitor sales may start to decline after tomorrow’s patent expiration, Pfizer is hardly a company whose success is tied solely to one product. With a market capitalization of $149 billion and a dividend yield of 4.3%, Pfizer is a bona fide blue chip with cash to spend.

It’s not going anywhere – patent or no patent.                 

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