For Pfizer, it has been a long and painful fall. In early 2004, its shares were just below $39. It was the age of Big Pharma. Most of the big drugs had not gone "off patent" and so there was very little competition for the blockbuster money makers.

Now, Pfizer’s shares are unlikely to trade above $28. Over the last five years, the S&P is up about 80% and Pfizer is down almost 20%.

Pfizer found its brain yesterday. It had not been far away, perhaps no further off that a closet in its NYC headquarters.

According to The Wall Street Journal "Pfizer’s labs struggled to find enough new drugs to offset the anticipated loss of sales when $13-billion-a-year cholesterol drug Lipitor faces generic competition, which could come as soon as 2010." So, its has hired a big time biotech executive to be head of a new Pfizer biotechnology center. He will work on advances including medicines made by splicing genetic material into live cells.

The stock market has been telling Pfizer that biotech has been the place to do much of its research work. The company trades at 3.6 times sales. Genentech (DNA), the leader in bio-based medicine trades at 7.5x. Its shares are up 400% over the last five years.

It will be several years before it is absolutely clear whether Pfizer’s move into the more advanced part of pharma R&D will work. But, at least it has given itself a chance.

Douglas A. McIntyre

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