Winners as Pfizer Loses Lipitor Patent (PFE, TEVA, MYL, WPI)

Pfizer Inc. (NYSE: PFE) has a big day ahead of it.  While it has been known for years, it is a massive date: Lipitor goes off-patent and will have generic versions of the statin drug competitors. Big deal? The last quarter’s annualized Lipitor sales was about $6 billion and the peak sales were well above $10 billion.

Canaccord Genuity’s specialty pharma analyst Randall Stanicky believes that generics will have 60% market share in 2012.  How the pie is divided is still subject to uncertainty and the analyst sees three possible scenarios:

• Scenario 1 – base case: Watson Pharmaceuticals (NYSE: WPI) and Ranbaxy both launch.  Under this scenario, it has no changes for Watson, Teva, and Mylan and it sees no surprises across the supply chain “where strategies and impact are well vetted.”
• Scenario 2 – modest surprise: TEVA is involved, most likely via a deal with Ranbaxy. Stanicky is not convinced that generic Lipitor is TEVA’s “mystery” product but he continues to see it as an opportunity. This could offer modest upside to TEVA, although the call noted that a generic Lipitor is likely a June 2012 event for TEVA.
• Scenario 3 –  Other less likely scenarios include (1) Ranbaxy’s ANDA is rejected by FDA (or relinquished by Ranbaxy) and others come in; Mylan and TEVA would see an earlier benefit while WPI would be negatively impacted or (2) Ranbaxy is “parked” by the FDA, in which case WPI would benefit both by being alone on the market while TEVA and MYL could see delay to market (we have a hard time seeing the FDA allowing this given focus here.

As far as what others expect from Pfizer, two weeks ago brought a Leerink Swann downgrade where Pfizer was cut to “Market Perform.”  All in all, Thomson Reuters shows a consensus price target objective from analysts as being $23.36.  At $19.35 today, Pfizer’s 52-week range is $16.27 to $21.45.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) has been battered enough this year that this would be a big deal for its stock if there was a blowout win coming its way.  Instead, shares are only up 0.6% at $38.51 while its 52-week range is $35.00 to $57.08.  It would be up more if everyone thought this was a win for Teva.  Watson Pharmaceuticals, Inc. (NYSE: WPI) is up 3% at $67.80.

JON C. OGG